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This project is co-financed by the European fund for Regional Development through Operational programme “ Development of the competitiveness of the
Bulgarian economy” 2007-2013
Annex to the
EXPORT STRATEGY
for industrial sector
„Manufacturing of medical,
precision and optical
apparatus and instruments”
Executive agency for promotion of small and
medium enterprises
2012
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
This document was developed under project № BG161РО003 – 4.2.01-0001
“PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN
ENTERPRISES”.
Beneficiary: Executive agency for promotion of small and medium enterprises
This document was developed with the financial support of Operational
programme “ Development of the competitiveness of the Bulgarian economy”
2007-2013 co-financed by the European fund for Regional Development. The
overall responsibility of the document’s content lies with the Executive agency for
promotion of small and medium enterprises and under no circumstances it can be
accepted that this document reflects the official statement of the European Union
and the Contract authority.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Contents
SITUATIONAL ANALYSIS AND DEVELOPMENTS WITHIN THE INDUSTRIAL
SECTOR IN BULGARIA ............................................................................................................... 10
EXPORT ORIENTATION OF THE SECTOR ............................................................................ 27
GOODS AND MARKETS WITH AN EXPORT POTENTIAL ................................................. 35
COMPETITIVENESS OF PRODUCTS AND SERVICES FROM THE SECTOR WHEN
EXPORTED ON INTERNATIONAL MARKETS. ..................................................................... 40
MACROECONOMIC CHARACTERISTICS OF PRIORITY BULGARIAN EXPORT
MARKETS. BILATERAL TRADE RELATIONS ...................................................................... 54
SUMMARISED RESULTS FROM THE ANALYSES (SWOT, PESTEL) ............................... 76
BARRIERS TO THE INTERNATIONALISATION OF ENTERPRISES FROM THE
SECTOR ........................................................................................................................................... 88
FINANCIAL ANALYSIS .............................................................................................................. 105
RESULTS FROM THE SOCIOLOGICAL SURVEYS AND PUBLIC DISCUSSIONS ....... 113
BIBLIOGRAPHY AND STATISTICAL SOURCES: ............................................................... 137
4 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
List of Tables Included:
Table 1 Value added in the manufacturing industry (%) ................................................................... 11
Table 2. High-technological exports (intra ЕU-27), % of total exports by Member States ............... 12
Table 3. High-technological exports (outside of ЕU-27), % of total exports by Member States ..... 13
Table 4. Investment in industrial sector „Manufacturing of medical, optical and other precision
equipment” in the years of economic growth .................................................................................... 15
Table 5. Employees by industrial sector and activity (for all sizes of enterprises, by the IV quarter
of the corresponding year) – number ................................................................................................. 16
Table 6. Industrial production indexes – seasonally adjusted (by the month of December of the
corresponding year) 2005 =100 ......................................................................................................... 17
Table 7. Main economic performance indicators for the manufacturing industry in the timeframe
2008 - 2010 ........................................................................................................................................ 18
Table 8. Productivity, value added and employment provided by SMEs in sector С26 (2008 - 2009)
............................................................................................................................................................ 19
Table 9. Turnover indexes of domestic (Bulgarian) industrial sales 2000 – 2011 (by the month of
December of the corresponding year) 2005 = 100 ............................................................................. 19
Table 10. General price indexes reported by manufacturers (by December of the respective year),
2005=100 ........................................................................................................................................... 20
Table 11. Main economic performance indicators for SMEs in sector С26 for 2009 ....................... 21
Table 12. Main economic performance indicators for SMEs in sector С26 for 2010 ....................... 21
Table 13 Number of SMEs in sector C26 by regions ........................................................................ 25
Table 14 Employment by regions in SMEs within sector C26 .......................................................... 26
Table 15 Total export of the Bulgarian manufacturing industry ($ million, at current prices). ........ 27
Table 16 Table 16. General data, foreign trade in sector С26 in the period 2000 - 2011 .................. 27
Table 17 Turnover indexes of export industrial sales 2000 – 2011 (by the month of December of the
corresponding year) 2005 = 100 ........................................................................................................ 28
Table 18 Bulgarian exports – Medical, precision and optical apparatus and instruments 2001 - 2010
............................................................................................................................................................ 29
Table 19 Share of the medical, precision and optical exports in the total industrial export for 2001 -
2010 .................................................................................................................................................... 29
5 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 20 Value of exported medical, precision and optical apparatus for the period 2001 - 2010 ... 30
Table 21 Number of Bulgarian micro enterprises exporting computer, electronic, optical and
precision products (С26) .................................................................................................................... 30
Table 22 Number of Bulgarian small enterprises exporting computer, electronic, optical and
precision products (С26) .................................................................................................................... 30
Table 23 Number of Bulgarian medium enterprises exporting computer, electronic, optical and
precision products (С26) .................................................................................................................... 31
Table 24 SME export of specific product groups within „medical, precision and optical” .............. 31
Table 25 A list of Bulgarian export markets for product group “Optical, photo, technical, medical,
etc. apparatus” (code: 90 by ITC, Geneva) – thousand Euro ............................................................. 32
Table 26 Index of exported values for product group “Optical, photo, technical, medical, etc.
apparatus” (code: 90 by ITC, Geneva) – thousand Euro ................................................................... 33
Table 27 Product groups – manufacturing and sales for 2010 ........................................................... 35
Table 28 A list of significant Bulgarian export markets reporting growth for the period 2008-2010
for product group “Optical, photo, technical, medical, etc. apparatus” (code: 90) ............................ 37
Table 29 Leading export markets (top 30) for medical, precision and optical apparatus (ITC code
90) with an accentuated growth in 2007 - 2010 ................................................................................. 38
Table 30 Coefficient of specialisation of the Bulgarian industry in the sector Optical, medical and
precision apparatus (ITC code 90) .................................................................................................... 41
Table 31 Specialisation coefficients (revealed comparative advantage) in industrial sectors in EU
and World’s largest economies for 2009 ........................................................................................... 42
Table 32 Belgium: growth of imports from principal trade partners for product group “Optical,
photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................................ 46
Table 33 Germany: growth of imports from principal trade partners for product group “Optical,
photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................................ 47
Table 34 Italy: growth of imports from principal trade partners for product group “Optical, photo,
medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ........................................................... 48
Table 35 Russian Federation: growth of imports from principal trade partners for product group
“Optical, photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................ 49
Table 36 USA: growth of imports from principal trade partners for product group “Optical, photo,
medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ........................................................... 50
6 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 37 Leading export markets for product groups and a share of the total global imports .......... 52
Table 38 Leading export markets and the position of Bulgaria (medical and other instruments) ..... 52
Table 39 Leading export markets and the position of Bulgaria (precision measuring equipment) ... 52
Table 40 Leading export markets and the position of Bulgaria (apparatus for auto tuning and
control) ............................................................................................................................................... 53
Table 41 GDP per capita at market prices, expressed in PPS (euro). ................................................ 56
Table 42 Main economic indicators for Germany and its bilateral trade relations with Bulgaria ..... 57
Table 43 Price levels of some products in product group 90, imported by Germany ....................... 58
Table 44 Main economic indicators for Belgium and its bilateral trade relations with Bulgaria ...... 59
Table 45 Price levels of some products in product group 90, imported by Belgium......................... 60
Table 46 Main economic indicators for France and its bilateral trade relations with Bulgaria ......... 61
Table 47 Price levels of some products in product group 90, imported by France ........................... 62
Table 48. Main economic indicators for Italy and its bilateral trade relations with Bulgaria ........... 63
Table 49 Price levels of some products in product group 90, imported by Italy ............................... 64
Table 50 Main economic indicators for Austria and its bilateral trade relations with Bulgaria ........ 65
Table 51. Price levels of some products in product group 90, imported by Austria.......................... 66
Table 52 Main economic indicators for Turkey and its bilateral trade relations with Bulgaria ........ 69
Table 53 Main economic indicators for the USA and its bilateral trade relations with Bulgaria ...... 70
Table 54 Main economic indicators for China and its bilateral trade relations with Bulgaria .......... 71
Table 55 Main economic indicators for Russia and its bilateral trade relations with Bulgaria ......... 73
Table 56 Main economic indicators for Japan and its bilateral trade relations with Bulgaria ........... 75
Table 57 SWOT analysis ................................................................................................................... 78
Table 58 Output data: financial analysis of 11 SMEs from the sector “Manufacturing of medical,
precision and optical apparatus and instruments”, (BGN thousand) ............................................... 105
Table 59 Net profit margin coefficient ............................................................................................ 106
Table 60. Return on Equity (ROE) ratio .......................................................................................... 107
Table 61 Return on Assets (ROA) ratio ........................................................................................... 108
7 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 62 Efficiency ratio indicator .................................................................................................. 108
Table 63 Financial autonomy ratio .................................................................................................. 109
Table 64 Indebtedness ratio ............................................................................................................. 110
Table 65 Liquidity radios ................................................................................................................. 111
Table 66. Location of the SMEs in the sociological survey ............................................................ 116
Table 67. Distribution of the surveyed enterprises according to the number of employees in 2011
.......................................................................................................................................................... 116
Table 68 Annual turnover of the surveyed enterprises .................................................................... 116
Table 69 Priority measures for promoting SMEs in the sector ........................................................ 117
Table 70 Assessment of the abilities and knowledge of employees in the surveyed SMEs ............ 121
Table 71 Changes in turnover of SMEs for the period 2008 – 2011 (basis 2007 = 100 %) ............ 121
Table 72 Number of SMEs according to the share of self-sustained exports for 2007 – 2011 ....... 123
Table 73 Table 73. Evaluation of the importance of barriers (obstacles) to SME and overall sectoral
export efforts for 2007 – 2011 (in %) .............................................................................................. 124
Table 74 Evaluations of the respondents to the degree of importance of factors tied to export
success (in %)................................................................................................................................... 126
Table 75 Potential markets, according to the managers of the surveyed SMEs .............................. 129
Table 76. Changes in export performance of the enterprise in the next 5 years (in %) ................... 131
Table 77 Frequence of use of some information sources (in %) ..................................................... 131
Table 78 Evaluation of the effect on the SME export performance of the services provided by the
BSMEPA (in %)............................................................................................................................... 132
Table 79 Share of exports carried out via web-sites (in %) ............................................................. 134
8 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
List of Graphs Included:
Figure 1 Production indexes in sector С26: Manufacturing of electrical and optical equipment
(before 2008) ...................................................................................................................................... 17
Figure 2 Production indexes of medical, precision and optical equipment (before 2008) ................ 18
Figure 3 Leading 5 importers of Bulgarian manufacturing production from sector 90 by STC of ITC
(optical, photo, technical, medical etc. apparatus) for the period 2001 - 2010 .................................. 34
Figure 4 General graphic outlook of growth trends in exported values in production group „Optical,
photo, technical, medical, etc. apparatus” (ITC code 90) .................................................................. 44
Figure 5 Indexed GDP per capita in PPS for leading export markets (EU-27=100) ......................... 55
Figure 6 Indexed comparative price levels for the leading export markets ....................................... 56
Figure 7 Average change in turnover within the surveyed companies by years (in %) .................. 122
Figure 8. Export markets for SMEs in the survey............................................................................ 127
Figure 9. Percentile distribution of exports according to the number of export markets ................ 128
9 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Abbreviations used:
BAEI Bulgarian Agency for Export Insurance
BCCI Bulgarian Chamber of Commerce and Industry
BIA Bulgarian Industrial Chamber
BICM Bulgarian Industrial Chamber of Machine-building
BSMEPA Bulgarian Small and Medium Enterprise Promotion Agency
EC European Commission
EU (EU-27) European Union (EU’s 27 Member States)
GDP Gross Domestic Product
ITC International Trade Centre (Genève), a joint agency of the UN
MEET Ministry of Economics, Energy and Tourism
MEYS Ministry of Education, Youth and Science
MLSP Ministry of Labour and Social Policy
NAVET National Agency for Vocational Education and Training
NGO Non-governmental organisation
NSI National Statistical Institute
OP Operational Programme
OPC Operational Programme Competitiveness
OP HRD Operational Programme Human Resource Development
OPRD Operational Programme Regional Development
PESTEL Political, economic, social, technological, ecological and legal macro analysis
SME Small and medium enterprises
SP Sectoral Programme
STC Standard Trade Classification
SWOT Strengths, weaknesses, opportunities, threats analysis
UN United Nations
10 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
SITUATIONAL ANALYSIS AND DEVELOPMENTS WITHIN THE
INDUSTRIAL SECTOR IN BULGARIA
According to current data small and medium enterprises in Bulgaria represent 99.7% of all
the active enterprises in the non-financial sector (with a similar 99.8% among Member States of the
EU). Perceivably a frequent emphasised priority for the executive and legislative authorities on a
national and European level, traditional economic analysis and policy in their support are marked
with a clear shift in the tone, recommendations and overall intensity in the last three years. The
underlying reason is comprehensible: the global financial – and consequently almost ubiquitous
economic – crisis that has unfolded.
It is quite natural that the new range of industrial and market indicators required imminent
short-term corrective measures. Just as it is necessary to plan accordingly for mid- and long-term
perspectives.
Not infrequently we have heard the opinion of leading experts that the crisis could represent
a chance for Bulgaria. In order to stand a chance for a long-term growth of the entire industry a
specific national comparative advantage needs to be located. And in the absence of one (or an
insufficiently pronounced one) what could be done is to invest in the programmed development of a
comparative advantage of production which could stimulate the overall competiveness of the
Bulgarian economy. A large portion of its growth could be built around the identified spheres and
industrial branches. With an appropriately developed legislative, political and institutional
framework the creation of new and promotion of existing enterprises in the priority manufacturing
sectors could improve significantly the position of small and medium enterprises on the
international markets. Such a policy of stimulated competitiveness needs to stand out especially in
the industrial sectors with higher added value of production and labour productivity, with high-
technological branches of the manufacturing industry being among the most suitable.
Since the very beginning we turn out attention to the manufacturing industry, not only
because it (and a specific branch of it!) is the subject of our analysis, but also because the basis of
the export potential of the country – which in turn statistically represents the true driving force
behind national GDP creation – is formed namely by the manufacturing industry. It corresponds on
11 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
an average annual level to about 60% of the entire production volume in Bulgaria and about 18% of
the added value.
However, available data shows that this productivity still represents one of the lowest
percentages within the EU. Even compared to the newer Member States.
Table 1 Value added in the manufacturing industry (%)
2000 2001 2002 2003 2004 2005 2006 2007 2008
EU-27 25.5 25.0 / 25.5 28.53 27.95 27.19 26.88 /
Bulgaria / 18.4 18.4 19.5 19.7 19.9 / 20.8 17.9
Data source: Eurostat
The subject of our in-depth analysis – sector C26 of the STC-2008, “Manufacturing of
computer and communication equipment, electronic and optical products” and its subsector in
particular, “Manufacturing of medical, precision and optical apparatus and instruments” – are
emphatically high-technological in their nature, depending essentially on a knowledge-based
economy, research and technological know-how, investments in contemporary equipment and
innovative development.
We should start by pointing out that in none of the 28 administrative districts of the country
sector C26 falls within the leading five economic activities, irrespective of the number and size of
the enterprises. And as a whole the Bulgarian manufacturing industry is characterised by a
relatively low rates of added value of production and it falls behind in its technological support and
modernisation of the manufacturing processes.
Even as the share of high-technological exports of the Bulgarian industry has shown a
considerable rate of growth in the last 15 years, the following data sets show that it still stays near
the bottom end of the rankings among EU-27 countries – both in its export within the EU and
towards third countries – with such percentages that are only comparable to those of Latvia and
Lithuania (and only recently with some of the countries most severely affected by the crisis such as
Portugal and Spain).
12 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 2. High-technological exports (intra ЕU-27), % of total exports by Member States
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Belgium 5,5 6,3 6,3 6,4 7,8 8,6 8,7 7,4 7,3 7,1 6,9 6,2 6 6,2 7,8
Bulgaria n/a 2,9 2,7 2,2 1,9 1,6 1,5 2,3 2,5 2,2 3,1 4 3,7 3,6 4,1
Czech Rep. 4,6 5,3 6,4 7,3 6,9 6,5 8,4 11,3 11,5 12,9 10,7 11,9 13,2 13,4 14,3
Denmark 8,1 9,1 9,9 11 12,8 12,2 11,9 13,4 11,6 11,2 12,9 10,6 9,5 8,3 9,1
Germany 10,8 10,8 11,9 12,8 13,3 15,2 14,4 14,2 13,5 14,1 13,4 13 11,8 11,4 12,9
Estonia 4 7,2 7,9 10 11,4 28 19,3 11,1 10,5 10,8 11,7 8,1 9,4 8,8 7,8
Ireland 32 37,4 35,6 34 40,2 42,8 43 36,1 29,9 27,9 27 27 23,8 21,1 18,4
Greece 3,4 3,4 3,4 4,2 5,3 7,4 6,8 6,2 7,6 8,7 7,3 7,2 5,4 5,2 5,5
Spain 4,5 4,9 4,5 4,6 5,4 5,8 5,7 5,3 5,4 5 5,1 4,6 3,9 3,6 4
France 10,6 11,6 12,7 13,3 18,4 21,1 21,2 18,3 17,1 16 12,6 14,2 12,2 13,1 16
Italy 6,8 6,8 6,8 6,9 6,9 8 7,8 7,2 6,1 6 6,2 5,6 5 4,8 5,4
Cyprus 2,5 2,4 2,6 2,5 2,7 2,8 3,4 3 3,8 14,1 36,4 23,5 16,4 23,8 23,5
Latvia 1,6 2,7 2,6 1,3 2 2 1,5 1,5 1,7 2 2,4 3,1 3,3 4 4,8
Lithuania 1 1,4 1,7 1,9 1,8 2,1 2,6 2,1 3,3 2,4 2,7 4,8 8,4 6,2 6,2
Luxembourg n/a n/a n/a n/a 16,2 21,8 29,7 25,7 31,1 31,9 40,7 42,8 34 36,8 42,5
Hungary 4,8 4,1 16,1 16,5 17,4 21,5 20,7 21,3 21,8 20,6 17,2 17 17,3 15,9 18,7
Malta 56,6 41 39 41,7 36,6 34 41,4 35,1 35,9 38,4 35,4 41,7 33,1 28,3 28,4
Netherlands 13,5 15 19,9 19,1 21,4 22,7 21,8 18,3 18,2 18,7 20 17,8 17,8 15,9 18,2
Austria 7,4 7,4 9,1 9,4 10,1 12,2 13 13,9 14,2 13,8 10,7 10,1 9,9 9,4 10
Poland 1,5 1,8 1,5 1,7 1,8 1,9 2,3 2 2,4 2,4 2,9 2,7 2,7 4 5,4
Portugal 4 2,4 2,7 2,9 4,1 3,7 4,9 4,2 4,4 4 3 2,9 2,5 2,6 2,6
Romania 1,1 1,1 0,8 1,4 3,1 5,7 5,7 3,3 2,9 3,1 3,4 4,2 3,7 5,8 8,2
Slovenia 2,4 2,5 2,7 2,9 2,9 3,4 3,1 3,1 3,2 3,4 2,7 3,1 2,9 3,8 4,3
Slovakia 2,4 2,5 2,9 3 3,3 2,6 3 2,5 3,4 4,7 6,2 5,7 4,8 5,2 5,8
Finland 12,1 13,1 15,6 19,2 19,7 22,3 18,5 19,1 16,4 12 14,6 13,8 14,2 16,2 13,5
Sweden 9,7 11,4 12 13,2 14,8 14,3 9,4 9 9,3 10,2 10,5 10,5 10,2 8,8 10,6
UK 21,1 20,8 19,7 23,5 26,8 28 29,7 30 23,5 20,9 20,2 28,9 13,7 12,6 14,5
Data source Eurostat
Last update 30.09.2011
Explanation Percentages given represent share of high-technological production out of the total national exports. High-tech
products hereby include (except sector C26) product groups such as space apparatus, chemical and nonelectric
machines, military equipment.
13 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 3. High-technological exports (outside of ЕU-27), % of total exports by Member States
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
EU-27 15,7 15,7 16,5 18,1 20,4 21,4 21,2 18,9 18,6 18,5 18,7 16,6 16,1 15,4 16,9
Belgium 6 6 6,2 7,3 7,9 9 9,8 7,8 7,7 7,1 7,5 8,1 8,7 8,9 11,7
Bulgaria n/a 1,9 1,9 1,5 1,5 1,7 2,2 3 3,7 3,2 2,6 2,3 3,2 3,5 5,5
Czech Rep. 7,2 12,9 11,1 10,7 14,6 15,3 13,4 18,3 18,3 18,5 17,3 17,8 19,7 18,1 20,5
Denmark 11,9 11,6 14,7 13,6 16,6 19,7 18,7 18,7 17,9 18,3 19,5 18 16,8 16,3 18,9
Germany 13,2 13,3 13,6 14 15,8 17,6 18,3 16,8 17,1 17,7 17,3 16 15,2 14,2 15,9
Estonia 4,1 3,8 2,6 3,1 3,7 3,6 7,4 4,3 4,2 6,8 5,3 7,9 4,1 4,6 4,9
Ireland 35,3 40 41,7 44,2 37,7 36,5 36,8 33,9 29,9 31,1 34 32,5 29,1 29,7 27,8
Greece 2,2 2,4 2,5 5,6 5,7 7,6 5,2 7,1 7,4 4,2 3,7 3 3,6 6,8 8,5
Spain 9,5 9,1 7,8 7,9 7,6 7,9 7,3 7 7,3 7,6 7,1 5,8 5 5,5 6,2
France 23,9 21,8 25,2 27,9 34,4 33,5 33,5 28,5 27,9 27,9 30,4 24,9 25,2 25,6 26
Italy 8,4 7,9 7,2 8,2 8,7 9,5 9,9 9,8 8,8 8,9 8,1 7,6 7,5 7,6 8,6
Cyprus 9,2 8,7 2,6 3,6 5,9 3,4 4,8 4 4,8 19,6 18,5 16,3 10,2 8,5 13,2
Latvia 4,9 3,8 5,7 4,9 3,4 3,2 5 4,8 6,7 7,2 6 7,1 8 6,1 6,4
Lithuania 3,3 2,9 2,8 2,2 2,9 3,9 3,9 3,2 2,5 3,4 4,2 4,4 5,5 7,1 5,2
Luxembour
g
n/a n/a n/a n/a 7,3 12,7 14,2 17,1 17,2 6,9 14,5 22,9 20,6 23,7 37
Hungary 4,7 4,2 5,7 18,5 30,3 31,4 20,3 22,3 25,1 28,2 30,2 33,1 36,7 35,9 35,4
Malta 57,5 70,1 62,3 72 74,1 80 76,6 75,9 74,1 71,1 62,2 66,8 62,1 58,9 56,9
Netherlands 19,7 22,6 18,1 27,2 24 23,2 24,3 20,5 21,4 20,7 21,1 20,2 20 17,2 19,1
Austria 9,2 9,1 11,4 11,5 17,5 19,6 19,6 21,2 18,9 17,3 18,3 14 14,4 14,5 16
Poland 4,1 3,8 3,4 4,7 4,3 6,9 4,5 4,4 4,3 4,1 4,4 4,7 4,3 5,1 7
Portugal 6,9 9,2 7,8 6,9 6 14 15,8 16 20,6 21,7 22,1 21 21,1 17,2 6,8
Romania 3,2 1,9 1,2 1,7 2,1 1,8 2,7 2,4 4,6 2,9 2,4 3 3 4,4 8,1
Slovenia 5,6 7,8 6,6 7,1 6,1 7,2 8,9 8,7 11,4 9 7,6 8,1 8,6 8,2 8,3
Slovakia 7,8 8,7 6 6,6 5 4,9 4,9 3,9 3,7 4,8 8 6,9 6 5,4 5,9
Finland 12,8 14,5 16,7 18,5 22,5 25,5 25,1 23,8 26,9 25,8 30,2 23,9 21,9 18,7 14,4
Sweden 18,1 18,9 20,7 21,4 23 25,3 21,2 20,4 18,6 19,7 19,5 17,8 19 20,2 20,7
UK 24,4 24,5 26,7 26,1 28,2 30,2 30 26,4 25,8 25,6 24,8 22,3 20,8 18,5 22,7
Data source Eurostat
Last update 30.09.2011
Explanation Percentages given represent share of high-technological production out of the total national exports. High-tech
products hereby include (except sector C26) product groups such as space apparatus, chemical and nonelectric
machines, military equipment.
14 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Again according to Eurostat data in the rankings of most specialised countries (by
value added) in different sectors of the manufacturing industry, Bulgaria stands out as the second
most specialised in textile, leather and shoe manufacturing (after Romania). While in the sector
“Electrical equipment, optical and precision apparatus” the leading in such specialisation are
countries such as Finland and Hungary, and volume-wise the rankings are topped by Germany and
France. In Bulgaria the most significant industries in terms of value added and specialisation ratings
are construction and media/communications (volume-wise, and as we can see – not even
manufacture related), and at the same time our specialisation falls on textile and leather industries,
as well as network supply of energy. The second one also not manufacture related. We can clearly
outline the lack of priority development in high-technological sectors.
Crucial in such a set of circumstances is the retardation in this respect of SMEs (although
this regards a general trend in apparent differences with larger enterprises within the EU-27). C26 is
the third most important European manufacturing sector in terms of value added (after basic metals
and metallic products, followed by petroleum and chemical products) but the Electric, electronic,
precision and optical equipment is characterised by relatively large enterprises that achieve a
higher-than-average productivity. Datasets validate this trend before the crisis, just as they do
nowadays.
In Bulgaria during the years of continuous and stable growth, before the crisis – with 2005
being a peak year among most of the industries – we notice that C26 is among the sectors that fall
behind in their growth prospects. To be more specific, the data for the manufacturing of “medical,
precision and optical apparatus and instruments” according to the NSI corresponds to 0,6% of
overall manufacturing industrial output, creating 0.9% of the value added and providing 1,0% of all
employment in the non-financial sector. The gap from the main EU competitors is considerable –
just as a comparison, the average value of the 27 countries points to a share of 2,1% of the
manufacturing industry.
15 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 4. Investment in industrial sector „Manufacturing of medical, optical and other precision equipment”
in the years of economic growth
All types of enterprises
2003 2004 2005 ЕС27 (2005)
Share of exports in overall sales (%) 13.7 29.2 42.4
Share of added value of production (%) 25.5 26.8 30.6 43.2
Gross investment in durable assets (million euro) 7.1 6.9 7.0
Gross investment in machinery and equipment (million euro) 5.8 4.4 4.3
Investment coefficient (gross investment/value added, %) 38.9 28.3 24.5 7.2
R&D expenditures (million euro) 0.1 0.4 0.4
Profit rate (%) 8.6 10.4 13.3 13.4
Share of gross operating excess in value added (%) 36.7 43.2 46.8 33.2
Data source: NSI
The above table illustrates the efforts of owners and upper management of the
enterprises to make up for the perceivable disparity in the creation of added value which is among
the dominant characteristics of high-technological production. Any decent indicators of investment
intentions (with an emphasis on the inverse relation with the increasing added value) are limited
primarily on durable assets, such as machinery and equipment. A policy which would have effect
on said differences in the immediate production processes, technology support and peripheral
activities. On the other hand to influence the potential and perspectives for a sustainable growth in
competitiveness undoubtedly one needs investment in R&D, namely where committing any
resources is thought apparently not so pressing and/or impossible at the moment in time. Existing
alternatives – license purchase, royalty payments, sub-contracting functions with leading
technological developers – are all valid strategical solutions for raising the general competitiveness
and the key importance of innovative development that is characteristic of the sector in question.
In order to gain an insight into some numerical outlines of the general state of sector
C26 “Manufacturing of computer and communication equipment, electronic and optical products”,
the more narrowly defined economic activity “Manufacturing of medical, precision and optical
apparatus and instruments” and their development trends in the last decade, we will present some
dynamic time series of publicly available statistics that will be analysed and will render an account
of the principal and most influential recent tendencies.
16 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 5. Employees by industrial sector and activity (for all sizes of enterprises, by the IV quarter of the corresponding year) – number
Data source: NSI
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
IV IV IV IV IV IV IV IV IV IV IV III*
Industry – overall 643196 645125 663646 679574 688588 695998 714024 690367 671191 598506 577821 570720
Manufacturing industry 546711 552903 572683 590329 601798 611713 631383 608842 592591 521642 502047 496418
Manufacturing of computer
technologies, electronic and
optical products
12846 11797 11326 11273 11485 11981 12727 11432 10725 9407 9248 7976
Structure (%)
Industry – overall 100 100 100 100 100 100 100 100 100 100 100 100
Manufacturing industry 85 85,7 86,29 86,87 87,4 87,89 88,43 88,19 88,29 87,16 86,89 86,988
Manufacturing of computer
technologies, electronic and
optical products
2,00 1,83 1,71 1,66 1,67 1,72 1,78 1,66 1,60 1,57 1,60 1,40
Manufacturing industry 100 100 100 100 100 100 100 100 100 100 100 100
Manufacturing of computer
technologies, electronic and
optical products
2,35 2,13 1,98 1,91 1,91 1,96 2,02 1,88 1,81 1,80 1,84 1,61
17 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 6. Industrial production indexes – seasonally adjusted (by the month of December of the
corresponding year) 2005 =100
year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
by month XII XII XII XII XII XII XII XII XII XII XII X*
Industry – overall 83,2 81,3 83,9 95,7 110,1 117,6 117,7 124,7 114,1 100,2 106,9 105,8
Manufacturing industry 70,6 66,2 74,6 89 106,2 115,6 123,2 122,3 109,8 93,9 103 106,3
Manufacturing of computer
technologies, electronic and optical
products
79,5 104,8 154,3 111,8 102,6 190,6 103,4 113,8 108,2 137,2 155,9 120,1
Data source: NSI
Figure 1 Production indexes in sector С26: Manufacturing of electrical and optical equipment
(before 2008)
Data source: Eurostat
Such trends are easily comparable to the data about the growth in production in our specific
area of interest “Manufacturing of medical, precision and optical apparatus and instruments”:
18 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Figure 2 Production indexes of medical, precision and optical equipment (before 2008)
Data source: Eurostat
As we can observe in the presented tables and graphs, regardless of the phases of current
economic development the analysis of the data shows a relatively stable (even if gradual and not
always consistent) and lasting increase in the production indexes, with the main tendency being that
fewer and fewer employees prove sufficient to maintain and even expand current levels of industrial
production in the sector.
One logical explanation of the presented statistics could be found in the increased average
labour productivity per employee, as well as the overall manufacturing productivity in the sector.
And indeed, the data confirms trends which speak of growing average productivity – with generally
all manufacturing enterprises presenting figures that relate proportionally to those of the SMEs
alone.
Table 7. Main economic performance indicators for the manufacturing industry in the timeframe
2008 - 2010
Class 2008 2009 2010
Number of enterprises – total 30 288 32 177 30 709
Out of which: SME 29 943 31 860 30 409
Turnover – BGN thousands 50 101 369 38 575 825 43 088 856
Out of which: SME 21 062 250 17 444 821 17 754 591
19 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Value added (according to factored costs)
BGN thousands
8 366 976 7 595 046 8 053 188
Out of which: SME 4 843 129 4 235 655 4 196 679
Employees – number 639 060 577 450 538 435
Out of which: SME 433 924 397 161 367 468
Labour productivity – BGN thousands 13,1 13,2 15,0
Out of which: SME 11,2 13,2 15,0
Data sources – NSI and Eurostat
For small and medium enterprises in sector C26 “Manufacturing of computer and
communication equipment, electronic and optical products” and accorgindly in the segmented
economic activity “Manufacturing of medical, precision and optical apparatus and instruments”,
after all, the change in the above discussed indicators appears to have been even less positive during
the crisis years.
According to Eurostat data:
Table 8. Productivity, value added and employment provided by SMEs in sector С26 (2008 - 2009)
2008 2009
Number of SMEs in sector С26 391 383
Labour productivity (€, thousands) 9,4 8,8
Value added as a share of manufacturing industry (%) 2,2 1,9
Share of employment provided by the manufacturing industry 1,6 1,5
Data sources –Eurostat
Taking note of the practically inconsiderable differences with the data provided by the NSI
for the same period, the trend that has confirmed itself is one of stagnation and lowered general
productivity in SMEs in the sector. At least until 2010 when amidst the continually falling
employment numbers we begin to notice an increase in value added, with the corresponding higher
average labour productivity in those same SMEs. If they continue to report lower export volumes
but higher total turnover for the sector, only a stabilised internal market demand could contribute to
offsetting the negative trends in export performances.
Table 9. Turnover indexes of domestic (Bulgarian) industrial sales 2000 – 2011 (by the month of
December of the corresponding year) 2005 = 100
year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
by month XII XII XII XII XII XII XII XII XII XII XII X*
Industry – overall 83,6 87,7 104,7 94,8 114,9 126,7 142,7 168,9 178,1 150,0 161,4 155,5
Manufacturing industry 75,7 75,6 82,5 88,8 110,0 122,4 144,0 155,7 157,4 135,6 136,9 139,5
20 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Manufacturing of computer
and communication
equipment, electronic and
optical products
82,3 105,9 154,7 130,2 108,5 219,9 120,5 124,7 116,5 108,9 143,0 71,1
Data source: NSI
Domestic market turnover figures confirm the peak 2005 in relation to the overall
growth that is characteristic of the decade, with the considerable decrease in 2008 and 2009 and the
relative “recovery” in 2010. What really stands out within the datasets is the difference with the
general industrial turnover indexes – lower values almost throughout and especially after 2005
when it is even more pronounced in comparison with the average numbers of the manufacturing
industry as a whole. We can find confirmation of the recovery trends in domestic market turnover
for 2010 but that can be attributed to a number of factors, amongst which we can also cite the
average price indexes reported by the manufacturers:
Table 10. General price indexes reported by manufacturers (by December of the respective year),
2005=100
year 2004 2005 2006 2007 2008 2009 2010 2011
by month XII XII XII XII XII XII XII XI*
Industry – overall 93,9 105,2 114,2 125,9 126,2 127,3 142,8 149,5
Manufacturing industry 93,9 104,8 112,2 123,3 117,6 121,5 135,9 142,9
Manufacturing of computer equipment,
electronic and optical products
95,1 104,8 106,9 105,1 106,5 103,8 110,5 110,8
Data source: NSI
Given the higher average production value (which hers does not show a leading role
typically attributed to a high-technological segment and lags behind in its growth compared to the
manufacturing industry as a whole) we cannot be sure whether this is due to the rise in the quality
of produced goods, or merely to the higher raw material, energy and overall production prices.
What we can me more tempted to affirm, however, is that if we aim at achieving a strategic
and long term development and growth of a high-technological manufacturing sector with
aspirations to global competitiveness, then domestic consumption can merely represent a temporary
and short-lived “remedy”. Objectively speaking, expectations of a sustainable growth of the
industrial sector in question are related mostly to improved indicators in the exported production
21 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
and ever higher added value, both of which should be able to assure conditions for growth and
development of the enterprises in the sector.
Table 11. Main economic performance indicators for SMEs in sector С26 for 2009
Trade sector
(STC-code)
Enterprises Turnover
Value added
(according to
factored costs)
Employees Exports Labour
productivity
BGN thousand Number BGN thousand BGN thousand
26 389 321139 99235 5467 240243 18,2
26.1 104 102265 18545 1366 113535
26.11 69 90415 12064 858 82050
26.12 35 11850 6481 508 31485
26.2 34 19881 5717 308 6819
26.3 82 44166 18524 994 18064
26.30 82 44166 18524 994 18064
26.4 16 6792 confidential 272 confidential
26.5 109 99853 34672 1820 60722
26.51 105 96433 33271 1776 60722
26.52 4 3420 1401 44 none
26.6 12 confidential confidential 102 confidential
26.7 23 13809 6878 570 6643
26.8 9 confidential confidential 35 confidential
Table 12. Main economic performance indicators for SMEs in sector С26 for 2010
Trade sector
(STC-code)
Enterprises Turnover
Value added
(according to
factored costs)
Employees Exports Labour
productivity
BGN thousand Number BGN thousand BGN thousand
26 363 452104 143744 5254 159772 27,4
26.1 96 158629 37085 1418 55488
26.11 60 142610 28822 799 25084
26.12 36 16019 8263 619 30404
26.2 35 25875 7860 385 4518
26.3 67 92716 35875 1170 16663
26.30 67 92716 35875 1170 16663
26.4 21 9906 4256 317 confidential
26.5 104 97258 35485 1276 35598
26.51 98 94245 34232 1220 confidential
26.52 6 3013 1253 56 confidential
26.6 6 confidential 18446 140 confidential
26.7 29 20997 3150 524 8302
26.8 5 confidential confidential 24 confidential
The data is elaborated according to Structural Business Statistics methods – NSI
22 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The above tables show specific data for the analysed industrial sector
“Manufacturing of medical, precision and optical apparatus and instruments”. It encompasses codes
26.5 “Manufacturing of devices and apparatus for measuring, testing and navigation; manufacturing
of watches/clocks”, 26.6 „Manufacturing of emitting electromedical and therapeutic apparatus”,
26.7 „Manufacturing of optical devices and elements, and photographic equipment” and 26.8
„Manufacturing of magnetic and optical storage media, non-recorded” (according to STC-2008).
The total number of small and medium enterprises decreases from 153 to 144. This holds true also
for the number of employees (from 2527 to 1964).
In the sectors where we have access to all relevant information regarding turnovers,
exports and value added we can see that the previously defined trends confirm the conclusions
made about the overall state of sector C26 “Manufacturing of computer and communication
equipment, electronic and optical products” – maintaining stable turnovers and value added (given
she decrease in employment provided) with a relative reduction in export values for 2010.
Data for the sector development in the last decade on the other hand also describes another
stable trend for the period in question – an almost uninterrupted increase in the share of exported
production out of the total volumes manufactured: from barely 13,7% in 2003 to 42,4% in 2005, to
the considerable 74,8% in 2009. This undoubtedly emphasises the dominant export orientation of
most enterprises in the sector. (Given the fact that Bulgaria’s main trade partners for this type of
production are Euro-zone countries we can comprehend the net drop in overall exported value by
33,5% in 2010). After what we perceive has been an essential re-orientation in the trade strategies
of the enterprises in the sector, nowadays the share of exports (out of the total sales) has exceeded
the average percentage that is reported by the manufacturing industry and as such we can definitely
count this orientation not as a trend but as a characteristic trait of the sector. In the subsector within
sector C26 “Manufacturing of computer and communication equipment, electronic and optical
products” that is the subject of our more narrow analysis (medical, optical, precision) the enterprises
with micro and small sizes are the more frequently reported ones. General economic and market
changes affect more profoundly their stability and the precarious demand of the recent years on the
global markets, as well as the difficulties in entering and re-positioning, are a more than expected
consequence and proof of their vulnerability. All of this stresses the importance and need of a long-
term strategic orientation of the sector to sustainable models of development and an accent on the
innovative character of this type of production.
23 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
A more in-depth analysis of the structure, trends and the product groups included in the
exported production is available further down in the present Annexes.
In the above-described definitive “re-orientation” to the export markets (and the inevitably
increased quality requirements) Bulgarian SMEs from the sector report a slow but stable growth in
the share of produced added value. Reaching 30,6% in 2005, this percentage is considerably higher
than the average one produced by the Bulgarian manufacturing industry. And after a period of
relative stagnation we record values of 30,9% in 2009 and 31,8% in 2010. Thus, however, we
confirm the previously mentioned gap with EU manufacturing performances by roughly 10% on all
average yearly indicators during the decade. The necessary stable improvement in the ratio value
added to production manufactured could position more successfully Bulgarian enterprises on the
global markets; but for that to happen we need a lasting and systematic improvement of the
technological, but above all of the innovative and R&D support of the manufacturing process.
With view to achieving this technological and ideological development of the sector, the
enterprises need to plan for certain investment expenditures. Despite some hardship in finding
specific investment data for the subsector in question, general data for sector C26 “Manufacturing
of computer and communication equipment, electronic and optical products” reveals investments
(both in fixed assets and R&D) that peak in 2007, a significant decrease in 2008 and 2009, with a
slight stabilisation in 2010. When funds and resources are insufficient within the enterprises
themselves of course, partnering with foreign companies and attracting direct foreign investment in
the necessary areas are both valid and inviting scenarios for small and medium enterprises. (The
capabilities of the SMEs themselves in investing in fixed assets alone are manyfold smaller.) Here
also we have NSI data that shows for the entire sector “Manufacturing of computer and
communication equipment, precision and optical products” a considerable stagnation in direct
foreign investment in the enterprises: € 62,13 million for 2008; € 60,92 million for 2009 and €
68,48 million for 2010 – compared to levels of € 193,67 million for the same category of
manufacturing according to data for 2007.
The intensity of investment in the industrial sector in question may be lower than the
average reported by the manufacturing industry in general due to the absence of heavy machinery
and extensive production facilities; what is relied upon is labour-intensive activities and the related
advantages deriving from lower labour costs. Undeniably however, the trend that speaks of lower
24 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
shares of expenditures in acquiring equipment – and especially the extremely low investment in any
type of intellectual and innovative technological developments – is among the serious problems that
enterprises have to solve in terms of their mid- and long-term prospects of development and
competitiveness improvements. At the present such a comparative advantage (based purely on
labour-intensiveness and occasional import of contemporary equipment that may cover basic
existing criteria) could have its role and weight in forming the present export positions of the SMEs
in the sector. But with the continuous growth of labour costs – when factoring in all social security
allowances and deductions, tax-related and other perceivable negative fiscal burdens (especially
having in mind the overall European state of public debt) – such manufacturing needs to become
more capital-intensive in order to survive.
This leads us to the impending need to define and access alternative sources of financing,
flexible financial engineering and strategic participation in joint partnerships and projects that share
expenditures leading to growth and investment in the necessary areas, and that ultimately give
access to diversified outside sources of financial support. In this case we mean principally the
European Operational and Structural Programmes, the Framework Programmes for science and
cooperation and innovation; but also various forms of production cooperation, as well as purely
financial instruments offered by specialised funds and European financial consortia such as the
apposite JEREMIE instrument, created in support of small and medium enterprises and functioning
since the end of 2011 in Bulgaria.
Increasing the presently set 2% that is appropriated for R&D-related financing in all of the
Bulgarian Operational Programmes combined would also represent a noticeable advance.
And as far as indicators for profitability (returns, profit, operating excess, etc.) there is an
applicable separate section on financial analysis of SMEs manufacturing medical, precision and
optical products.
Let us now turn our attention to some of the data for the regional distribution and
development of enterprises in the sector on a (both SMEs and large ones). According to MEET data
for 2011 the industrial sector manufacturing computer technology, electronic, optical and precision
products (C26) encompasses about 1,2% of the total industrial manufacturing in the country and
created roughly 1,4% of the added value in the industry. The salary levels in the sector are
considered average compared to national distributions: average monthly remuneration by the end of
25 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
2010 amounted to BGN 697 and the sector provided about 1,8% of the employment in the
manufacturing industry.
Actively producing companies in the sector are thought to be around 1200, with 363 of
them considered SMEs by the end of 2010. Almost half of all the enterprises are situated on the
territory of the South-West and South-Central planning region (NUTS II level). As we mentioned
earlier, the total number of SMEs for the specifically defined and analysed sector of interest is 144
by the end of 2010; however we do not have data for the regional distribution of these enterprises.
Human resource development for the sector is supported as a result of the functioning 20
higher education institutions ,121 professional secondary-school institutions and 7 private colleges.
For micro, small and medium enterprises manufacturing computer, electronic, optical and
precision products (coinciding with sector C26 according to STC-2008) we have the following data
by Eurostat on their regional distribution:
Table 13 Number of SMEs in sector C26 by regions
2008 2009
Bulgaria (total) 391 383
North-West 23 21
North-Central 39 37
North-East 33 31
South-East 17 19
South-West 198 202
South-Central 81 73
Not overlooking the marginal differences in the data provided by Eurostat and the national
statistic sources (3 SME, most likely due to differences in statistical calculation methods), we can
clearly find confirmation in two of the anticipated trends.
The first one is that in the most-developed region in the country, the South-West, we have
the strongest presence – and accordingly the conditions – for development of a high-technology
manufacturing activity such as the one in question. The necessary human resources, material,
infrastructural and overall conditions and requirements for development of the enterprises reflects
26 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
on the extremely low sectoral activity and presence in the least developed Bulgarian (and according
to Eurostat data, in the entire EU) region: the North-West.
The other easily perceivable trend is that out of the 391 total SMEs in the sector at the
beginning of the crisis (2008) we have a drop to 383 in 2009, and according to NSI even 363 in
2010. Besides the overall decrease in the number of enterprises, we also have a sharp reduction in
the total employment provided by them:
Table 14 Employment by regions in SMEs within sector C26
Share of the sector in the total manufacturing employment Change in the number of
employees (%)
2008 2009 2008 - 2009
Bulgaria (total) 1,6 1,5 -16,5
North-West 0,5 0,6 -10,1
North-Central 1,1 1 -22,3
North-East 0,9 0,9 -14
South-East 0,2 0,2 -7,3
South-West 2,9 2,7 -15
South-Central 2,1 1,8 -18,6
Data source: Eurostat
Separate data for the SMEs divided according to their regional productivity, added value and
indexes of production and sales we do not have at our disposal, and we thing it highly likely that the
overall SME data from the sector will find their direct proportional statistical reflection in the
regional distribution of the same trends as well.
27 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
EXPORT ORIENTATION OF THE SECTOR
We now turn our attention to the export orientation of the Bulgarian manufacturing industry,
sector C26 “Manufacturing of computer and communication equipment, electronic and optical
products” and the medical, optical and precision production in particular.
A starting point will be some general data tracing the volume of exported goods and services
by the manufacturing industry in the last few years which are thought to confirm the analysis made
so far – a decrease in 2008 with a slight recovery in 2010:
Table 15 Total export of the Bulgarian manufacturing industry ($ million, at current prices).
Source: WTO
The stable growth in the exports of sector C26 “Manufacturing of computer and
communication equipment, electronic and optical products” goes along the same yearly trends, with
the last decade showing a decrease in the exported volumes at the end of 2008 and entire 2009. The
partial recovery concerns 2010, while in 2011 the Bulgarian manufacturing industry from the sector
has the opportunity to finally approach a zero trade balance, having in mind the increase in the
exported production compared to the lack of improvement in the domestic consumption of this
category of goods.
Table 16 Table 16. General data, foreign trade in sector С26 in the period 2000 - 2011
year Export FOB Import CIF Balance Trade volume
+/- % €
thousands
%share +/- % €
thousands
%share +/- % €
thousands
+/- % €
thousands
%share
2000 / 29 701 0,6 / 109 897 1,6 / -80 196 / 139 598 1,1
2001 17,9 35 023 0,6 38,0 151 654 1,9 -45,4 -116 630 33,7 186 677 1,3
2002 24,4 43 583 0,7 -1,9 148 813 1,8 9,8 -105 230 3,1 192 396 1,3
2003 22,5 53 371 0,8 5,6 157 113 1,6 1,4 -103 743 9,4 210 484 1,3
2004 19,4 63 748 0,8 25,8 197 705 1,7 -29,1 -133 957 24,2 261 453 1,3
2005 34,1 85 465 0,9 -0,9 195 903 1,3 17,6 -110 438 7,6 281 367 1,2
2006 60,0 136 740 1,1 20,9 236 834 1,3 9,4 -100 094 32,8 373 574 1,2
2007 30,7 178 672 1,3 9,1 258 287 1,2 20,5 -79 615 17,0 436 959 1,2
2008 10,0 196 507 1,3 24,6 321 716 1,3 -57,3 -125 209 18,6 518 223 1,3
For the year: 2006 2007 2008 2009 2010
Total global exports ($ million, at then current prices) 8039 10385 11587 8694 10369
28 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
2009 -9,1 178 586 1,5 -17,5 265 379 1,6 30,7 -86 793 -14,3 443 965 1,6
2010 28,5 229 453 1,5 -8,3 243 229 1,3 84,1 -13 776 6,5 472 682 1,4
2011* **33,0 217 860 1,5 **11,6 195 087 1,2 **304,9 22 773 **21,9 412 947 1,3
* data until September 2011 ** Compared to September 2010
Data sources: NSI and MEET
Similarly to the domestic consumption for the sector, we have a series of indexed data for
the turnover of exported production on the foreign markets by the industry as a whole, as well as the
sector in particular:
Table 17 Turnover indexes of export industrial sales 2000 – 2011 (by the month of December of the
corresponding year) 2005 = 100
year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
by month XII XII XII XII XII XII XII XII XII XII XII X*
Industry (total) 64,2 55,0 73,5 69,3 91,5 112,2 120,6 139,3 97,0 110,3 176,9 203,2
Manufacturing industry 60,4 53,7 73,0 68,5 91,9 110,1 119,8 140,0 98,3 113,8 180,0 205,7
Manufacturing of computer
and communication
technology, electronic and
optical products
77,8 83,7 114,0 64,1 94,9 111,0 124,0 127,5 121,4 155,6 335,6 238,0
Data source: NSI
A comparison of the domestic and export performance shows that consumption of such
high-technology goods ultimately has contracted more nationally and the enterprises in the sector
cannot maintain high turnovers merely by domestic sales. And while 2010 is marking a general
increase (for both domestic and exported volumes), recovery for the levels of sales on the global
markets is quite pronounced and reports exceptional indexed improvements according to Bulgarian
national statistics: from 155,6 during the crisis 2009 (naturally compared to the traditionally peak
industrial 2005); passing through turnover index values of 335,6 for 2010 (again at 2005=100); and
only in the first ten months of 2011 we record turnover indexes of 238. This data – given the not so
exceptional production and demand indexes globally – speak of a considerably improved
positioning of our enterprises that form the sector’s industrial activity.
Narrowing the present analysis to the exported Bulgarian medical, precision and optical
apparatus and instruments we notice the expected similar trends of growth until 2008, stagnation
(with a slight decrease) in 2009 and recovery in 2010.
29 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 18 Bulgarian exports – Medical, precision and optical apparatus and instruments 2001 - 2010
year amounts
(BGN thousands)
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
68484,0 114332,5 153731,1 150824,0 205425,3 303755,3 359473,4 395080,3 392529,1 479543,1
Data source: ITC, Genève
* Data for total sectoral exports does not include services
Despite improved turnovers and overall better performance of the enterprises in the analysed
industrial sector, the share of such a high-technological export within the Bulgarian manufacturing
industry remains at a secondary rate of importance – in the total manufacturing export for the period
2001-2010 the sub-sectoral share is under 1,5%. Compare it to basic manufacturing productions
such as fuel, chemical and distillation products, as well as the immediately following primary
copper and copper product manufacturing – we the two sectors combined report a share of over
23% of the total industrial export of Bulgaria in 2010. Such data allot high-technology production
sectors quite a low position in the priority rankings of the Bulgarian manufacturing industry.
Table 19 Share of the medical, precision and optical exports in the total industrial export for 2001 - 2010
Product category Share of total industrial export values, %, for:
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total industrial export, % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
For comparison:
Fuels, oils, distillation
products
8.97 6.01 5.81 7.99 10.38 13.28 14.71 16.06 12.59 13.29
For comparison:
Copper and copper items
5.88 5.56 6.05 7.33 8.84 12.74 10.02 10.51 8.82 9.98
Optical, photographic,
technical,
medical and precision
equipment
0.56 0.64 0.73 0.76 0.88 1.12 1.3 1.27 1.52 1.44
Data source: UN, ITC
Regarding specific values of the analysed export categories, according to the International
Trace Centre in Geneva (a joint cross-institutional UN agency) the data points to quite a modest
total value, keeping in mind that the following numbers include all categories of Bulgarian
30 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
enterprises that export “Optical, photo, technical, medical, etc. apparatus” – or, alternatively, code
90 under the nomenclature of the same institute.
Table 20 Value of exported medical, precision and optical apparatus for the period 2001 - 2010
Code/Sector Export values by years, € thousand
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total
industrial
export
5,703,749 6,077,625 6,660,502 7,983,158 9,426,235 12,021,319 13,551,132 15,282,366 11,832,901 15,519,394
'90. Optical,
photo,
technical,
medical etc.
apparatus
31,943 39,144 48,679 60,540 82,636 134,134 176,321 194,615 179,330 223,905
Data source: ITC (UN)
The latest data for 2011 is reported to be 278,420 (278 million) euro.
Going back to the precisely defined subject of this analysis – SMEs in the sector – it appears
that not many enterprises from this category export their production. Eurostat data, divided into
micro, small and medium Bulgarian enterprises which export their products and services (in turn
divided into intra and extra EU-27 exports) relates the overall situation in the sector.
Table 21 Number of Bulgarian micro enterprises exporting computer, electronic, optical and precision
products (С26)
year Within EU, number of enterprises Value
(Euro thousand) Outside of EU, number of
enterprises
Value
(Euro
thousand)
2008 22 1150 37 2065 2009 37 910 36 963
Data source: Eurostat
Table 22 Number of Bulgarian small enterprises exporting computer, electronic, optical and precision
products (С26)
year Within EU, number of enterprises Value
(Euro thousand) Outside of EU, number of
enterprises
Value
(Euro
thousand)
2008 42 32449 39 10589 2009 46 12291 37 7290
Data source: Eurostat
31 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 23 Number of Bulgarian medium enterprises exporting computer, electronic, optical and precision
products (С26)
year Within EU, number of enterprises Value
(Euro thousand)
Outside of EU, number of
enterprises
Value
(Euro
thousand)
2008 33 76715 32 60034
2009 25 50345 20 43544
Data source: Eurostat
Such statistics confirms our observations so far that outline a general decrease in the
exported production of SMEs from the sector in 2009 compared to 2008. And in two thirds of the
cases (exception made for newly created micro enterprises) the trend points to a loss in relative
competiveness and consequent closing of some small and medium exporting companies.
As a verification of the above-mentioned conclusions we shall present data from the NSI as
well for two specific product sub-groups; their total average decrease in value exported on the
international markets merely corroborates the difficulties that SMEs from the sector are
experiencing:
Table 24 SME export of specific product groups within „medical, precision and optical”
STC
code
section
number Product groups
SME
export,
2009,
(BGN
thousand)
SME export,
2010, (BGN
thousand)
Share of SME in the
total export of the
industrial sector,
2009, %
Share of SME in the
total export of the
industrial sector, 2010,
%
26.5 9,1 Meters, testing and navigation
apparatus; manufacture of clocks 60 722 35 598 15,47 9,07
26.7 9,4 Optical devices and elements and
photo- equipment 6 643 8 302 1,69 2,12
Data source: NSI
Below we present tables of dynamic data series for reported values of the most significant
Bulgarian export markets for industrial sector “Optical, photo, technical, medical etc. apparatus”
(ITC code 90).
32 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 25 A list of Bulgarian export markets for product group “Optical, photo, technical, medical, etc.
apparatus” (code: 90 by ITC, Geneva) – thousand Euro
Importers Exported
value in
2001
Exported
value in
2002
Exported
value in
2003
Exported
value in
2004
Exported
value in
2005
Exported
value in
2006
Exported
value in
2007
Exported
value in
2008
Exported
value in
2009
Exported
value in
2010
World 31,942.51 39,143.52 48,679.49 60,540 82,636.03 134,133.83 176,321.08 194,614.84 179,329.99 223,904.56
Belgium 1,723.22 1,725.33 3,566.89 4,880.79 22,548.78 56,292.55 80,130.23 83,315.39 65,727.1 85,001.95
Germany 7,469.5 7,662.51 9,941.89 15,320.11 15,119.77 18,772.94 22,125.22 30,193.63 26,244.95 34,228.81
Italy 3,512.24 4,278.45 4,988.17 4,777.08 5,445.69 5,954.36 7,098.34 7,550.28 7,216.97 15,749.08
USA 1,737.72 3,102.85 2,526.33 2,789.71 6,240.62 9,821.5 12,978.36 8,250.32 7,004.72 9,356.97
Russian Federation 448.37 307.64 323.3 485.59 830.26 745.09 1,156.31 1,762.34 9,072.66 7,902.03
Austria 1,806.87 3,145.14 3,019.23 4,534.29 4,384.17 5,112.15 7,333.98 8,994.54 8,427.32 7,336.47
Switzerland 528.68 949.36 1,101.51 1,137.59 2,734.09 4,073.32 3,902.26 6,439.04 5,303.2 4,762.45
Czech Republic 74.73 97.26 191.68 303.09 328.41 574.74 2,536.58 2,005.66 3,268.97 3,865.54
Poland 99.27 142.72 552.97 631.91 146.14 729.97 1,928.88 4,205.02 3,724.28 3,761.61
United Kingdom 1,638.45 1,180.88 2,150.03 2,219.71 2,233.04 5,305.59 897.32 1,794.29 2,393.47 3,662.96
Romania 194.07 205.09 1,260.51 348.11 397.47 636.03 3,158.14 3,666.05 3,580.16 3,211.12
Hong Kong, China 17.85 158.58 256.17 156.77 96.36 121.79 172.17 140.01 137.67 3,205.84
Turkey 324.57 458.82 575.05 721.14 950.71 1,019.72 1,405.81 1,480.29 1,726.62 3,065.77
Netherlands 1,777.87 3,418.95 4,078.34 3,900.78 3,604.5 4,444.27 5,380.29 4,100.35 1,953.21 2,944.53
Sweden 3,168.71 3,205.4 3,358.42 3,776.97 4,244.46 4,468.95 4,652.95 3,602.85 1,755.3 2,802.95
India 12.27 60.26 68.9 133.46 224.83 671.86 698.89 1,603.98 1,705.83 2,424.9
China 1,029.47 971.56 695.18 790.28 1,173.93 1,930.39 2,403.8 2,255.09 1,277.04 2,421.14
France 1,093.04 573 709.31 1,314.46 1,583.44 2,149.3 2,870.7 1,636.61 1,661.37 2,280.31
Greece 88.11 120.52 187.27 108.53 199.94 375.73 592.38 535.57 4,456.38 1,759.19
Hungary 65.81 218.84 128.97 823.25 101.98 858.13 598.94 1,561.17 2,146.09 1,743.37
Spain 530.91 235.75 384.25 883.54 554.85 855.74 1,348.17 1,483.68 1,136.5 1,592.76
Slovakia 1.12 16.92 72.43 78.79 18.47 458.52 794.46 958.99 975.89 1,535.52
FYROMacedonia 286.64 208.27 223.48 317.56 448.05 600.21 1,529.83 3,114.85 2,260.1 1,425.57
Denmark 163.96 695.63 488.48 276.56 537.18 1,004.6 607.7 517.22 1,480.68 1,229.02
Kazakhstan 90.34 150.12 29.15 28.94 33.72 28.66 37.94 91.07 1,247.64 994.06
Canada 42.38 189.24 186.38 324.8 516.3 550.86 311.51 396.24 691.94 988.79
Serbia 0 0 0 0 0 641.61 739.74 1,280.47 1,000.98 921.77
Ukraine 761.78 158.58 595.37 752.5 635.95 682.2 1,509.4 1,115.99 638.88 847.96
Portugal 2.23 6.34 5.3 23.31 12.85 390.85 381.54 534.89 496.91 776.42
Israel 155.03 205.09 110.42 76.38 226.44 382.1 256.79 961.71 624.54 654.42
Jordan 5.58 6.34 0.88 0 7.23 5.57 104.32 25.15 65.97 630.32
Iran (Islamic Rep.) 78.07 12.69 2.65 256.46 32.92 203.79 153.2 108.74 276.06 572.34
Mexico 52.42 37 17.67 7.24 22.48 9.55 299.84 95.15 163.48 515.86
Japan 8.92 68.72 168.72 234.75 186.29 334.34 559.55 409.15 479.7 513.6
Saudi Arabia 6.69 1.06 14.13 24.12 17.67 3.18 78.79 300.41 180.69 463.14
33 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 26 Index of exported values for product group “Optical, photo, technical, medical, etc. apparatus”
(code: 90 by ITC, Geneva) – thousand Euro
Importers Index of exported values for: (2009=100) Exported value
for 2010 (Euro thousand) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
World 18 22 27 34 46 75 98 109 100 125 223,904.56
Belgium 3 3 5 7 34 86 122 127 100 129 85,001.95
Germany 28 29 38 58 58 72 84 115 100 130 34,228.81
Italy 49 59 69 66 75 83 98 105 100 218 15,749.08
USA 25 44 36 40 89 140 185 118 100 134 9,356.97
Russian Federation 5 3 4 5 9 8 13 19 100 87 7,902.03
Austria 21 37 36 54 52 61 87 107 100 87 7,336.47
Switzerland 10 18 21 21 52 77 74 121 100 90 4,762.45
Czech Republic 2 3 6 9 10 18 78 61 100 118 3,865.54
Poland 3 4 15 17 4 20 52 113 100 101 3,761.61
United Kingdom 68 49 90 93 93 222 37 75 100 153 3,662.96
Romania 5 6 35 10 11 18 88 102 100 90 3,211.12
Hong Kong, China 13 115 186 114 70 88 125 102 100 2,329 3,205.84
Turkey 19 27 33 42 55 59 81 86 100 178 3,065.77
Netherlands 91 175 209 200 185 228 275 210 100 151 2,944.53
Sweden 181 183 191 215 242 255 265 205 100 160 2,802.95
India 1 4 4 8 13 39 41 94 100 142 2,424.9
China 81 76 54 62 92 151 188 177 100 190 2,421.14
France 66 34 43 79 95 129 173 99 100 137 2,280.31
Greece 2 3 4 2 4 8 13 12 100 39 1,759.19
Hungary 3 10 6 38 5 40 28 73 100 81 1,743.37
Spain 47 21 34 78 49 75 119 131 100 140 1,592.76
Slovakia 0 2 7 8 2 47 81 98 100 157 1,535.52
FYROMacedonia 13 9 10 14 20 27 68 138 100 63 1,425.57
Denmark 11 47 33 19 36 68 41 35 100 83 1,229.02
Kazakhstan 7 12 2 2 3 2 3 7 100 80 994.06
Canada 6 27 27 47 75 80 45 57 100 143 988.79
Serbia 0 0 0 0 0 64 74 128 100 92 921.77
Ukraine 119 25 93 118 100 107 236 175 100 133 847.96
Portugal 0 1 1 5 3 79 77 108 100 156 776.42
Israel 25 33 18 12 36 61 41 154 100 105 654.42
Jordan 8 10 1 0 11 8 158 38 100 956 630.32
Iran (Islamic Rep.) 28 5 1 93 12 74 55 39 100 207 572.34
Mexico 32 23 11 4 14 6 183 58 100 316 515.86
Japan 2 14 35 49 39 70 117 85 100 107 513.6
Saudi Arabia 4 1 8 13 10 2 44 166 100 256 463.14
Data source: ITC
After a review of the above tables we can define Bulgaria’s largest export market for the
delineated sector 90 of trade activity (optical, photo, technical, medical, etc. products). Among the
first ten are Belgium, Germany, Italy, USA, the Russian Federation, Austria, Switzerland, the Czech
Republic, Poland and the UK. We can clearly see that 7 out of the 10 leading markets are EU
34 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Member States, while Switzerland is an EFTA member, and the remaining two countries are among
the World’s largest economies and traditionally pursued markets.
Herewith we present also the graphical expression of the biggest Bulgarian export markets
for product sector “90”. We can observe that Belgium has shown a remarkable increase as a trade
partner and importer for the sector, especially after 2004. Germany, on the other side, remains
currently second placed but continues to maintain a stable growth over the last decade.
Figure 3 Leading 5 importers of Bulgarian manufacturing production from sector 90 by STC of ITC (optical,
photo, technical, medical etc. apparatus) for the period 2001 - 2010
Data source: ITC
After the definition of the strongest and most stable traditional importers of Bulgarian
production from sector “Manufacturing of medical, precision and optical apparatus and
instruments”, the present analysis shall focus on the products (or services) with an export potential
and advantages, as well as the identification of possible export destinations for Bulgarian SMEs
from the sector.
35 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
GOODS AND MARKETS WITH AN EXPORT POTENTIAL
An initial list of the product groups within sector C26 “Manufacturing of computer and
communication equipment, electronic and optical products” reveals that it encompasses four major
production groups: electrical equipment, medical technology, office and computing equipment, as
well as radio and television equipment. Because of this more widely outlined manufacturing sector
we can cite specific products included such as electronic elements and printed (circuit) boards,
computer technology, radio-, tv-, and telecommunication equipment, even some consumer
electronics.
But the production lines which are of our specifically defined interest within the sub-sector
to be analysed are: meters, testing and navigation apparatus; manufacture of clocks (and parts
thereof); electro-medical, emitting and therapeutic apparatus; optical instruments, elements and
photographic equipment; magnetic and optical storage media (or codes 26.5, 26.6, 26.7 and 26.8
according to КИД-2008, as they were identified above in these annexes).
Table 27 Product groups – manufacturing and sales for 2010
Name of position
NCEA-
2008
code
Manufactured Total sales
Quantity
(number)
Quantity
(number)
Value, BGN
thousand (no
VAT or excise
taxes added)
Compasses, incl. for navigationl other
navigation devices/apparatus
26.51.11 2 366 2 160 549
Telemeters, theodolites and
tachymeters; other devices and
apparatus for geodesy, hudrography,
oceanography, hydrology, meteorology
and geophysics
26.51.12 Confidential
information
Confidential
information
3 335
Radiolocation and radio-probing
devices, radio-navigation apparatus and
devices for radio remote control
26.51.20 Confidential
information
Confidential
information
22 104
Instruments for measuring of electric
variables without a registering device
26.51.43 1 438 1 438 363
Devices and apparatug for measuring
and verification of other electric
parameters, not elsewhere defined
26.51.45 3 926 3 986 7 454
36 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Densimeters, areometers, hydrometers,
thermometers (without medical ones),
pyrometers, barometers, hygrometers
and psychrometers
26.51.51 3 914 876 3 908 643 66 120
Instruments and apparatus for physical
and chemical analyses, not elsewhere
defined
26.51.53 15 100 15 061 7 464
Gas, liquid or electricity counters 26.51.63 394 363 261 221 13 457
Cycle or production counters,
taximeters; speedometers and
tachometers; stroboscopes
26.51.64 N/A 111 N/A
Thermostats, manostats and other
devices and apparatus for automatic
control and checkup
26.51.70 158 733 168 781 N/A
Parte for devices and apparatus for
automatic control and checkup and for
instruments and measuring machinery
n.e.d.
26.51.85 Confidential
information
Confidential
information
2 612
Instruments and apparatus for
measuring, registering and reporting of
time; clock switches and other devices,
allowing the activation of a mechanism
at a specific time, provided with a
clockwork or with synchronous motor
26.52.28 Confidential
information
Confidential
information
4 451
Liquid chrystal devices; lasers, without
laser diodes; other optical devices and
elements, n.e.d.
26.70.23 179 154 178 936 6 341
Dentistry instruments and apparatus 32.50.11 2 434 2 435 844
Syringes, needles, catheters, tubes and
similar instruments; ophtalmological
and other instruments and apparatus,
n.e.d.
32.50.13 109 773 956 Confidential
information
57 583
Data source: NSI
These product groups are marked by a change in demand that follows the world and local
trends of economic and social development. What we have to be able to point out – and what should
receive its due attention when planning mid-term measures within the present strategy – are the
countries which have reported considerable growth in their demand for products from the analysed
groups.
37 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 28 A list of significant Bulgarian export markets reporting growth for the period 2008-2010 for
product group “Optical, photo, technical, medical, etc. apparatus” (code: 90)
Importers Exported growth in value
between 2008-2009, %
Exported growth in value
between 2009-2010, %
Exported value in
2010, Euro thousand
World -7.9 24.9 223,904.56
Hong Kong, China -1.7 2,228.6 3,205.84
Norway 46.8 1,078.3 270.35
Uzbekistan 1,693.5 907 122.75
Jordan 162.3 855.5 630.32
South Africa -52.5 789.4 204.08
Luxembourg 448.6 663.5 142.33
Lebanon 92.1 388.2 248.52
Lithuania -50.9 273.3 198.06
Cyprus 111 253.2 258.31
Mexico 71.8 215.5 515.86
Saudi Arabia -39.9 156.3 463.14
Italy -4.4 118.2 15,749.08
Azerbaijan -19 116.5 302.74
Latvia 18.2 112.3 141.58
Iran (Islamic Republic of) 153.9 107.3 572.34
China -43.4 89.6 2,421.14
Singapore 35.2 86 454.86
Turkey 16.6 77.6 3,065.77
Chinese Taipei 41.8 70.4 420.22
Republic of Korea 2 68.8 314.79
Sweden -51.3 59.7 2,802.95
Slovakia 1.8 57.3 1,535.52
Portugal -7.1 56.3 776.42
United Kingdom 33.4 53 3,662.96
Netherlands -52.4 50.8 2,944.53
Canada 74.6 42.9 988.79
India 6.3 42.2 2,424.9
Spain -23.4 40.1 1,592.76
France 1.5 37.3 2,280.31
United States of America -15.1 33.6 9,356.97
Ukraine -42.8 32.7 847.96
Germany -13.1 30.4 34,228.81
Belgium -21.1 29.3 85,001.95
Finland -31.8 27.6 361.48
Czech Republic 63 18.2 3,865.54
Japan 17.2 7.1 513.6
Israel -35.1 4.8 654.42
Poland -11.4 1 3,761.61
Data source: МТЦ
38 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The conclusions we can draw from the above numbers is that besides our traditional and
principal trade partners for the analysed product group (most of the leaders in the trade rankings
continue to report growth, amongst which Italy and the UK) in a strategical perspective worth
noting are the trends in successful positioning and occupying ever wider shares (corresponding to
increased demand) on markets such as the Czech Republic, France, Slovakia among the European
ones; but climbing the rankings and requiring attention are trade relations with China (Hong Kong
quoted separately but just as important), India, Iran, Uzbekistan and Jordan among the Asian
partners; as well as the increasing importance of trade exchanges with Turkey and Canada.
Last subject of topical attention – but likely to be just as important – are the export markets
which present themselves as the largest in global terms (leading 20-30 countries); and those
amongst them that report significant net growth in demand over the last few years (in this case data
for the period 2007-2010) and where Bulgarian enterprises currently do not have strong enough
export positions.
Table 29 Leading export markets (top 30) for medical, precision and optical apparatus (ITC code 90) with
an accentuated growth in 2007 - 2010
Importers Growth in imports
2007 - 2008, %
Growth in imports
2007 - 2008, %
Growth in imports
2007 - 2008, %
Total imported value,
2010, Euro thousand
World N/A N/A N/A 347,100,646
China 4 -9 41 67,716,119
USA -1 -8 24 45,040,262
Germany 3 0 16 23,281,585
Japan -4 -11 30 16,936,568
France 5 -4 15 13,767,563
Netherlands 9 -9 22 12,389,997
Republic of Korea -2 -12 51 11,358,263
United Kingdom -5 -10 11 11,170,472
Hong Kong 1 -6 30 10,388,678
Italy 2 -5 10 8,635,898
Canada -1 -5 19 8,451,962
Chinese Taipei -23 -29 56 7,862,056
Mexico -9 -27 25 7,683,979
Belgium 12 3 8 7,336,258
Singapore -6 -8 33 6,344,563
Spain -2 -8 7 5,081,630
Australia 7 -1 20 4,938,264
Switzerland 10 -5 15 4,749,597
Brazil 22 -14 30 4,560,024
Russian Federation 26 -36 30 4,521,010
Poland 29 -7 22 4,126,398
39 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Malaysia 10 -14 39 3,610,705
Thailand 12 -6 43 3,164,651
Sweden -1 -12 17 3,147,091
India 13 5 -6 3,095,269
Austria -1 -8 14 2,764,33
Turkey 7 -13 27 2,588,858
Czech Republic 26 -4 11 2,276,396
Denmark -2 -7 6 1,956,378
Saudi Arabia -92 -55 4,009 1,841,458
Data source: ITC
After classifying all export markets in groups of largest at present and traditional (for
Bulgaria); those with the largest considerable growth rates among the above; as well those in a
global perspective (especially reporting increased demands!), on which Bulgarian enterprises are
not well positioned, we can infer and combine said export markets in a list that represents a priority
ranking for Bulgarian companies from the analysed sector:
Belgium, Germany, Italy, China (+Hong Kong), Turkey, Japan, Republic of Korea,
Canada, Taiwan, USA, Russian Federation, Austria, Switzerland, Singapore, Mexico, France,
India, Czech Republic, Poland, the United Kingdom, Australia, Brazil, Malaysia, Thailand,
Sweden, Saudi Arabia, Slovakia, Canada, Jordan, Iran.
Undoubtedly, it is necessary to seek comparative production and market advantages which
may position permanently the Bulgarian enterprises from the sector on those same markets that
undergo a positive economic development and currently increase their demand in this category of
high-technological product groups.
40 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
COMPETITIVENESS OF PRODUCTS AND SERVICES FROM THE SECTOR WHEN EXPORTED ON
INTERNATIONAL MARKETS.
What is widely known in economics and market studies as a “comparative advantage” (usually of production) is a principle that affirms
the superior position of a given country or an enterprise when manufacturing a specific product (or in a wider definition, offering a service). This
advantage exists as a result of a better resource combination – material, human resource, technological support or any other type of factor that
conditions the better final price efficiency of the country of enterprise which is said to have the “comparative advantage”.
For Bulgarian manufacturing we have factored in among the comparative advantages of production mainly the low labour costs; and we
also have in place some logistic (basically geographic), energy and other minimal resource advantages. The entire “picture” of competitiveness
and specialisation according to comparative advantages could be emphasised by standardised coefficients – such as the popular Balassa one.
41 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 30 Coefficient of specialisation of the Bulgarian industry in the sector Optical, medical and precision apparatus (ITC code 90)
Specialisation and
industrial productiveness
Export
(€ thousand)
Share of
total
export (%)
Increase in
export value
(%)
Increase
in export
volume
(%)
World
increase in
export value
(%)
World
increase in
export
volume
(%)
Number
of
exported
products
Share of
top 3
products
(%)
Share of top
3 export
markets (%)
Net trade
balance
(€ thousand)
Balassa index
(comparative
advantage
coefficient)
Sp
ecia
lisa
tio
n,
Ind
ex L
afa
y
yea
r
Total
manufacturing industry
11 513 121 100,00 4 -4 3 544 17,6 29,9 -4 770 748
20
09
90 Optical, medical,
precision apparatus
173 755 1,51 19 18 0 1 120 57,8 56,3 -63 351 0.5 0
Total manufacturing
industry
15 952 853 100,00 17 1 3 571 21,7 27,8 -10 308
654
20
08
90 Opt/med/prec. apparatus 202 229 1,27 32 33 4 5 122 58,3 62,9 -103 099 0.5 0
Total manufacturing
industry
12 620 879 100,00 13 8 3 527 20,1 31,9 -7 819 521
20
07
90 Opt/med/prec. apparatus 164 096 1,30 37 48 -1 5 125 62,2 65,4 -57 903 0.4 0
Total manufacturing
industry
11 448 261 100,00 15 16 3 528 24,2 31,4 -6 191 562
20
06
90 Opt/med/prec. apparatus 127 823 1,12 47 57 2 6 128 57,0 63,3 -89 433 0.4 0
Total manufacturing
industry
9 913 593 100,00 3 496 20,0 32,2 -5 424 724
20
05
90 Opt/med/prec. apparatus 86 953 0,88 129 48,0 53,2 -110 116 0.3 0
Source: ITC
42 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 31 Specialisation coefficients (revealed comparative advantage) in industrial sectors in EU and World’s largest economies for 2009
43 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Careful analysis of the above table reveals that Bulgarian industry reports higher comparative advantages in more labour-intensive
sectors or those that rely on large industrial complexes and basic processing of resources. High-technological sectors cede in the
specialisation rankings to almost all EU-27 countries and are comparable only with those of India, Brazil and Russia.
In our efforts to evaluate various perspectives in the development of markets for the sector in question, as well as to outline
strategic goals and measures for the SMEs in the branch to follow, we need to position Bulgarian exporters in the overall trend regarding
growth of production, exports and competiveness for the economic activity analysed.
44 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Figure 4 General graphic outlook of growth trends in exported values in production group „Optical, photo, technical, medical, etc.
apparatus” (ITC code 90)
45 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Colour coding facilitates outlining some of the general tendencies, such as the
exceptional growth in total exported values that has marked the development of some
African and almost all Asian countries, along with exporters from Central and South
America. A substantial increase is noted in most Central and Eastern-European countries.
Good indicators receive the export placement of industries in the same sector from the USA,
Canada, Australia and most of South America and Western Europe. In this line of thought
we should point out the apparent commitment of the mentioned regions and countries in
investing and programming their development and competitive positioning on the markets
for “Medical, precision and optical apparatus and instruments”. Thus representing ever more
effectively direct competitors for the Bulgarian SMEs from the sector on the already
dynamic global markets.
Maintaining and expanding current market positions in the sector could be
preferentially achieved through a systematic and planned strategical development, following
a precise Action Plan and abiding by a set of categorised and quantifiable indicators for its
implementation and frequent evaluation.
Before attempting to expand to new market positions, however (listed above as
perspective and potential markets), the sustainable development of the enterprises in the
sector requires maintaining present traditional partners and the good working relations in
place. That is why it is essential to pay the necessary attention to the direct competitors not
only generally present on the global markets for the sector’s product groups but also to those
that are particularly exporting such production to Bulgaria’s leading priority markets.
Hence, dynamic progressions of percentage changes in the values of imported production
for sector 90 (ITC code) will be presented for the leading five Bulgarian export markets:
Belgium, Germany, Italy, USA and the Russian Federation.
46 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 32 Belgium: growth of imports from principal trade partners for product group “Optical,
photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010
Exporters
Imported
growth in
value between
2006-2007, %
Imported
growth in
value between
2007-2008, %
Imported
growth in
value between
2008-2009, %
Imported
growth in
value between
2009-2010, %
Imported
value in 2010,
Euro
thousand
World 7.5 11.6 2.8 7.8 7,336,257.79
United States of America 14.5 18.4 7 -2 1,743,086.28
Germany 8.6 0.8 -10.7 8.9 951,492.7
Netherlands -17.8 16.6 -11.1 9.7 657,222.98
France 23.8 9.1 -3.3 -6.8 534,601.87
United Kingdom 18.8 23.5 -3 13.9 493,820.55
Luxembourg 0.9 41.9 859.2 46.8 417,440.57
Ireland 0.7 18.9 57 6.6 346,460.14
Switzerland 35.3 -3.4 3.1 21.4 319,866.02
Japan -9.8 2.2 7.6 10 292,802.73
China -39.8 8 -4.9 37.7 200,049.37
Spain 5.3 -8.4 -3.9 0 160,719.22
Italy 12.8 -3.9 -4.1 7 140,362.82
Mexico 154.4 84.5 -23.5 -9 122,677.59
Israel -1.7 13.7 38.2 48 93,919.87
Denmark 24.2 15 -11.4 -4.8 91,446.77
Bulgaria 57.3 6.7 -20.6 25.2 90,999.44
Singapore 16.3 19.7 -2.2 2.3 76,217.32
Sweden 5.5 -12.1 -24.9 41.8 72,335.21
Hungary 106.8 41.5 -34.6 23.3 48,596.75
Canada -12.4 2.8 14 40.5 44,370.48
Czech Republic -13.7 11.3 -8.8 25.2 43,002.15
Poland 6.3 12 -10.9 37.4 34,774.04
Slovakia 75.1 45.4 -34.9 47.5 29,731.44
Austria 100.7 14.9 -46.1 2 27,947.4
Finland -22.7 47.3 -23.9 20 24,797.29
Philippines -27.2 -11.1 -21.9 -12.5 23,256.49
Malaysia 2.8 0 37.8 46.2 22,145.71
Dominican Republic 27.6 -28 59.3 -49.4 21,219.42
Republic of Korea -62.5 -3.6 30.5 19.9 20,412.12
Portugal 36.4 -17.7 -19.1 28.8 20,063.45
Brazil 21.2 -5.3 10 9.1 19,497.89
Thailand -20.9 109.7 -13.1 8.5 18,689.84
Costa Rica 191.9 7.2 595.6 38.9 15,732.51
Romania 30.9 98.6 195 29.9 15,616.54
Tunisia 38.5 256.3 123.8 1.2 11,780.37
Source: ITC
47 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 33 Germany: growth of imports from principal trade partners for product group “Optical,
photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010
Exporters
Imported
growth in value
between 2006-
2007, %
Imported
growth in value
between 2007-
2008, %
Imported
growth in
value between
2008-2009, %
Imported
growth in
value between
2009-2010, %
Imported
value in
2010, Euro
thousand
World -6.3 2.5 -0.4 16 23,281,584.77
United States of
America
-2.7 -3.7 -5.1 17 4,720,155.36
Japan -4.5 8 -10.7 30.7 2,576,794.88
Switzerland 8.9 9.2 -9.4 7.8 2,412,944.37
China -40.6 8.1 -3.2 30.9 1,552,034.66
France -1.8 0 -4.4 11.4 1,427,626.51
Netherlands -46.4 16.4 37.9 0.8 1,116,059.39
United Kingdom -8.1 -0.7 4.1 13.3 1,002,174.71
Hungary 13.8 -11.2 5.8 21.4 930,174.62
Italy -9.1 16 8.2 12 816,711.68
Austria -10.9 22.4 28.3 18.9 608,180.41
Belgium 0.8 3.2 43.6 9.2 516,260.71
Czech Republic -9.3 9.9 59.2 -3.9 491,949.16
Ireland -10.5 -6.2 6.8 28 440,193.26
Denmark -1.9 -1.2 15.4 16.4 408,651.42
Poland 7.1 20.5 4.1 21.6 316,191.76
Malaysia -6.6 6.7 -4 25.7 310,076.78
Mexico 43 12.5 41.4 15.9 307,551.72
Singapore 62.1 -40.4 -10.8 56.9 280,013.99
Republic of Korea -4.6 -13.7 13.5 14.9 277,580.05
Sweden 7.1 -15 -2.8 8 171,601.17
Spain -9.3 15.8 -5 5.9 159,417.91
Thailand -5.7 0.3 10.5 12.8 143,966.29
Canada -3.3 -6.8 -20.4 21.6 136,687.81
Chinese Taipei 23.7 -15.5 -30 5 133,222.91
Philippines 19.6 31.1 28.4 33.4 133,213.87
Israel 0.3 38.4 1.3 24.9 123,325.98
Slovakia -32.4 34.2 86 -4.4 106,927
Finland -10.6 0 -4.8 43.8 92,425.77
Romania -6.2 -7.7 -10.1 23.4 91,246.45
Hong Kong, China 25.5 33.9 7.9 16.2 88,185.2
Portugal 2 -5.9 3.4 27 67,991.47
Indonesia 7.7 -0.7 -0.5 17.9 65,908.46
Russian Federation 15.7 17.3 -28.1 34.3 51,477.26
Bulgaria -6.1 8.8 0.6 10.3 45,787.77
Brazil 2.7 -17.2 -6.5 58.6 37,131.17
Source: ITC
48 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 34 Italy: growth of imports from principal trade partners for product group “Optical, photo, medical,
etc. apparatus” (ITC code 90) between 2006 - 2010
Exporters
Imported
growth in
value between
2006-2007, %
Imported
growth in
value between
2007-2008, %
Imported
growth in
value between
2008-2009, %
Imported
growth in
value between
2009-2010, %
Imported
value in 2010,
Euro
thousand
World -7.1 2 -4.8 10.4 8,635,897.52
Germany -2.2 -1.6 -12 16.1 2,045,709.11
Netherlands -25 0.4 11.3 3.8 1,098,591.79
United States of America -9.2 1.2 -10.1 7.4 989,553.16
France -0.2 1 6.6 1.7 799,709.48
China -5.9 6.4 -11.4 28.1 750,895.09
Belgium -9.9 11.6 5.3 -11.9 458,997.56
United Kingdom -2.5 -2.9 -21.9 13.4 392,434.68
Switzerland 3.6 3.9 -2.3 4.9 241,119.87
Ireland 1 -9.8 16 18.6 201,508.83
Japan -18.8 2.7 -15.3 -4.2 171,915.95
Sweden 8.2 -10 -7.7 101.7 154,822.64
Spain -2 9.2 -26.6 54.8 137,362.57
Denmark 5.8 2.4 -10.9 13.9 125,360.8
Czech Republic 16.8 19.5 13.8 13.7 99,927.91
Austria 6.2 11.1 -12.7 16.3 94,803.23
Slovenia 7.1 17.2 -15.9 -1.9 93,851.34
Hungary -48.8 104.7 -16.4 39.7 63,612.33
Mexico 61.8 56.5 297 -18.5 63,214.71
Canada 7.3 -15 -5.4 10.6 56,320.29
Republic of Korea 3 -8.7 -14.8 52.7 50,091.6
Finland 12.4 -8.3 -5.7 25.1 39,153.17
Poland 39 66.5 40.9 5.3 38,992.77
Thailand -21.3 8.3 -1.8 21.5 38,976.2
Israel 11.1 22.8 -8.3 -34.1 38,594.39
Romania -7.9 -0.4 12.7 24.8 38,540.92
Chinese Taipei 3.8 -6 -15 4.3 36,387.88
Slovakia 9.9 11.7 13.3 128.4 30,806.08
Singapore -15.8 24.1 -13.8 -9.5 30,693.87
Malta 35.8 -11.7 25.7 5.4 19,948.23
Malaysia 4.7 -18.3 -12.4 73.3 19,722.31
Luxembourg 30.1 -13.6 -36.3 1.8 17,454.04
Brazil -5.9 -1.7 -15.5 9.3 16,307.86
India 15.7 18.7 -6.4 9.7 14,209.79
Bulgaria 5.2 -13.1 27.2 99.5 14,078
Norway -1 35.9 -8.1 -19.4 14,068.21
Source: ITC
49 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 35 Russian Federation: growth of imports from principal trade partners for product group “Optical,
photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010
Exporters
Imported
growth in
value between
2006-2007, %
Imported
growth in
value between
2007-2008, %
Imported
growth in
value between
2008-2009, %
Imported
growth in
value between
2009-2010, %
Imported
value in 2010,
Euro
thousand
World 38.5 25.6 -35.7 29.9 4,521,009.68
Germany 48.9 14.1 -32.6 35.8 1,067,081.58
USA 37.3 28 -26.3 19.7 821,739.96
China 38.9 37.4 -44.1 68.3 526,943.09
Japan 37.7 29.3 -39.4 7.7 373,945.91
France 15.7 50.6 -38.6 62.7 255,764.19
Italy 35.4 -25.7 -29.1 50.6 176,036.03
United Kingdom 54.9 36.4 -11.2 19.4 172,275.92
Switzerland 52 26 -1.6 -12.6 128,805.37
Republic of Korea 26.8 86.6 -73 45.7 118,241.22
Ukraine 14.2 17.8 -13.3 22.9 81,064.11
Ireland 44.2 49.9 15 28.2 62,573.08
Austria 51.4 30.8 -40.4 49.8 54,412
Denmark 30 29.2 -44.8 19.8 46,089.76
Canada 152.9 -14.9 -40.3 113.1 44,811.03
Israel 117.7 4.7 -46.2 31.6 42,503.61
Finland 9.7 15.3 -30.7 27.3 35,485.69
Poland 31.9 96.3 -53.4 35.2 27,736.54
Slovakia 40 7.9 -33.3 33.6 26,729.68
Chinese Taipei 1,047.6 122.9 -94.4 78.8 25,051.83
Czech Republic -17.1 -8 -21.1 52.3 24,843.22
Spain -31.2 -20.7 -32.3 38.1 22,827.99
Belgium -20 39.4 -16.9 75.3 22,275.24
Mexico -16.6 -4.3 -8.2 56.4 21,135.08
Thailand -2.2 61.4 -9.4 54.3 20,595.12
Singapore 7 27.5 -16.3 66.7 17,350.12
Australia 140.8 -20.8 23.1 21.3 14,137.5
Hungary -17 -75.5 105.7 -26.7 13,979.35
India -42.7 -50.6 -32.5 62.4 10,387.93
Lithuania 39.1 -36.5 -38.2 107.7 9,535.45
Uzbekistan 567.6 -79.8 1,297.3 79.8 7,206.94
Portugal -35.3 130.2 -40.7 275.2 7,096.24
Slovenia -18.3 -18.5 60.4 51 6,494.53
Romania 60.5 67.9 -68.4 54.6 6,482.48
Bulgaria 10.6 93.4 265.4 -3.2 6,241.49
Turkey 82.7 32 -63.2 64.4 5,896.59
Source: ITC
50 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 36 USA: growth of imports from principal trade partners for product group “Optical, photo, medical,
etc. apparatus” (ITC code 90) between 2006 - 2010
Exporters
Imported
growth in
value between
2006-2007, %
Imported
growth in value
between 2007-
2008, %
Imported
growth in value
between 2008-
2009, %
Imported
growth in value
between 2009-
2010, %
Imported
value in 2010,
Euro thousand
World -2.3 -0.8 -8 23.6 45,040,262.35
Mexico 2.1 -7.1 2 26.8 6,655,145.73
Germany 2.4 -6.9 -10.7 19.6 5,566,596.97
China 6.1 3.1 -5 32.4 5,481,271.2
Japan -14.9 -5.6 -20.7 33.1 4,694,539.48
Ireland -6.9 22 -5.7 15.8 3,838,097.02
United Kingdom 1.9 -4.6 -12.1 14.4 2,089,703.81
Canada -4.1 -0.1 -13.1 20.3 1,949,185.86
Switzerland 0.9 11.2 1 21 1,798,058.57
France 8.1 -0.1 -3.3 22 1,628,181.19
Malaysia 14.1 10.8 -12.4 54.4 1,064,228.18
Singapore 16.7 -16 -10.1 27.8 950,794.6
Netherlands -53.6 -6.1 -16.5 27.8 736,465.4
Chinese Taipei -5.6 -6.2 -6.8 33.6 692,335.9
Costa Rica 0.6 14.2 4.4 16.7 670,267.76
Australia 11.9 3 -4.9 23.3 579,101.14
Denmark -1.1 3.7 2.5 11 502,008.75
Sweden 14.7 -9.2 -9.6 23.7 496,173.16
Dominican Republic -7.8 6.8 11.2 16.6 448,838.57
Thailand 17.7 -10 -12.4 36.7 409,293.04
Austria 9.1 1 -12 13.3 289,420.66
Philippines 34 -16.5 -10.5 35.5 228,221.19
India 0.9 25.2 -11.5 27.9 212,117.41
Hungary 10.8 -27 -32.9 79.1 136,252.53
Spain 2.1 4 -22.9 76.9 134,673.33
Poland -28.4 59.7 8.8 22.7 126,613.16
New Zealand 4 1.8 1 7 101,717.98
Viet nam 226.3 111.9 10.6 32.1 67,445.49
Romania 44 29.4 61.7 39.1 35,199.53
South Africa 6.8 -9 15.9 8.8 21,184.03
Turkey 7.7 88.1 53.4 57.5 20,438.48
Slovakia -47.7 19.3 -12.3 109.3 14,689.5
Lithuania -4.7 23.9 6.7 41.8 13,005.62
Estonia 13.2 -4.2 34.8 34.7 12,305.26
Bulgaria 74.8 -37.5 -30.4 84.7 11,061.18
Slovenia -14.9 20.2 -27.9 57.2 9,768.15
Source: ITC
After careful consideration of the above presented data on the percentage changes of
exported production by the sector “Medical, precision and optical apparatus and instruments” we
can infer the clearly outlined trend that certain countries (which in overall trade volumes and
concerned importing partners qualify as direct competitors for Bulgarian enterprises in the sector)
51 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
are experiencing a successful change of positioning and having ever larger market shares, as well as
bigger volumes of exported production. This is especially the case of Central and Eastern-European
countries, some Latin American countries, and Central and Eastern-Asian ones.
Considering the fact that the analysed markets are among the leading importers on the
market – and no less Bulgarian traditional and largest partners – the need to implement systematic
investment and structural measures is obvious, in order to recover from the present delay in re-
positioning wherever specific enterprises consider that there may be one. Even with generally
positive trends in the percentage changes which Bulgarian companies experience in their exported
production, a development of a mid- and long-term approach is among the priorities of the sector.
And as for our direct European competitors, we can safely regard some bench marketing analysis to
be able to lead us to the adoption and use of the best practices in the business, and as such is
practically indispensable.
What facilitates to a great extent the elaboration of such measures is the overall policy and
priorities of the European community. As we may see further in the herewith applied chapters on
the strategic approach and planning, it follows to a great extent the economic principles of
sustainable development of European SMEs that have at their basis a knowledge-based economy,
investments in innovations and scientific developments, technological updates and human resource
VET programmes – all of which should raise the general European competitiveness and
perspectives for a long-term upward economic development. In the last decade the Bulgarian
national authorities have repeatedly emphasised their commitment to prioritise various forms of
support to such development, with the ultimate goal of the present strategy being namely defining
concrete measures and steps in that direction.
Given the available information from national sources we can interpret how the Bulgarian
enterprises are positioned at the high-technology global markets and to deduce the necessary
conclusions: which areas and in what way could we plan to stimulate the sector and its enterprises.
According to MEET data we have information on the leading export markets on a global
scale for some product groups from the analysed sector. Leading global markets frequently coincide
with the leading Bulgarian export partners. Percentage shares out of the total global import are
52 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
noted within the product groups, and there is data on how much of that is satisfied by Bulgarian
exports.
Table 37 Leading export markets for product groups and a share of the total global imports
Position 1 2 3 4 5
Medical, surgical, dental
and other instruments Germany 27,4% Italy 7,6% Poland 7,4% Switzerland 5,5% Turkey 4,5%
Densimeters, hydro-, thermo-,
pyro-, barometers Belgium 88.3% USA 5,0% Germany 3,3% Spain 0,8% Czech
Rep.
0,3%
Instruments and apparatus for
tuning and control UK 15,1% Russia 13,5% Sweden 12,1% Germany 8,8% Italy 7,8%
Data sources: UN and MEET, 2011
Market shares that the Bulgarian manufacturing industry from the sector occupies are the
following:
Among the first five positions of the leading export markets for “medical, surgical, dental
and other instruments” (combining for 52,4% of the total imports globally) Bulgaria has a markedly
low share –
Table 38 Leading export markets and the position of Bulgaria (medical and other instruments)
Export markets Germany Italy Poland Switzerland Turkey
BG position and % 52 / 0,0% 36 / 0,1% 22 / 0,6% 25 / 0,2% 38 / 0,1%
Data sources: UN and MEET, 2011
Among the first five positions of the leading export markets for precision measuring
apparatus (densimeters, hydrometers, thermometers, pyrometers, etc.), combining for 97,7% of the
total imports globally (with Belgium only responsible for 88,3% of the World’s imports) Bulgarian
industry has reported much better indicators –
Table 39 Leading export markets and the position of Bulgaria (precision measuring equipment)
Export markets Belgium USA Germany Spain Czech Rep.
BG position and % 1 / 54,5% 13 / 1,2% 6 / 5,5% 31 / 0,0% 19 / 0,4%
Data sources: UN and MEET, 2011
Among the leading export markets for “instruments and apparatus for automatic tuning and
control” (with a total share of 57,2%) the Bulgarian manufacturing industry has its share but again,
not very high –
53 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 40 Leading export markets and the position of Bulgaria (apparatus for auto tuning and control)
Export markets UK Russia Sweden Germany Italy
BG position and % 27 / 0,3% 21 / 0,8% 23 / 0,7% 38 / 0,1% 26 / 0,5%
Data sources: UN and MEET, 2011
In conclusion we need to emphasize the three main groups of target markets which may
provide conditions for a sustainable development and growth for the Bulgarian small and medium
(as well as large) enterprises in the sector.
First and foremost attention has to be given to the main and traditional trade partners –
especially the leading ten – with view of maintaining a considerable base for the export volumes.
Following are the markets that globally represent leading importers for the sector and on which the
Bulgarian enterprises are not currently well represented (with a priority, again, falling on the
leading dozen). Out of these two groups naturally a big portion of the countries are overlapping, a
fact that only stresses their importance. The third group is made up of the export markets that over
the past few years (three could be considered sufficient) have reported a stable rise in demand and
respective imports of foreign production from the sector; which is a sign of lasting trends in the
increase of potential volume of imported production. Leading countries in this ranking also merit
strategic attention and systematic trade placement efforts.
54 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
MACROECONOMIC CHARACTERISTICS OF PRIORITY BULGARIAN
EXPORT MARKETS. BILATERAL TRADE RELATIONS
In order to achieve a clearer understanding of the overall economic state and particular traits
of the export markets that we have come to define as priority ones for the examined Bulgarian
industrial sector, hereby we present an overview of the leading countries in this ranking – five that
are Member States of the EU, as well as five that are outside its borders.
The most significant markets presenting themselves with a larger increase in the export
shares of Bulgarian SME of the sector “Manufacturing of medical, precision and optical apparatus
and instruments” are:
Within the EU: Belgium, Germany, France, Italy, Austria;
Outside the EU: China, Turkey, the Russian Federation, the USA and Japan.
Current data and characteristics for most of the studied markets could be found at the
National Export Portal maintained by the BSMEPA.
The figure that follows presents graphically the indexed GDPs at Purchasing Power Parity
(or Standard) per capita of the leading export markets as per data for December 2011.
55 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Figure 5 Indexed GDP per capita in PPS for leading export markets (EU-27=100)
Data source: Eurostat
Relevant for the understanding of these markets are also the comparative price levels of
consumption, indexed and compared to the average price level within the EU:
56 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Figure 6 Indexed comparative price levels for the leading export markets
Data source: Eurostat
As for the leading European markets, their purchasing power per capita is presented
numerically with GDP levels at market prices:
Table 41 GDP per capita at market prices, expressed in PPS (euro).
Year 2008 2009 2010
EU-27 25 000 23 500 24 400
Eurozone (ЕU-17) 27 200 25 500 26 400
Belgium 28 900 27 700 29 000
Bulgaria 10 900 10 300 10 700
Germany 29 000 27 200 28 800
France 26 700 25 400 26 300
Italy 26 100 24 400 24 600
Austria 31 100 29 300 30 800
Data source: Eurostat
57 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
GERMANY
Germany is a leading trade partner for Bulgaria, a principal supplier of investment goods,
high technology equipment and transportation means.
The Treaty on Friendly Cooperation and Partnership in Europe between Bulgaria and
Germany entered into force on November 5, 1992, and acts as a juridical basis for the relations
between the two countries. Up until January 1, 2007, as a Member State of the EU Germany applies
in its economic relations with Bulgaria the Europe Agreement, in force since February 1, 1993. All
trade and a significant part of other forms of economic relations are regulated by the Convention on
Trade, Business and Economic Relations signed on May 8, 1990.
Table 42 Main economic indicators for Germany and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 35 700
GDP growth (%), 2010 3,5%
Inflation (%), 2010 1.1%
Export volume 2010 $ 1,337 trillion
Rank as a world exporter (2010) 3
Main trade partners of exports
(2009)
France 10,1%, USA 6,7%, UK 6,6%,
Netherlands 6,6%, Italy 6.3%, Austria 5.7%,
Belgium 5.2%, China 4,7%, Switzerland 4,5%
Main exports (2009) machines, transportation vehicles, chemicals,
metals and metal goods, foods, textile
Main trade partners of imports (2009)
Netherlands 13%, France 8,2%, Belgium
7.2%, China 6,8%, Italy 5.6%, UK 4,7%,
Austria 4.4%, USA 4,2%, Switzerland 4.1%
Main imports (2009) machines, transportation vehicles, chemicals,
foods, textile, metals
Volume of Bulgarian exports
(euro million, 2010)
1 658
Share (%) out of total Bulgarian exports,
in euro, 2010
10.64%
Main Bulgarian exports in 2010 Textile and clothing, machines, electronics,
base metals and metallic goods, etc.
Volume of Bulgarian imports,
(euro million, 2010)
2 235
Share (%) out of total Bulgarian imports,
in euro, 2010
11.67%
Main Bulgarian imports in 2010 Machines and apparatus, textile goods and
clothing, electronics, transportation vehicles
and equipment, chemical and pharmaceutical
products
Data sources: ITC and MEET
58 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Germany remains a leading foreign investor in Bulgaria. According to the governmental
InvestBulgaria Agency total German investment for the period 1996-2010 have amounted to 2548
million euro which rank Germany as fifth among the leading foreign investors. In 2010 only
German investment in the Bulgarian manufacturing industry amount to 68,9 million euro. In 2011
the trade exchange with Germany reaches 4976 million euro. Bulgarian exports for Germany
amount to 2412 mil. Euro while imports from Germany add up to 2564 mil. Euro.
For 2011 Bulgarian exports for Germany makes up for 11.93% of the total national exports
(1st place), while German imports have a share of 10.99% out of all imports (2
nd only to the Russian
imports).
German companies have shown interest in investing mostly in transportation infrastructure
and the energy sector. Nevertheless a plausible consideration is given to an increased German
presence in the machine-building, electronics and electro-technical sectors.
Below is a table with price levels of certain product within group 90, according to the
classification of the ITC:
Table 43 Price levels of some products in product group 90, imported by Germany
Code Product
2008 2009 2010 Imported
amount,
2010,
€ thousand
Imported
quantity,
2010,
tons
Importing
price,
euro/ton
Importing
price,
euro/ton
Importing
price,
euro/ton
'9018 Electro-medical apparatus (ECG, infra-
red ray app. and similar) 49,467 49,695 51,669 5,198,807.45 100,617
'9027 Instruments for physical/chemical analysis;
instruments for viscosity, heat, etc. 136,514 144,912 151,436 2,604,846.21 17,201
'9032 Automatic regulating or controlling
instruments and apparatus 53,386 51,576 50,183 1,845,341.2 36,772
'9031 Measuring or checking machines, not
elsewhere specified 98,363 98,624 91,226 1,666,153.54 18,264
'9026 Instruments for measuring/checking the
level/flow/pressure of liquids/gases 78,850 85,120 72,726 1,132,337.88 15,570
'9022 Apparatus based on the use of X-rays/of
alpha/beta/gamma radiations 87,657 97,370 94,882 904,221.37 9,530
Source: ITC
BELGIUM
The Kingdom of Belgium has a well regulated and developed contractual and legal basis for
the active development of bilateral trade relations with Bulgaria.
59 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Since 1981 there is an Agreement for a wider economic, industrial and technological
cooperation between SMEs of the two countries, while in 1994 a Treaty between the Republic of
Bulgaria and the Belgian-Luxembourg Economic Union enters into force to protect and mutually
promote investments. After 2000 a few framework agreements and programmes have been defined
to regulate cooperation separately with the federal regions of Flanders and Wallonia.
Belgium is one of the important trade and economic partners of Bulgaria. In 2009 Belgium
is the fourth most significant destination of Bulgarian exports among the EU Member States, after
Germany, Italy and Romania.
Table 44 Main economic indicators for Belgium and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 37,800
GDP growth (%), 2010 2%
Inflation (%), 2010 2,3%
Export volume 2009 $ 279,2 млрд.
Rank as a world exporter (2010) 16
Main trade partners of exports
(2009)
Germany 19,6%, France 17,7%, Netherlands
11.8%, UK 7,2%, USA 5,4%, Italy 4.8%
Main exports (2009) Machinery and equipment, chemicals,
finished diamonds, metals and metallic
articles, foods
Main trade partners of imports (2010)
Netherlands 17,9%, Germany 17,1%, France
11,7%, Ireland 6.3%, USA 5,7%, UK 5,1%,
China 4.1% (2009)
Main imports (2009) prime resources, machinery and equipment,
chemicals, raw diamonds, pharmaceutical
products, foods, transportation equipment,
petroleum products
Volume of Bulgarian exports
(euro million, 2010)
587.3
Share (%) out of total Bulgarian exports,
in euro, 2010
3,77%
Main Bulgarian exports in 2010 Non-refined copper - 23% out of the total
Bulgarian exports, precious metal residue
(16%), rape seeds (11%), densimeters (14%),
raw tobacco (6.9%), electrical car batteries
(2.8%), poultry (3%), socks (1.5%), ladies’
suits (1%).
Volume of Bulgarian imports,
(euro million, 2010)
364.3
Share (%) out of total Bulgarian imports,
in euro, 2010
1,9%
60 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Main Bulgarian imports in 2010 Copper ore - 7% out of the total imports are
Belgian, medicines (7%), passenger vehicles
(3.5%), pork meat (4.3%), tractors (5.4%),
human blood; animal blood for therapeutic,
prophylactic or diagnostic purposes (3.3%),
agricultural machines (1.8%), automobile
parts (2.3%).
Data sources: ITC and MEET
Table 45 Price levels of some products in product group 90, imported by Belgium
Code Product
2008 2009 2010 Imported
amount,
2010,
€ thousand
Imported
quantity,
2010,
tons
Importing
price,
euro/ton
Importing
price,
euro/ton
Importing
price,
euro/ton
'9018 Electro-medical apparatus (ECG, infra-
red ray app. and similar)
32,326 35,601 35,654 3,172,750.61 88,987
'9021 Orthopaedic appliance (crutches/surgical
belts & trusses)
275,320 272,658 301,293 1,372,691.87 4,556
'9027 Instruments for physical/chemical analysis;
instruments for viscosity, heat, etc.
124,396 134,604 127,691 606,022.1 4,746
'9032 Automatic regulating or controlling
instruments and apparatus
63,395 57,863 74,390 322,036.38 4,329
'9031 Measuring or checking machines, not
elsewhere specified
50,367 47,013 54,460 250,297.61 4,596
'9019 Mechano-therapy appliance (artificial
respiration, massage app., ozone/oxygen)
17,311 20,017 19,590 198,412.18 10,128
Source: ITC
In 2010 the attracted Belgian investments have amounted to 124.2 million euro.
In 2005 the biggest Belgian investment was made at “Epic Electronic Assembly” EOOD in
the electronics sector.
FRANCE
France has always been a significant factor in the foreign economic relations of Bulgaria.
This cooperation has acquired even more meaning after the accession of Bulgaria to NATO in 2004
and the European Union on January 1, 2007. Relations between the two countries within the
framework of the EU have been developed by applying certain reforms required by the European
central institutions, as well as the common policies on energy, foreign relations, safety and defense.
61 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Both countries strive for an effective Union in all economic, social and political aspects that is able
to respond adequately to the expectations and needs of its citizens.
With view of expanding the French investment presence in Bulgaria a Bulgarian-French
Chamber of Commerce has been created as an heir to the Business Club France-Bulgaria. This
organisation facilitates direct business contacts between Bulgarian and French companies.
Table 46 Main economic indicators for France and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 33.1 thousand
GDP growth (%), 2010 1.1 %
Inflation (%), 2010 1,5%
Export volume 2010 $ 508,7 billion
Rank as a world exporter (2010) 6
Main trade partners of exports
(2009)
Germany 15,9%, Italy 8.2%, Spain 7.8%,
Belgium 7.4%, UK 7%, USA 5.7%
Main exports (2009) Machines and transportation equipment,
airplanes, plastics, chemicals, pharmaceutical
products, iron and steel, beverages
Main trade partners of imports (2009)
Germany 19,4%, Belgium 11,6%, Italy 8%,
Netherlands 7,1%, Spain 6,7%, UK 4,9%,
USA 4,7%, China 4.4%
Main imports (2009) Machines and equipment, transportation
means, raw petroleum, airplanes, plastics,
chemicals
Volume of Bulgarian exports
(euro million, 2010)
628,4
Share (%) out of total Bulgarian exports,
in euro, 2010
4,03 %
Main Bulgarian exports in 2010 Suits, clothing ensembles; Fresh cooled or
frozen meats;
Wires, cables, other electrical conductors;
toiled seats and bowls, kitchen sinks; other
engines and circuit control apparatus; spare
fixtures and accessories
Volume of Bulgarian imports,
(euro million, 2010)
629,4
Share (%) out of total Bulgarian imports,
in euro, 2010
3,28 %
Main Bulgarian imports in 2010 Passenger automobiles and other automotive
vehicles; assembled industrial installations;
automotive means for goods transportation;
pharmaceutical products; circuit breaking and
control apparatus; electrical apparatus for wire
telephony (incl. videophones).
Data sources: ITC and MEET
62 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 47 Price levels of some products in product group 90, imported by France
Code Product
2009 2010 2011 Imported
amount,
2011,
€ thousand
Imported
quantity,
2011,
tons
Importing
price,
euro/ton
Importing
price,
euro/ton
Importing
price,
euro/ton
'9018 Electro-medical apparatus (ECG, infra-red
ray app. and similar)
41,643 43,336 40,776 3,031,176.14 74,337
'9021 Orthopaedic appliance (crutches/surgical
belts & trusses)
407,933 322,789 2,829,567.23 8,766
'9032 Automatic regulating or controlling
instruments and apparatus.
48,179 44,082 39,142 967,935.01 24,729
'9027 Instruments for physical/chemical analysis;
instruments for viscosity, heat, etc
149,353 161,523 154,873 948,284.44 6,123
'9022 Apparatus based on the use of X-rays/of
alpha/beta/gamma radiations
87,297 86,985 817,486.49 9,398
'9031 Measuring or checking machines, not
elsewhere specified
83,459 75,382 77,237 649,720.06 8,412
Source: ITC
In 2011 the trade exchange with France amounted to 1615.7 million euro. Exports from
Bulgaria to France were worth 857.3 million euro, while French imports reached 758.4 million
euro.
For 2011 the reported growth in the trade exchange on an annual basis is calculated to be
28.42% with a positive balance for Bulgaria in the amount of 98.9 million euro.
Potential investments in Bulgaria by French companies were made in areas such as: energy
management, water and waste treatment, infrastructure development, but primarily in industrial
subcontracts in mechanical engineering, food industry, wine industry, pharmaceuticals and
informatics. The largest share of French investments is in the manufacturing – 58%.
The French Agency for International development of enterprises (Ubifrance) with its
representation in Sofia aims to assist French companies in finding Bulgarian partners in sectors of
mutual interest.
ITALY
Trade and economic relations between Bulgaria and the Republic of Italy are based on
formal contracts and agreements of more than five decades with the more recent ones including a
Cooperation Agreement between the BIC and the Italian Confederation of Industrialists
(Confindustria) since 1998; the Cooperation Agreement between BCIC and the Italian Foreign
63 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Trade Institute (ICE) based in Rome, as well as the Commercial Chambers in Vicenza, Trieste,
Udine, Gorizia and the Association of Young Entrepreneurs (ACCO-44); a Cooperation
Memorandum between the BSMEPA and the Italian Foreign Trade Institute since 2007 and a
similar document between the InvestBulgaria Agency and the Italian Foreign Trade Institute.
Italy remains one of the leading foreign trade partners of Bulgaria, the main destination of
the Bulgarian consumer goods in the EU market. In 2010, following Russia and Germany, Italy
ranks third among foreign trade partners of Bulgaria and the data indicates: an increase of 38.2
percent in export to Italy from 2009, increase of 8.9 percent in imports and growth of 18.4 percent
in trade.
Table 48. Main economic indicators for Italy and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 30,500
GDP growth (%), 2010 1,3 %
Inflation (%), 2010 1,4%
Export volume 2010 $ 458,4 billion
Rank as a world exporter (2010) 8
Main trade partners of exports
(2009)
Germany 12,6%, France 11,6%, USA 5,9%,
Spain с 5.7%, UK 5,1%, Switzerland 4,7%
(2009)
Main exports (2009) Engineering products, textile and clothing,
general machinery, motor vehivles,
transportation equilment, chemicals, foods and
beverages, tobacco products, minerals and
non-ferrous metals
Main trade partners of imports (2009)
Germany 16,7%, France 8,9%, China 6,5%,
Netherlands 5.7%, Spain 4.4%, Russia - 4,1%,
Belgium 4% (2009)
Main imports (2009) Engineering products, chemicals,
transportation equipment, energy supply,
minerals and non-ferrous metals, textile and
clothing, foods and beverages, tobacco
products
Volume of Bulgarian exports
(euro million, 2010)
1.509,9
Share (%) out of total Bulgarian exports,
in euro, 2010
9,69 %
Main Bulgarian exports in 2010 Textile and clothing; fur, leather and
footwear manufacturing, chemical, machine
building and metallurgy industrial outputs
Volume of Bulgarian imports, 1.417,6
64 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
(euro million, 2010)
Share (%) out of total Bulgarian imports,
in euro, 2010
7,4 %
Main Bulgarian imports in 2010 Ready-made products in energy supply,
technological and electrical machinery,
apparatus; textile and clothing, footwear,
leather, fur and skin articles; chemical
products, transportation means; furniture and
lighting fixtures
Sources: ITC and MEET
Table 49 Price levels of some products in product group 90, imported by Italy
Code Product
2008 2009 2010 Imported
amount,
2010,
€ thousand
Imported
quantity,
2010,
tons
Importing
price,
euro/ton
Importing
price,
euro/ton
Importing
price,
euro/ton
'9018 Electro-medical apparatus (ECG, infra-red
ray app. and similar)
38,537 38,948 39,219 2,269,541.38 57,868
'9021 Orthopaedic appliance (crutches/surgical
belts & trusses)
342,303 422,049 419,852 1,364,520.24 3,250
'9027 Instruments for physical/chemical analysis;
instruments for viscosity, heat, etc
114,719 135,495 139,469 648,529.47 4,650
'9031 Measuring or checking machines, not
elsewhere specified
57,547 60,521 54,044 579,897.14 10,730
'9032 Automatic regulating or controlling
instruments and apparatus.
35,790 38,095 40,756 561,086.8 13,767
'9003 Frames and mountings for spectacles,
goggles
146,983 138,723 149,631 365,848.09 2,445
Source: ITC
Italy is among the seven most developed industrialized countries in the world and forth most
powerful economy in Europe. Much of the raw materials and 75% of the energy resources are
imported. Italy is facing the serious challenges of the global financial and economic crisis. Due to
the high degree of interconnectedness of the Italian economy with the leading industrial countries
and the elevated dependency on the imports of basic raw materials and resources, in a short- and
mid-term plan it can feel the negative effect of these factors on its growth. Despite all that, in the
conditions of a global crisis the government managed to maintain overall stability of the financial
system not to allow bankruptcies of large companies. The present expert government has developed
a rehabilitation plan for the public finances, which will strengthen the position of Italian economy.
For the period 1996-2010 Italian investment in Bulgaria amounts to 1198,6 million euro, and
Italy is placed 10th
in the ranking of leading investors in the country. Sectors in which Italian
investors are most interested into are energy, tourism, banking and insurance services, transport and
65 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
agriculture. Light industry where even small businesses are interested in investing is often in low-
tech sectors.
In 2011 the trade exchange with Italy amounts to 3387.8 million euro. Exports from
Bulgaria to Italy add up to 1 720.7 million euro (with a growth of 13.9% compared to 2010), while
imports from Italy have reached a total 1 667.1 million euro (representing a growth of 15.7%
compared to levels of 2010).
Italy is still one of the most important trade partners among the EU Member States where
Bulgarian enterprises sell a large share of consumer goods and supply a wide range of high-
technology goods and transportation means. Bulgarian exports for Italy also include a number of
articles with a higher degree of processing, and there are still perceivable possibilities of increasing
Bulgarian exports in that direction, including electrical equipment and spare parts.
Bulgarian companies can expand their exports to Italy to participate as subcontractors for
Italian companies with established positions on the international trade/market. In order for them to
achieve this, they have to improve their marketing strategy. Export potential has also bio foods,
textiles and clothing, electronics components and software.
AUSTRIA
Bilateral relations with Bulgaria have overall been traditionally friendly – for almost a
century official diplomatic relations have been established, and for the past few decades trade
relations also regulated officially between the two countries.
A Treaty between the Republic of Bulgaria and the Austrian Republic for a mutual
promotion and protection of investment exists since 1997.
Table 50 Main economic indicators for Austria and its bilateral trade relations with Bulgaria
GDP (per capita, 2009) $ 40 400
Growth in the GDP (%, 2010 ) 2 %
Inflation (%, 2009 ) 1,9%
Amount of the export ( billion $ 2010 ) $ 157,4 billion.
Rang as a world exporter (2010) 29
Major trade partners for export (2009 ) Germany 31%, Italy - 8,2%, Switzerland 5%
66 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
(2009 )
Main export positions (2009) machinery and equipment, motor vehicles and
parts, paper and paperboard, metal goods,
chemicals, iron and steel, textile, food
Major trade partners for import (2009) Germany 45.1%, Switzerland 6,8%, Italy-
6,7%, The Netherlands4% (2009 )
Main import positions (2009) machinery and equipment, motor vehicles,
chemicals, metal products, petrol and petrol
products, food
Of exports of Bulgaria (million euro, 2010) 293.8
Export share (%) in the total export of
Bulgaria, calculated in euro, 2010)
1,89 %
Main positions in the Bulgarian’s export for
2010
engines, machines, air conditioning, facilities
for physical education, athletics, sports,
swimming pools, television receivers, video
monitors and video projectors; crude zinc,
chocolate, sunflower seeds, insulated electric
conductors, optical fiber cables.
Amount of the import of Bulgaria (billion
euro, 2010)
666.9
Import share (%) in the total import of
Bulgaria, calculated in euro, 2010)
3,48 %
Main positions in the Bulgarian’s import for
2010
Electrical apparatus for line telephony and
videophones, medication, passenger cars,
automatic machines for data processing;
magnetic or optical readers, machines for air
conditioning, tractors, printing machinery,
petroleum oils, meat, consoles and desks for
management or electrical distribution.
Sources: ITC and MEET
Table 51. Price levels of some products in product group 90, imported by Austria
Code Product
2008 2009 2010 Imported
amount,
2010,
€
thousand
Imported
quantity,
2010,
tons
Importing
price,
euro/ton
Importing
price,
euro/ton
Importing
price,
euro/ton
'9018 Electro-medical apparatus (ECG, infra-red
ray app. and similar)
76,482 72,041 75,056 684,964.04 9,126
'9021 Orthopaedic appliance (crutches/surgical belts
& trusses)
415,958 412,690 487,423 307,076.53 630
'9032 Automatic regulating or controlling
instruments and apparatus.
57,075 56,725 55,473 244,858.9 4,414
'9031 Measuring or checking machines, not
elsewhere specified
61,926 60,423 63,348 236,223.37 3,729
'9027 Instruments for physical/chemical analysis;
instruments for viscosity, heat, etc
102,072 99,720 128,103 231,610.03 1,808
'9026 Instruments for measuring/checking the
level/flow/pressure of liquids/gases
69,513 77,454 70,673 150,886.31 2,135
Source: ITC
67 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Austria is a well-developed and industrialised country with a high standard of living. Among
the largest branches of the Austrian industry we find the manufacture of automobiles, metallic
goods, machine-building, manufacture and processing of metals, foods, chemical industry, radio-
television and telecommunication equipment, manufacture of electrical energy.
Among its main trade partners are Germany, Italy, USA, Switzerland and France. Austria
exports mainly finished or semi-finished industrial goods, and imports mostly parts, agricultural and
food production, as well as natural resources.
According to the Bulgarian National Bank for the period 1996-2010 Austria has ranked at
second place among the leading investors in the Bulgarian economy (after the Netherlands) with the
total amount estimated at 5,2 billion euro or 13,1% of all foreign direct investment in the country
for the period in question (which amount to 39.5 billion euro). Again according to the BNB for
2010 the net payments flow towards Austria add up to 684 million euro – led by the manufacturing
industry with 630.5 million euro, followed by trade and repair services (66 mil. euro) and
transportation, warehousing and communications with 40.2 million euro.
The more significant areas of direct investment made by Austrian entities in 2010 are
construction (29.8 million euro) and agriculture, hunting and the forest sector (4.0 mil. euro).
Austrian companies dominate the top 100 of the largest foreign investors in Bulgaria. They operate
in the telecommunications, construction and financial sectors, among others (data sources: the
BNB, published on the InvestBulgaria Agency website).
Under the Investment Promotion Law there have been four big projects certified with
Austrian participation. Austrian investment in Bulgaria includes almost all sectors: power
distribution, telecommunications, energy, finance, trade. Almost 10% of the largest foreign
investors in Bulgaria are Austrian companies. In 2011 the trade exchange between the two countries
has reached 1173.1 million euro. Bulgarian exports for Austria amounted to 389.3 million euro
(which is an increase of 32.6% compared to the year before), while the imports from Austria
reached 783.3 million euro (an increase of 17.4% since 2010).
Among the most significant markets outside the borders of the European Union we should
include China, Turkey, the USA and Japan. Considering especially the proximity and the close
traditional ties with Turkey, as well as the size of the rest of the markets in this group, we will
68 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
present some brief information for the respective macroeconomic and trade dimensions of these
export destinations.
TURKEY
Turkey is a natural regional trading partner, a country with large population and growing
economy, an important trade factor in the region.
In the recent past contractually we could emphasize the Cooperation Agreement in the
spheres of trade and economics, industry and technology; the Agreement on mutual protection and
promotion of investment; the Cooperation Agreement for mutual assistance in the sphere of
customs services; Cooperation Agreements in the energy and infrastructure sectors, tourism. The
Treaty on Friendly Cooperation and Partnership, Neighbourhood, Safety and Collaboration since
1992 has been one of the most significant constituents of the contemporary contractual basis of the
bilateral relations. The Summit Declaration on Black Sea Economic Cooperation of the same year,
as well as the Yalta Declaration of 1998 further delineate the mutual ambitions in developing trade
relations between the two countries. In the past two years memorandums and principle agreements
in the energy sector have also been signed.
Trade and economic relations between Bulgaria and Turkey in the recent years show a
steady upward trend despite the economic crisis and the marked slight decrease. Turkey ranks sixth
in trade for Bulgaria (after Germany, Russia, Italy, Greece and Romania), as in year 2010 exports to
Turkey reached up to 1.32 billion EUR and imports - up to 1.03 billion EUR. The increase in
exports to the Republic of Turkey is 53% on an annual basis, mainly due to the continuously
improving condition of the Turkish economy.
Trade exchange between the two countries is balanced and numerically positive for the
Bulgarian side, with the exception of 2008 and 2009. A chief position among Bulgarian exports is
occupied by articles and prime resources of the ferrous and non-ferrous metallurgy, chemicals and
raw materials, petroleum industry products, grains and cereals, wood processing industry products,
etc. Turkish imports for Bulgaria is dominated by agricultural products, construction materials and
cement, ferrous and non-ferrous metals, passenger and freight vehicles, household consumer
electronics, textile products, etc.
69 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
According to BNB data the aggregate total volume of Turkish investment in Bulgaria for the
period 1992-2008 amounts to 476.1 USD which places Turkey 18th
among foreign investors in
Bulgaria. The largest Turkish investment has been the “Trakia Glass Bulgaria” glass factory in
Targovishte, owned by the “Shishedjam” company. And the first Bulgarian investor that has set foot
on the Turkish market is the “Prista Oil” company (from Russe) that has built a motor oil factory in
Izmir worth 6 million USD. Opportunities for further bilateral cooperation could be found among
the areas of tourism, energy, participation of Turkish companies in major infrastructure and
construction projects and the outlook for development of joint ventures in various sectors.
Turkey is among the main foreign trade partners of Bulgaria, currently ranked 5th
as an
export destination and 6th
as an importer. Among the countries in the Balkan region, Turkey is the
second biggest trading partner in importance after Romania.
In 2011 the trade exchange with Turkey has amounted to 3 936.2 million USD. Bulgarian
exports for Turkey were calculated at 2 391.5 million USD while Turkish imports added up to
1 544.7 million USD.
Table 52 Main economic indicators for Turkey and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 12,300
GDP growth (%), 2010 8,2 %
Inflation (%), 2010 8,7%
Import volume, 2010 $ 185 billion
Export volume, 2010 $ 114 billion
Main trade partners for exports Germany, France, Italy, UK, Iraq
Bulgarian exports for Turkey, 2010 $ 1,75 bill.
Share (%) out of total Bulgarian exports,
2010
5,83%
Main Bulgarian exports in 2010 Copper and copper articles, iron and steel,
mineral fuels and distillation products, tobacco
goods, wood, electrical and electronic equipment
Bulgarian imports from Turkey, 2010 $ 1,37 bill.
Share (%) out of total Bulgarian imports,
2010
5,41%
Main Bulgarian imports in 2010 Ores and prime earth materials, plastics and
plastic goods, electrical and electronic
equipment, aluminum articles, machines, foods
Sources: ITC and MEET
70 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
USA
The role of the USA as a trade partner for most countries globally is essential. For the
Bulgarian exports this “translates” mostly into goods with low level of processing on one hand; but
in the other there are many scientific and research products being exported such as IT and software
programs. This is often mediated with the assistance of domestically registered foreign legal
entities, thus frequently such transactions are not reflected in the balance payments for services and
goods. In 2011 trade exchange with the USA amounts to 642.9 million USD. Bulgarian exports for
the US are calculated to have been 366.0 million USD, while American imports are reported as
276.9 million USD.
Certain macro characteristics of the US economy are presented for 2010 in the following
table:
Table 53 Main economic indicators for the USA and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 47,600
GDP growth (%), 2010 3,8%
Inflation (%), 2010 1,5%
Import volume, 2010 $ 1 966 billion (~2 trillion)
Export volume, 2010 $ 1 277 bill.
Main trade partners for exports Canada, Mexico, China, Japan, UK, Germany, Rep.
Korea, Brazil
Bulgarian exports for USA, 2010 $ 282 mil.
Share (%) out of total Bulgarian exports,
2010
1,37%
Main Bulgarian exports in 2010 Live animals, mollusks, butter and milk fats,,
cheeses, honey, animal and plant products
Bulgarian imports from USA, 2010 $ 177 mil.
Share (%) out of total Bulgarian imports,
2010
6,94%
Main Bulgarian imports in 2010 Shoes, suits, antiques, collectors’ items, pictures,
mannequins
Sources: ITC and MEET
CHINA
China is the largest trade partner for Bulgaria in Asia. The global financial and economic
crisis in 2009 ceased the trend that saw Bulgarian exports for China (and overall trade in general)
71 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
grow. In 2009 trade exchange with China dropped 40% and equaled 765.2 million USD, out of
which Bulgarian exports 136.8 million USD (a 13% decrease) and Chinese imports worth 628.4
million USD (a 43% decrease). In 2009 China ranked 22nd
as a Bulgarian export market and 13th
as
an importer.
Trade relations between the two countries are regulated by certain agreements and treaties
such as the Agreement on economic cooperation of 2006, the Treaty on mutual promotion and
protection of investments of 1989 (and the following protocols attached as of 2007); some
memoranda for promotion of trade and economic cooperation between MEET and the Government
of the PRC, between InvestBulgaria Agency and the Shanghai Board for Foreign Investment
Promotion, as well as between the BSMEPA and Directorate “Trade Development” at the Chinese
Ministry of Trade. There is also an Agreement on cooperation between the Bulgarian Export
Insurance Agency and the respective Chinese partner organisation SINOSURE, dated 2006.
In 2010 again there has been a growth of 18% reported in the trade exchange between the
two countries but the lower basis for comparison (2009) has to be taken into consideration. The
mentioned growth is due mainly to the increase in Bulgarian exports with 84%. This significant
increment in turn is owed to the increased export of refined copper and copper alloys. Imports also
grow by 4%. This trend is maintained also for the first quarter of 2011. Once again a leading share
in the Bulgarian exports for China is occupied by refined copper and its alloys (77.8% of all exports
for China).
Table 54 Main economic indicators for China and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 7 700 (PPP)
GDP growth (%), 2010 10,3 %
Inflation (%), 2010 3,2%
Import volume, 2010 $ 1 396 billion
Export volume, 2010 $ 1 578 billion
Main trade partners for exports USA, Hong Kong, Japan, Rep. Korea, Germany,
the Netherlands, India, UK
Bulgarian exports for USA, 2010 $ 250 million
Share (%) out of total Bulgarian exports,
2010
1,2 %
Main Bulgarian exports in 2010 Refined copper and copper alloys, copper scrap,
unrefined lead, aluminum scrap; , необработено
олово, отпадъци от алуминий; panels,
consoles, control and power distribution panels
72 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Bulgarian imports from USA, 2010 $ 653 million
Share (%) out of total Bulgarian imports,
2010
2,57 %
Main Bulgarian imports in 2010 Electric apparatus for wired telephony,
transportation vehicle parts, air conditioning
machines, toys, el. boilers, electric boilers, water
and air heaters
Source: ITC and MEET
According to Bulgarian National Bank data for the time period 1996 – 2010 the attracted
Chinese investment equaled 17.6 euro. Investment was primarily channeled towards
telecommunications, renewable energy sources and automobile construction sectors.
In October 2009 a Loan Contract has been signed between the Chinese Development Bank
and the Bulgarian Development Bank worth 5 million euro for direct crediting of small and medium
enterprises. In 2011 trade exchange with China reached 1345.8 million USD (+49% compared to
2010). Bulgarian exports for China amounted to 402.6 million USD (+61%) and Chinese imports
were worth 943.2 million USD (+44%).
RUSSIA
Official diplomatic relations with Russia have been established on July 7, 1879. With some
interruptions and following global historical events, the flow of official relations continues just as
the trade ones do.
On January 13 1992 the Russian Federation announces that it shall continue to enforce the
rights and observe the obligations stemming from international agreements entered on behalf of the
ex-USSR.
Russia remains one of the most important and traditional foreign trade partners of Bulgaria.
After the accession of Bulgaria to the EU the relations between the two have acquired new and
more intensive dynamics. A confirmation of this is the growth recorded (96%) in 2007 compared to
the volume of Bulgarian exports for Russia in 2006, of Russian investment in Bulgaria with 73.8%,
of the tourist flow from Russia with 14%, as well as the signed agreements on important energy
projects.
73 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
On average for the time period it is reported that 640 Bulgarian companies export to the
Russian market, with 41 of them accountable for 75% of the exports; while Russian imports in
Bulgaria are done by an average of 844 companies out of which 2 record 75% of the total worth
(because of the energy resources involved). Bulgaria takes up about 1% of the trade exchange of
Russia.
Table 55 Main economic indicators for Russia and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 15,900
GDP growth (%), 2010 4 %
Inflation (%), 2010 6,7%
Export volume 2010 $ 376,7 billion
Rank as a world exporter (2010) 13
Main trade partners of exports
(2009)
The Netherlands 12,2%, Italy 9%, Germany 6,9% ,
Turkey 5,9%, Ukraine 5%, China 4,5%, Poland
4,3%
Main exports (2009) Petrol and petroleum products, natural gas, wood
and wooden goods, metals, chemicals, machines
and spare parts
Main trade partners of imports (2009)
China 12,9%, Germany 12,6%, Japan 6,9%,
Ukraine 6%, USA 5,1%, Italy 4,1%
Main imports (2009) Transportation means, machines and equipment,
plastics, cast iron, steel and metallic semi-
processed articles, consumer goods, foods.
Volume of Bulgarian exports
(euro million, 2010)
415,8
Share (%) out of total Bulgarian exports,
in euro, 2010
2,5 %
Main Bulgarian exports for Russia (2009) Medicines, wines, aircraft, fittings, spare parts,
refrigerators, freezers, cables, beverages, cosmetics
Sources: ITC and MEET
During the period 2000 – 2008 the development of Russian economy is characterised by a
stable growth, with rates around 7%. For the year 2008 the rate of Russian GDP growth is 5.6%
given a forecast 7.5–8%. The negative trends since the end of 2008 as a result of the global financial
crisis are still in effect. Crisis events spread to the entire Russian economy. According to data of the
Ministry of Economic Development of the Russian Federation the drop for 2009 is 8.5%, tied
mostly to the decrease of investment interest in Russia. Investment in base capital in 2009 decreased
by 17%.
74 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
According to estimations of the Russian Government the country has already passed the
most acute phase of the financial and economic crisis, and is recording a slow growth in the past
few years. In the framework of the Anti-crisis Programme the Government of the RF took actions
aimed at stabilising the real estate market and the construction sector.
Official data of the Ministry of Economic Development of the RF reports inflation for 2009
as 8.8%, and unemployment – 8.4%, which is 2 percent higher than the data for 2008. For 2010
inflation has gone down a couple of points, as we see from the above table.
The main task for the Russian economy is its diversification towards less reliance on the
prime and raw materials sector, and the development of infrastructure and manufacturing industry.
Russia is one of the biggest global producers and exporters of energy resources. It possesses an
estimated 50 trillion cubic meters natural gas, which is 35% of the world’s stock, with 12% of the
oil reserves and 16% of all coal reserves. Crude oil and gas exports produce about 45% of all
foreign currency revenue in the national budget. A quarter of all gas and oil supply for the EU
comes from Russia. Annually Russia exports about 130-135 billion cubic meters of natural gas for
Western and Eastern Europe.
The new Russian energy strategy foresees in 2030 the oil yield to grow a maximum of 9.7%,
and that of gas – with 41.5%.
Bulgarian exports for Russia are highly diversified, with the shares of medicines, fittings,
automobile and car parts, cooling equipment, car batteries, aircraft and cosmetics representing about
half of all the exports. An increase in the volumes of supply of these and other product groups will
allow the largely negative trade balance – due to energy and fuel imports – to decrease. In 2011
according to ITC trade exchange with the Russian Federation amounts to 2 334.7 million USD.
Bulgarian exports for the Russian Federation are worth 716.4 million USD, while the imports are
reported as 5 618.3 million USD.
The Russian Federation is one of the main foreign trade partners of the Republic of
Bulgaria. In 2011 the Russian market accounts for 2.6% of all Bulgarian exports (ranked 10th
) and
17.7% of the imports (placed 1st).
75 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
JAPAN
Despite the lack of tradition in trade relations historically between Bulgaria and Japan, the
volume of the Japanese market itself, its dynamics and the importance of the country in the
development of high-technological industrial sectors are all reasons good enough for defining it a
market with good perspectives, to give it weight as a trade partner, just as well as it is a direct
competitor in some sectors.
In 2011 trade exchange between Bulgaria and Japan amounted to 127.0 million USD.
Bulgarian exports were reported as 32.1 million USD while imports from Japan added up to 94.9
million euro.
Table 56 Main economic indicators for Japan and its bilateral trade relations with Bulgaria
GDP (per capita, 2010) $ 34 600
GDP growth (%), 2010 4%
Inflation (%), 2010 – 0,7%
Import volume, 2011 $ 855,2 billion
Export volume, 2011 $ 823,6 billion
Main trade partners for exports China, USA, Rep. Korea, Taiwan, Hong Kong,
Thailand, Singapore, Germany, Malaysia, the
Netherlands
Bulgarian exports for Japan, 2010 $ 21,8 million
Share (%) out of total Bulgarian exports, 2010 0,1%
Main Bulgarian exports in 2010 Electrical and electronic equipment; oils, perfumes
and cosmetics; fish and seafood; clothing; organic
chemicals; optical and precision apparatus
Bulgarian imports from Japan, 2010 $ 92,3 million
Share (%) out of total Bulgarian imports, 2010 0,36 %
Main Bulgarian imports in 2010 Machines, transportation vehicles (without railway
ones), electrical and electronic equipment, dyes and
pigments, iron and plastic articles
Sources: ITC and MEET
76 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
SUMMARISED RESULTS FROM THE ANALYSES (SWOT, PESTEL)
In elaborating the sectoral SWOT analysis we have been governed by commonly accepted
principles of such a marketing examination. The study aims to define the specific internal strong
and weak traits, as well as the external opportunities and threats for the enterprises in the field that
is part of the respective sector of the economy. The analysis is a means of achieving a summary, a
systematisation and a rationalisation of the trends in progress. As a result of the study the
advantages and deficiencies of the Bulgarian manufacturing enterprises will be clearly outlined
along with the state of the markets. Thus we will justify the choice of strategic approach in reaching
the most effective path of development for the organisations. The essence of this method is in
pointing both the opportunities and threats from the external environment that each one of the
organisations may have to face in operating in the sector, as well as the strengths and weaknesses
that define their businesses.
The strengths of the organisation encompass all the characteristics and factors that the
company has excelled in or any such particular trait that may further on lead to additional
possibilities. The strengths of a company may be represented by its internal customs and practices,
essential experience, valuable organisational resources and competitive potential, better products,
perfected technology, better customer service or brand recognition.
The weaknesses of an enterprise may be defined as deficiencies of an important component
necessary for the functioning of the company or any function that it cannot perform compared to
other, or leaves it in a disadvantageous position. Weaknesses, depending on their grade of
importance in the strife for competitiveness, may further make the company vulnerable to a certain
extent.
The internal strengths of the company are determined as competitive assets while its
inherent weaknesses are competitive liabilities. With regard to shaping a strategy the organisational
strengths are essential since they can be effectively used as a basis for achieving a competitive
advantage. In cases when the strengths are insufficient to successfully form a strategy the
management of the organisation should promptly create a basis for one. At the same time, a
successful strategy should be aimed towards eliminating the weaknesses which make the company
vulnerable and represent barriers to its business activities. As a result of such an analysis decisions
are taken that should combine different examined factors: guidelines for possible actions in
77 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
matching the strengths with the opportunities to reach economic growth, while weaknesses and
threats of the environment are to be taken notice of and neutralised in a timely manner in order to
limit their negative influence on the effectiveness of business activities.
The definition of opportunities and threats will be essentially based on the profound analysis
of the external environment of the enterprises. An opportunity shall be defined out of a favourable
trend which creates conditions (with an adequate reaction) for a subsequent increase in turnover and
profit or for improving the market positioning of the company, effectively raising its
competitiveness or the grade of its internationalisation. Potential opportunities for the company
resulting from the environment are a widened product line for greater scope of customer
satisfaction; ability to exploit habits, customs and technological know-how for new production
opportunities; increasing diversity between interconnected products; addition of new accompanying
products; vertical integration; acceleration of market share growth; emergence of new technology,
etc. Threats, on the other hand, represent unfavourable trends which – when lacking timely reaction
and opposition – may lead to reduction of the company’s sales and profit. Potential external threats
may be sought among increased sales of a substitute product; slow growth of market demand; high
dependency on low demand as the product (or even business) nears final phases of its life cycle;
heightened exigence of buyers and suppliers; unfavourable demographic changes, etc.
The SWOT analysis results for economic sector “Manufacturing of medical, precision and
optical apparatus and instruments” find confirmation of their validity on one hand in the
sociological surveys carried out with upper management and owners of SMEs in the sector as well
as in expert focus groups. On the other hand they are a reflection of a substantial analysis of
dynamic time series of statistics from the publicly available industrial reports and data and
underline the underlying characteristics of SMEs and the economic branch in question.
Systematised conclusions from the SWOT analysis are to be found in the table below (and
presented in a summarized manned in the main strategic document as well) with the inherent
strengths and weaknesses – as well as most threats – are derived from the abovementioned sources.
The opportunities themselves are to a large extent defined as potential strategic interventions,
typical and innovative policies for promoting the branch’s export potential, with a number of those
borrowed from foreign good practices that have shown actual potential for export development for
the manufacturing sector being analysed here. Those same possibilities are to lead us to the
formulation of concretely applicable proposals for policies and specific measures for promoting the
78 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
export potential, grouped in several main categories. The elaborated measures are divided into
micro, meso and macro levels and to be found in the Action Plan included in the main strategic
document.
Table 57 SWOT analysis
Strengths Weaknesses
1. Bulgaria is part of the EU single market;
2. Fixed currency exchange rate, a stable
financial and trade basis;
3. Key geographical location, at a crossroads
of resources and markets;
4. Subcontracting and outsourcing for
established international companies
from the sector;
5. Competitive labour costs, low taxes and
social security expenditures;
6. High-technological production with an
added value above the average in the
Bulgarian manufacturing industry;
7. Primarily export oriented SMEs in the
sector, restricted domestic markets;
8. Expanding market positions and good trade
relations with EU, US and Russian
partners;
9. Good basic human resource provided to
support the production processes;
10. Competent industrial branch associations
(BIA, BCCI, BICM);
11. Relatively good level of certification of
production and process management;
12. Adequate current technological
manufacturing equipment in most
enterprises;
13. Good working relations with most
international partners;
14. Quality of exports;
15. Growing price indexes in a global
1. Limited investment in contemporary scientific
developments and technologies, generating
export potential and sustainable growth;
2. Lack of resources for R&D, innovation and
own technological developments;
3. Absence of strong traditional positions on the
markets for medical, precision and optical
equipment;
4. Insufficient number of experts with an
experience in foreign trade;
5. Limited company experience in preparing
export marketing strategies;
6. Insufficient experience in participating at
national and international expositions;
7. Low liquidity, limited resources for developing
export practices;
8. Unsatisfactory infrastructure;
9. Low industrial energy efficiency;
10. Lack of frequently updated, systematised and
centralised information on foreign markets,
easily accessible by the enterprises;
11. Limited domestic prime material and resource
production;
12. Necessity to align manufacturing entities to
EU and world standards and barriers;
13. Small number of companies with a registered
own trade mark or protected intellectual
production;
14. Complicated SME access to financing of
projects by the European structural funds;
15. Lack of long-term sector vision and strategy
79 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
perspective;
16. Existence of all principal logistic
possibilities to conduce to export practices.
for entry into perspective and growing markets
(BRIC countries, etc.);
16. Low elasticity of production and ability for
reaction to market demands;
17. Difficulty of access to flexible financial
engineering in the present financial
environment;
18. Low grade of vertical integration leads to sale
of components, lower added value of the final
production.
Opportunities Threats
1. Possibilities for financing of projects under
EU Structural Funds in Bulgaria;
2. Export-oriented sector according to the
vision of the Bulgarian Government;
3. Anticipated expert assistance by BSMEPA
for promotion of exports;
4. Stimuli envisaged for grouping into
branch, vertical and export-oriented
clusters;
5. Financial stability and improved credit
ratings for Bulgaria are premises for
intensification of foreign trade contacts;
6. Access to new markets under preferential
and frame agreements signed by the EU;
7. Increased participations in domestic and
international consortia with export
orientation;
8. Improvement of Bulgarian image and
positioning on the target markets for the
sector: Belgium, USA, Germany, Italy,
Russia, Austria, etc.;
9. Capturing of the positive trends in the
development and demands of promising
markets in Asia, Western Europe and
America;
10. Infrastructure improvement in Bulgaria;
11. Higher protection for designs, trademarks
and developments; the currently elaborated
common EU patent policy gives assurances
1. Possible deepening of the crisis in the Euro-
zone and/or contraction in the global
consumption as a result of a ‘second wave’;
2. Low thresholds for market entry and open
competition lead to strong pressures and
(some) exceptionally dynamic markets;
3. Increasing barriers for entry into target markets
outside EU (e.g. introducing different regimes)
by global competitors and agreements;
4. Strong dependency on foreign raw materials
and increase in energy prices lead to possible
increase of total cost levels of production, with
an increase of resource prices on international
markets;
5. Ineffective export insurance policy, absence of
products focused on SMEs;
6. Lack of sufficiently reliable information and
divergence in the main statistics sources
impedes managerial decisions and SME
exports;
7. Worsened educational system;
8. Decrease in number and effectiveness of
Bulgarian trade representations abroad and, in
particular, on the target markets;
9. Deficiencies in administrative capacity and
complicated procedures for accessing EU
funds.
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
for the R&D of own products;
12. Improvement of levels of professional
education, training and competence of
Bulgarian experts in export marketing;
13. Europe 2020 sets priorities for promoting
high-technology and innovative (as well as
resource-efficient) manufacturers of the
future
14. Increased presence at industrial
expositions;
15. Systematic improvement of human capital
through education and training;
16. EU initiatives in support of SMEs
(by DG Enterprise and Industry mostly):
- European SME Week
- Transatlantic IPR portal
- „Enterprise Europe” network
- Competitiveness and Innovations
Programme (CIP)
- direct grants for supply of products
and services by SMEs to the EC
- SME support offices (especially
from newer MS), e.g. in China etc.
- Official opening of the financial
instrument JEREMIE in Bulgaria.
Political factors
Political factors in the Bulgarian environment have shown certain stability throughout the
last decade. Despite the apparent common change in management philosophy, this factor is
considered to be evaluated primarily according to government interventions in the actual economy
of the country. It could be claimed that several recent governments have executed to a large degree
a liberal economic policy, regardless of their contradicting interventions in other national (e.g.
social) aspects of development. The field in which – according to managers, owners and other
stakeholders directly affected by the functions of industrial SMEs – there is a need of significant
improvement is the one mainly in the area of administrative services.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Among the priorities of national and European executive authorities lie for fairly long period
electronic services and e-government platform as one of the first steps to facilitate the business. It is
no less expected, along with the digitalization and decentralized access, simplification of
administrative requirements and procedures. Those are rather the expectations of SMEs towards
governments (as for instance the introduction of silent consent principle), than real support and
subsidies from national authorities.
Overall, however, the Bulgarian political system, as it was already mentioned, has provided
stability and predictability in long term, which itself is essential for investors and prospective
business partners. It is in this line with this stability and predictability that Bulgaria was admitted as
a full member of organization like NATO and European Union. Undeniably, this membership has
positively influenced in general the conditions for development of Bulgarian exports and the
prospects for realization of SMEs in international markets. Confidence in overall policy framework
in Bulgaria has led to long term contracts, framework agreements for subcontracting and export and
to improvement of the image and positioning of its industry – effects that individual SMEs and even
industry associations could not achieve on its own.
However, it is appropriate to mention the absence of tangible long-term policy vision and
coherence of reforms affecting the educational system. Vital areas such as formation of skilled
workers find their base in the overall scientific and educational framework. To extend that absolute
production capacities could be provided with adequate and relatively well-trained personnel,
development of high-tech and innovative sectors such as C26 (Manufacturing of computer and
communications equipment, electronic and optical products) requires preparation of prospective and
leading engineers who could determine growth and development of enterprises in the industry.
Ambitions for own developments will lead to increased export potential. Improvements and
innovations in the production cycle will provide a comparable competitive advantage of the
manufacturing industry.
Last but not least, we would like to mention the need of significant improvement in the
condition of the infrastructure in the country. As one country which has potentially all the available
methods for logistic diversified export, growth of quantitative and qualitative investment towards
improvement of the infrastructure will provide additional export potential of enterprises, will reduce
their production costs and will reposition in positive direction out image as reliable and accredited
trade partner.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Economic factors
Considering purely economic factors, it is of major importance in the beginning to touch
financial parameters such as interest rates, tax rates, inflation and GDP indices and exchange rates.
Those which provide stability and a relatively long planning horizon of growth are (currently) tax
rates and exchange rates. Over the past four years the flat income tax is in force in Bulgaria, which
provides certain competitive advantages for its producers. Furthermore, Bulgarian monetary system
is practically bound by all the positive and negative trends in the Euro zone and its currency due to
its fixed exchange rate towards it (throughout the last 15 years, first to the German mark and to the
Euro – after the official introduction of the euro currency). This, of course, could bring both
advantages and disadvantages – a strong euro lowers competitiveness and hampers export, but
provides cheap raw materials and energy in global markets – and certainly can provide a stable
long-term planning framework for branch specialists.
Considerations for national and pan-European trends in economic growth and inflation are
very similar. By observing the published data tables in the appendixes it is easily visible that while
the euro zone is experiencing upward economic development – GDP growth, industrial production;
of course proportionally tied to the increasing price indices and inflation trends – the Bulgarian
manufacturing industry, just as the overall state of the economy, is also rising. Statistics shows that
exports in larger share determine and influence creation of GDP in comparison with domestic
consumption because the manufactured products for export have generally higher added value and
increased labour productivity.
What has lasting negative impact on the development and production in the country, and in
specifics on the mid- and long- term strategies of SMEs are high interest rates which all together
hinder industrial growth. In quite severe extend this could be noticed in industrial production
(except fully in SMEs) which rely on high-tech development passing trough common investments,
update on production processes, need of saving resources for R&D and providing technological and
production advantages in those highly dynamic sectors. Due to this reason, one of the most pressing
problems that Bulgarian SMEs are facing – and in particular those SMEs of sector C26 – is
provision of access to flexible alternatives of financial engineering that allow businesses not to lag
behind in technological or financial aspect and also to provide them with investment opportunities
in improving their export potential.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Social factors
Social factors in Bulgaria are also broadly researched. The aging Bulgarian population have
a need to maintain and increase the insurance rates for supporting stable social system. In this
aspect a main influence has the earlier mentioned necessity of educated and perspective workforce
and skilled professional. According to current trend in the labour market (nearly 11% of
unemployment), quantitative entrée of competitive workforce would not be a major problem for the
business, but instead main issues could be finding professionals who could foster growth in
competitive and export advantages.
Technological factors. Innovation and sustainability factor.
Due to comprehensive reasons technological factors are of great importance for the
manufacturing industry and in particular they play a significant role in sectors with high-tech
manufacturing. New technologies create new product ranges and new production processes.
Possible improvement provides them with additional competitive advantages, decrease in costs,
energy needs, accelerated and improved production. Trade and distribution are also evolving as
improvements for global clients and multilateral business relations are affected by the Internet trade
(including wholesale), flexible customization of orders, contemporary communications and
opportunities for promotion and sales.
Availability of new technologies and development of next generation in technological
advancements should not be only viewed as short term advantage or facilitation for multinational
trade. Next to low costs it is also taken on improved quality but above all strive for innovation and
improvement. Among the long term commitments of Bulgaria towards the European Union is the
prioritization of objectives for strategy Europe 2020. Between the main topics in this key
development area for the vision, are investments with 3% of GDP in research and development
(R&D) as well as access to “green” energy resources which to improve the energy efficiency of
Bulgarian society with 20% (a major part of which is the energy need of the industry).
National long-term strategies are closely linked to similar vision of the Union. At a position
in which the current state demonstrates lack of resources and defects in mechanism and regulatory
frameworks, there the interested parties are expected to make joint cross-sectoral efforts
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
(governmental agencies, industry and individual efforts) and to strive to achieve and put into
practice the flagship thematic initiatives of EU for accomplishment of Europe 2020 objectives.
And if in most macro factors the purposes of this long-term vision have apparent gravity and
importance, then four out of the seven flagship initiatives, mentioned beforehand, that bring us to
the national level towards the requirements and views of EU will lead to the introduction of tangible
technological changes in society and, of course, in the industry. “Innovation Union” seeks to
improve the framework conditions and access to financing for R&D activities and innovations, for
strengthening chain of innovations which to boost further levels of investment in the field across
EU.
“Youth on the move” aims to improve the performance of education systems on the
continent and to reinforce the international attractiveness of European education system. Such a
framework will improve tremendously the innovation and technological potential of the society and
is something the Bulgarian government should also strive to partner in if it wants to support small
business development in the long run.
“A digital agenda for Europe" aims to accelerate the use of broadband and to benefit from
the digitization of a common market for end users and companies. This vision, which should
highlight the efforts of small and medium sized businesses, is much closer to its applicability in
Bulgaria. For its accomplishment there is an accessibility of a large number of national and
European sectoral operational programs and initiatives.
"Resource Efficient Europe" is a long-term intention of the community to diversify its
energy sources - with a highlighted development in renewable energy – to reduce consumption and
to improve their effectiveness during their use. This requires also planning, financing and
investment in technological developments for achieving goals of energy sustainability and
efficiency.
There is also an all-encompassing thematic initiative – “Industrial Policy for the Globalized
Era” – that aims to improve the business environment especially for micro, small and medium sized
enterprises which are the notorious feature of the economic backbone of Europe and the
actualization of the most active part of the work – age population. Framework agreements and the
European initiates are not missing: “The European Charter for SME”, „Small Business Act”,
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
sectoral programs of the DG Enterprise and Industry, prescriptions and goals of the national
Operational Programs. The ultimate goal is to support the development of strong and sustainable
growing industrial base of Europe, capable to complete on a global level and on current markets.
Commitments here are also in reference to all parties involved thus the achievement of such goals is
ambitious and long-termed although every little step in the following direction will support
industrial SMEs and will improve their prospects and positioning in global markets.
Environmental factors
After the initial step and in general less commonly mentioned, but at the same time with
growing importance and currently taking key positions in the analysis of macro environment, are
the arguments for sustainable positioning of industry in the environment. Current weather
conditions could affect the cycle, resource delivery, supplies or other momentary consideration of
the business. The long term concern in the last two decades, however, affects the trends of climate
changes and the effects of industry on the environment.
High technology sectors are not directly affected of the extent to which other sectors such as
the hospitality, agriculture and mining sectors could be affected. However, the public importance
together with direct effect of the changes in consumptions and availability of resources force
national governments and intergovernmental committees to pursue development of environmentally
sustainable patterns of production and consumption. Those factors will increasingly become
stronger part of new legislations, adopted environmental standards and taxes, logistic and industry
constraints. This trend could on a first look have some immediate negative effects on the
competitiveness of Bulgarian and European industrial companies – and especially over SMEs with
lower capacity for allocation of resources and alignment of production to developed norms – but in
the long run, for the same industries this will ensure sustainable resource provision.
Often could be seen in seemingly negative and restrictive tendencies that this new
environmental awareness could be analyzed and considered as a significant change in consumer
expectations and demand, which could mean new market opportunities for businesses to create their
timely products or to properly position themselves based on current developments and market
trends.
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Operational programme “ Development of the
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Legal factors
If we need to define a single all-encompassing historical problem in the development of
small and medium businesses in Bulgaria, it undoubtedly will be the lack of continuity in the
political and legal initiatives; thus we have a frequent passing of new and changes of existing laws
and law groups, having a direct or implicit effect on small businesses. This is a factor of
considerable importance for international investors and trade partners as well. And if for them the
overcoming of some obstacles could limit itself to an in-depth research of the existing norms, for
SMEs in Bulgaria adhering to such requirements often means a great deal of effort in terms of
resources and time necessary.
With regard to these concerns we have hinted to some of the responsibilities of the
Executive and Legal branches may adopt in order to simplify procedures and requirements – legal
and administrative ones; thus facilitating SMEs and keeping in mind the clearly declared
commitments to stimulate such enterprises and implement various forms of promotional efforts to
their benefit. Besides the parliamentary working commissions and expert groups at the apposite
Directorates and Ministries, there are also consultative councils to the Council of Ministers which
also have a direct interest in developing SME measures, and specifically those from the
manufacturing industry and sector in question, subject of the present analysis. Those concerned are:
Council for administrative reform, Consultative council for promotion of small and medium
enterprises, Consultative council for sustainable development, Intra-institutional council for export
insurance, National council for science and innovation (as well as a separate National council for
innovations), National consultative council for vocational training of the workforce, Council for
protection of intellectual property, Council for coordination in the management of European Union
funds; as well as some that have an indirect but still strategic meaning for the prospects for
development of the Bulgarian SMEs and the industry as a whole: councils for promoting
employment, statistical activities, labour inspection, economic growth, “international cooperation
for development” and others.
They are composed of members of the Government administration and the respective
Ministries but also of some branch, financial and non-governmental organisations, local authorities
and others. (As an example, the Consultative council for the promotion of small and medium
enterprises under the Chairmanship of the Minister of MEET, at present contains government
employees from the Ministry of Finance, MLSP, MEYS, BSMEPA, the Council for coordination
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
and management of the EU funds, as well as representatives from banks, BIA, BCCI, NAMRB, and
NGOs such as the Centre for economic development, Institute for market economy, and the
Entrepreneurship development foundation.)
This aggregation of experts from various sectors and spheres of social and economic life
should regularly re-evaluate, review and suggest constructive changes and improvements to the
framework, while aiming to maintain a stable and predictable basis for the development of
Bulgarian SMEs in their work with current and potential future partners.
The legal framework as one of the six macro factors of the present analysis is the most
extensive one. It encompasses not only specific institutions and experts, and end users, but also
influences generally the formation of the business environment for the development of the
Bulgarian industrial SMEs. It is the macro factor that covers and regards probably all of the above-
mentioned single parameters and conditions of a future Bulgarian sustainable and long-term
development: it has political, economic, social, technological and ecological effects and
repercussions.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
BARRIERS TO THE INTERNATIONALISATION OF ENTERPRISES FROM
THE SECTOR
Analyses of the statistical datasets may give us a large portion of the information needed to
infer some of the most important trends in the development of SMEs and the sector in general. With
a view to individuating the essential problems facing the enterprises themselves, however, much
more effective can undoubtedly be the sociological surveys, focus groups and cross-institutional
working relations with actual owners and managers of SMEs producing optical, precision and
medical apparatus.
The surveys in their entirety are presented and analysed within a separate annex to the
present strategy. The conclusions that we can draw at this stage, nonetheless, are among the ones
pointed out and graded as most serious obstacles and barriers to the internationalisation of the
enterprises themselves. Sorted according to their relative importance and frequency of occurrence,
they are the following:
Unfavourable business environment in Bulgaria
Customs and non-customs limitations by other countries
Lack of experience in foreign trade matters
Higher risk on the various foreign markets
Those are followed by little less urgent ones but with a growing perceivable importance:
Lack of qualified staff/experts able to guarantee quality
High input prices
High export-related expenditures
Language barriers
High export-related expenditures for access to some of the identified key export target
countries – e.g. India, are related to high transport costs, while for Russia – the high export costs are
related to high market entry costs, including inter alia high administrative costs and costs due to
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
bureaucraticy. The competitive prices of the local products and the different business culture should
be noted as specifice barriers to the access to the Chinese market.
Additionally expressed opinions refine and specify the wider categories of barriers that
SMEs from the sectors are faced with in their attempts to go global.
According to experts and upper management within the branch the difficulties of market
entry could be offset by participating in specialised expositions and apposite forums. Those are
followed in importance by clarifications regarding customs requirements and licensing regimes
which they expect to be able to find in specialised informative publications for the industrial sector
in question.
Replacing the production facilities and investing in innovative production processes requires
the structuring of preferential conditions and negotiations with banks and other crediting
institutions, especially for the SMEs that apply for financing under OP calls of the BSMEPA, as
well as other Structural funds and Sectoral Programmes.
Financial problems regard also the lack of resources for innovations, advertisement and
patent acquisition. Small and medium enterprises rarely have the available funds to invest in
innovations (time and financial ones above all), and the smaller ones can hardly afford to maintain
a unit of good researchers. Possible solutions may include the creation of a guarantee Fund
which could be used to loan credits to SMEs for the actualisation of their ideas.
Actual SME exponents also speak of the discrepancy between the realities of theoretical
developments and theorisation in the educational institutions and the trends in the practice of the
high-technological sectors of production, such as the one analysed by this study. SMEs expect the
government to provide motivation for the business and educational structures to work together –
structural incentives (e.g. fiscal, tax) as such a working relationship will lead to a better
professional and academic environment.
Similar are the expected stimuli for cross-sectoral clusters, technological and innovative
parks which could support the development and improvement of research and manufacturing
processes altogether.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Explicitly pointed out are the needs to elaborate unified standards and certificates, bilingual
documentation (to drastically facilitate exports), as well as the higher activity and visibility of the
national trade representations abroad.
The creation of a “Strategic planning” unit responsible for the monitoring of present and
future strategic frameworks is also desirable. As for the BSMEPA, although under criticism for its
lack of efficiency in some initiatives, as a whole it receives the approval for its actions and
cooperation whenever mutual projects are at the stage of their implementation.
Business Environment Anti-corruption Components
The level of transparency and the corruption risk should be analyzed as crucial elements in
the assessment of the availability of favorable business environment for the SMEs internalization in
the sector – at a national level, as well as in the identified priority export markets.
LEGAL REGULATION OF THE ACTIVITIES OF THE EXECUTIVE AGENCY FOR
PROMOTION OF SMALL AND MEDIUM ENTERPRISES: CORRUPTION RISK
ASSESSMENT
1. HIERARCHY OF THE LEGAL FRAMEWORK
The work, organisational structure and functions of the Executive Agency for promotion of
Small and Medium Enterprises (the SME Agency) are laid down in the Law on Small and Medium
Enterprises, its Implementing Provisions and the Statute of the SME Agency. Other secondary
legislation and internal bylaws have been adopted as well. A Regulation on the terms and conditions
for awarding contracts under Art. 7(2) of the Law (direct negotiation procedures) has been approved
by Decree of the Council of Ministers. The analysis reveals that the centre of regulatory gravity is
shifted to second-level legislation and the executive bodies are given extended powers to regulate
this type of activity, at the expense of the legislature.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
2. STAKEHOLDERS AWARENESS OF THE AGENCY’S ACTIVITIES
Organisational arrangements are in place to ensure that the framework of procedures and
activities is accessible by a wide circle of users. The website of the SME Agency contains all laws
and regulations related with its work. Information is also available on the specific activities and
opportunities provided by the Agency. The information is regularly updated to ensure better
awareness of all stakeholders. It should be noted that these are only prerequisites for better
awareness of the Agency by increasing its transparency, which in turn reduces the chances for
exacting potential corruptive pressures on the users of its services.
3. JUDICIAL REVIEW OF THE ACTS
The administrative acts issued by the SME Agency in exercising its powers and performing
its activities are subject to judicial review under the Administrative Procedure Code.
4. ANTICORRUPTION MEASURES
4.1 GENERAL FRAMEWORK
The SME Agency has developed and put in place Internal rules for protection of persons
submitting reports regarding corruption (whistleblowers), abuse of power, trading in influence and
conflict of interest against staff members of the Agency, Internal rules regarding provision of access
to public information and Internal administrative arrangements for checks undertaken by the
Ombudsman.
It is envisaged a detailed procedure for registration and follow up of the received reports,
which afford maximum protection to the submitter of the report.
4.2 RULES FOR FOLLOWING UP THE REPORTS
The staff member alleged in the report can not continue dealing with the case, to which the
report relates. If the case has not been assigned to the alleged staff member, measures are taken to
restrict any access of the latter to information and materials related with the case.
The internal rules are contain detailed measures for protection of whistleblowers who report
alleged cases of corruption, abuse of power, trading in influence and conflict of interest.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
4.3 REPORTING
While adequate regulatory provisions are in place for the work of the administrative bodies
and the mechanisms for prevention and combating corruption, and for protection of whistleblowers,
there is no feedback about the follow-up on the submitted complaints and reports or the final
outcomes of the inquiries made. Neither is there information about how many reports are
confirmed, dismissed or referred to other competent authorities for further investigation.
Making this feedback publicly available would let all stakeholders and organisations see
clearly the results from the activities aimed at assistance and promotion of small and medium
enterprises as well as the measures taken to prevent illicit acts of administrative officials in carrying
out these processes.
LEGAL REGULATION OF THE ACTIVITIES OF BULGARIAN EXPORT
INSURANCE AGENCY EAD: CORRUPTION RISK ASSESSMENT
1. LEGAL REGULATION OF THE ACTIVITIES
The Export Insurance Code governs the activities of the Agency related with the
performance of the specific functions entrusted to it by the State. Detailed arrangements of the
various types of insurance services are laid down in the Rules of Bulgarian Export Insurance
Agency EAD on the activities and procedures related with the conclusion of insurance contracts and
settlement of insurance claims. The detailed regulation envisages clear and accessible procedures
and reduces the scope for discretionary decisions of the administration.
2. STAKEHOLDER AWARENESS OF THE AGENCY’S ACTIVITIES
The procedural rules are available to a wide circle of users of the Agency’s services. All
laws and regulations related with its activities are posted on the website of the Agency. Detailed
information is available for the various procedures and the required documents. The information is
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
updated on regular basis to ensure better awareness of the stakeholders. It should be noted that these
are only guideline materials and the choice of a specific option for using the export insurance
services should be a matter of additional research.
3. JUDICIAL REVIEW OF THE AGENCY’S ACTIVITIES
The relationships between Bulgarian Export Insurance Agency EAD and its counterparties
do not occur at the plane of administrative law. They are governed by the rules of the civil law.
Any disputes or differences of opinion between the Agency and the insured party related to
settlement of claims under insurance contracts (policies) are resolved by negotiations. If the parties
fail to reach an agreement, the insured party or a third beneficiary, if so provided for in the
insurance contract, can contest the refusal for payment of insurance compensation or the amount of
the compensation before the Board of Directors. If the negotiations and the subsequent decision on
the contestation of the insured party or the third beneficiary do not lead to resolution of the dispute,
the party concerned can file for court action under the Civil Procedure Code.
Pursuant to Art. 14(7) of the Export Insurance Act, the Bulgarian Court of Auditors
(National Audit Office) exercises specific control insofar as the financial operations related with the
activities of the Agency are at the expense of the State.
4. DIRECT ANTICORRUPTION MEASURES
The Rules of Bulgarian Export Insurance Agency EAD does not contain specific
arrangements for filing of complaints/reports regarding corruptive behaviour of staff members of
the Agency (whistleblowing). There are no specific provisions for protection of whistleblowers who
report suspected cases of abuse of power, trading in influence or conflict of interest. Neither are
there specific rules regarding the staff members alleged in these reports. Despite the specific
character of the Agency as a business/commercial entity, one should try to look beyond the confines
of the concept that anticorruption rules are a territory reserved for the state administration only. The
business sector also uses and applies such rules.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
I. LEGAL REGULATON OF THE ACTIVITIES OF THE NATIONAL CUSTOMS
AGENCY: CORRUPTION RISK ASSESSMENT
1. HIERARCHY OF THE LEGAL FRAMEWORK
Being a centralised administrative structure under the Minister of Finance, the National
Customs Agency (NCA) and its work are regulated by the Community and national legislation. At
supranational level, customs affairs are subject to a huge number of international and customs
conventions, treaties and agreements.
A) The functions of the customs administration and the procedures liable to customs control
and supervision are regulated by one national law and a plethora of second-level legislation,
including rule books, ordinances, instructions and decrees. Numerous EC Regulations on the
working arrangements of the customs administration and the procedures applicable to movements
of goods within and outside the Community, including the Regulation establishing the Community
Customs Code, are directly applicable in Bulgaria and prevail on the national legislation in case of
conflict and divergence.
B) The work of the customs administration and the procedures liable to customs control are
also the subject matter of administrative acts issued by the Director General of NCA alone or jointly
with the heads of other agencies involved in the movement of the goods concerned.
C) The last level in the hierarchy of the legal instruments comprises the individual decisions
and other acts, which the customs officers directly responsible for the particular movements or
procedures take every day in respect to the operators concerned, however these decisions and other
acts do not apply to customs matters in their generality.
There is a balance between the acts issued by the customs administration and those issued at
higher levels. Since the customs procedures can be very diverse, the day-to-day work involves
numerous decisions, which the customs administration is expected to make. On the other side,
however, both the national laws (the Customs Act and its Implementing Rules) and the EU acquis
provide operational independence to customs officers in making these decisions, which quite
frequently results in unjustified decisions and impediments for the operators concerned.
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Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
In a number of cases the highly detailed rules render the operators unable to fulfill the
statutory requirements in order to receive permission for the desired customs procedure or
arrangement.
The very detailed Community and national rules for the so called “simplified procedures” in
practice prevent their wide application as there are many requirements to the operators who wish to
use them, so very few companies have obtained Approved Exporter or Approved Economic
Operator (AEO) status. Although electronic declaration procedures are available, essentially they
provide little facilitation to the clients of the customs administration since the existing laws and
regulations still require the (physical) presentation of various documents.
2. STAKEHOLDER AWARENESS OF CUSTOMS ACTIVITIES
The legal rules governing the customs procedures are available to a wide circle of users of
the customs administration’s services. The NCA website contains all laws and regulations, at
national and EU level, concerning the movement of goods. The information is updated on regular
basis to ensure better awareness of all stakeholders. However, an issue that has to be raised is the
complexity of customs work and the difficulties involved in the practical application of the various
customs procedures, especially if they are pursued without the help of customs brokers.
Regarding the details of the customs procedures, the Customs Act establishes the right of
free access to information and the conditions under which the customs administration may issue
Binding Tariff Information (BTI) and information about the origin of the goods.
3. JUDICIAL CONTROL ON THE ACTIVITIES OF THE AGENCY
The decisions issued by customs officers are individual administrative acts and therefore
must be supported with reasons. They can be appealed administratively or in court. Despite the
existence of explicit norms, the final decision as to whether the legal requirements for issuing the
act requested by the customs client are met or otherwise is in the discretion of the administrative
authority. This fact does not determine the final contents of the act, but it costs financial and human
resources and time for the customs client to appeal the act to a higher administrative level or in
court. However, the appellable administrative acts do not include the numerous decisions to demand
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
additional information or documents, which are left to the discretion of the customs officers directly
involved in the procedure. In essence, this may lead to unreasoned demands aimed at achieving
results which are not regulated by the law. The preemption of these “decisions” must equally be the
objective of regulatory, structural and functional changes aimed at reducing to reasonable limits the
discretionary powers of customs authorities. While the customs legislation contains very detailed
rules for each and every customs procedure, it nevertheless leaves leeway for discretionary
decisions of the customs officers, and this, rather than facilitating the users of the customs services
and the customs officers themselves, leads to displacement of focus and replacement of the
objectives intended by the law.
4. DIRECT ANTICORRUPTION MEASURES
4.1 GENERAL FRAMEWORK
The efforts to reform the customs administration and achieve higher integrity of customs
officers have lead to serious structural and staff changes, new rules for recruitment of customs
officers, new forms of job description sheets, and a new integrated IT system for management of
human resources. In order to achieve greater transparency in the work of the administration, citizens
transiting the border crossing points are asked to complete anonymous questionnaires. New forms
and methods for attestation of the staff members are introduced and job candidates undergo
psychological tests for determining their loyalty to the organisation (HCS – Integrity check).
4.2 SPECIFIC ANTICORRUPTION ACTIONS
There is a solid legal basis for prevention and countering illegal acts of customs officers,
which rests on the provisions of the Customs Act and is further elaborated by the Minister of
Finance in the Code of Ethics of the Customs Officer. There is also the Client Charter, which
fosters the statutory rights of stakeholders. The NCA website provides easy and accessible
information and office phones (email address) to anyone willing to report allegedly illegal acts of
customs officers. The administration disregards anonymous reports and does not have specific
measures for protection of persons reporting illegal acts of customs authorities, however,
notwithstanding the official position in respect to anonymous information, the Annual Customs
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Report for 2011 does provide the total number of all investigated reports, including the anonymous
ones.
5. SPECIALISED UNITS AND THEIR FUNCTIONS
The Inspectorate service of NCA, whose task is to ensure that staff members behave
appropriately and in compliance with the established rules, is now part of the Inspectorate Unit of
the Ministry of Finance. The Statute of NCA provides that recommendations and reports containing
allegations against staff members are responsibility of Directorate “Organisation and management
of human resources”, more specifically of its “Professional standards and internal investigation”
unit at the Central Customs Directorate (Head Office of Customs). The officers of this Directorate
have powers to undertake investigations, establish offenses and impose administrative-penal
liability for conflict of interest or other disciplinary offences, and these powers are officially
regulated. There are approved Guidelines for establishment of disciplinary offenses and carrying
out disciplinary procedures, and compliance officers/controllers have received dedicated training.
6. REPORTING
Already the first pages of the Annual Report of NCA, which is published on the website of
the Agency, provide very detailed statistics regarding the detected offenses, the undertaken
disciplinary procedures and the imposed penalties. The information includes the number of initiated
cases and internal investigations, the law under which they were carried out (the Civil Servants Act,
the Conflict of Interest Prevention and Detection Act or the Customs Act) and the findings/results
of these checks and investigations: incompliance of staff members, conflict of interest or other
disciplinary offenses. The published information also includes details of inquiries into the personal
assets of staff members as well as the fact that some cases were forwarded to the competent
authorities of the National Revenue Agency (the tax service).
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
7. GENERAL CONCLUSION
The regulatory provisions on the functioning of the customs administration ensure
harmonised implementation of the administrative procedures, however the discretionary powers
afforded by certain provisions are conductive to elicitation of corruptive practices. The
“appropriate” legal environment, combined with legislation imposing multiple licensing regimes,
the control of which is mandated on the customs authorities, gives rise to administrative hurdles that
can be overcome not necessarily by legitimate means. The creation of conditions for wider usage of
simplified procedures and the optimisation of the administrative capacity for application of these
procedures would be a important step for preemption of corruption.
ІІ. ASSESSMENT OF EXPORT-RELATED CORRUPTION RISKS
Until now, the small and medium enterprises in this sector have been carrying out their
export operations in competitive market environments, under relatively limited financial resources
for innovations and continuously increasing requirements to the quality of the exported goods and
services. The bulk of the export in this sector is for EU Member States, all of which have stringent
regulations for marketing the products and services generated by Bulgarian SMEs. At the same
time, some exports are destined for African, Middle East, Asian and other Balkan countries. In this
market situation, the corruption risk profile is defined both by the existing objective conditions and
subjective (discretionary) drivers.
The first phase of export operations – establishment of contacts, seeking of international
partners and entering into contractual arrangements, involves the following corruption risk
elements:
• Ignorance of the applicable regulatory framework;
• Insufficient technical capacity and resources, including lack of investments in
innovations;
• Tendency to over-rely on the experience of intermediaries and entrepreneurs, who
have already been involved in similar businesses;
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
• Lack of competent staff for performing these operations.
In such circumstances there is a growing risk of resorting to unauthorised or illicit means to
compensate these deficiencies.
Small enterprises encounter huge difficulties trying to access whatever options for making
direct contacts with potential partners in the export of these types of products and services. In
contrast with other sectors, the highly specialised nature of these products means that demand is
confined to a relatively limited number of international importers. On the other hand, practical
experience has shown that most exporters in this sector have already some sort of relationship,
either as subcontractors or as distributors, with one or more companies operating in these markets.
This situation nourishes at least three other elements of corruption risk, namely:
• Possible monopoly on the market;
• Lack of effective mechanisms for abating unfair competition;
• Lack of intra-company rules for protecting the interests of exporters.
Where one of these elements or a combination of these elements is in place, the level of
corruption risk is higher as the potential exporter is not independent and responsible for its acts.
The second phase is one which elicits high levels of corruption risk, namely the organisation
of export operations in accordance with requirements and rules existing in the country. This
involves the following factors of commercial risk:
• Ignorance of the applicable legal framework;
• Strong distrusts in public institutions;
• Lack of clear comparability and uniform standards among the institutions existing in
other countries and in our country.
The third critical area or relevance to the level of export-related corruption risk in this sector
is delineated by the guarantees of the remedies available to the exporter. The specificity of these
exports determines at a higher degree the readiness of the exporters to make additional efforts for
protecting their receivables. Accordingly, practices which provide financial guarantees for
receivables from international partners can efficiently preempt the risk of resorting to illicit
maneuvers.
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
ІІІ. DESIGN AND IMPLEMENTATION OF EXPORT STRATEGIES DRIVEN BY
GENERAL AND SPECIFIC CHARACTERISTICS OF THE ENVIRONMENT
(COMPARATIVE INTERNATIONAL BENCHMARKS OF THE SPREAD OF CORRUPTION
AND SPECIFIC NATIONAL CHARACTERISTICS OF THE MAJOR MARKETS)
To ensure successful design and implementation of effective export strategies for businesses
in the sector, account should be taken, among other factors, of the characteristics of environment in
which these businesses plan to implement and achieve their business programmes and targets.
Accordingly, it is important take into consideration analytical materials and data from international
comparative surveys, which provide benchmarking evaluations of:
• The overall anticorruption context in which businesses and public institutions in the
individual countries and regions carry out their functions;
• The efficiency of institutional efforts in combating corruption;
• The sectors and institutions, which are found to exhibit most significant deficiencies
in terms of functional efficiency, operational transparency and extent to which they have been
affected by the spread of corruptive practices.
Three well recognised cross-national surveys of the international anticorruption organisation
Transparency International can be used as tools for estimation of the spread of corruption on global
scale and the extent to which key national institutions and sectors have been affected:
Corruption Perception Index
Transparency International’s Corruption Perception Index measures the level of political and
administrative corruption based on the judgments of representatives of the business community,
economic and political risk analysts across the globe, including polled experts from the countries
included in the survey. The Corruption Perception Index varies from 10 (indicates low level of
corruption and practical absence of corruptive pressure) to 0 (indicates an extremely high level of
corruption enrooted in all institutions and spheres of socio-economic activity), the midpoint 5
defines the line in the sand above which corruption is not a system problem, while values lesser
than 3 are critical as they mean that corruption in the country concerned is ubiquitous. The survey
can be used for making regional and subregional comparisons in order to give broad guidance to
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
businesses as to which countries in a given region present the highest corruption risk and
accordingly offer the most inappropriate business environment as a whole.
Global Corruption Barometer
The Global Corruption Barometer measures the spread of corruption across individual
sectors and institutions in the countries included in the survey. It reflects the perceptions of citizens
and their immediate experience from encounters with corruptive practices. GCB values vary from 0
(for corruption-free sectors and institutions) to 5 (for heavily corrupted sectors and institutions).
This survey makes it possible to compare the levels to which the corruption has permeated
key sectors of social, economic and political life within the surveyed country. In addition to being a
tool for sectoral analysis, the Barometer can be used as a basis for development of anticorruption
policies with clearly defined priorities. Businesses can use the survey in order to flag those
institutions and sectors of social, economic and political life, which have greater deficiencies in
their work and accordingly present a more serious corruption risk.
Bribe Payers Index
The Bribe Payers Index tells us to what extent the companies in a given country are prepared
to offer and pay bribes in pursuance of their export strategies abroad. The Bribe Payers Index varies
from 10 (lack of willingness to offer and pay bribes) to 0 (high degree of willingness to offer and
pay bribes). The BPI encompasses a relatively limited number of countries (28), but it should be
stressed that these include the largest producing and exporting countries in the world. Businesses
can use this survey to gauge the willingness of their competitors, which operate abroad or
contemplate expansions to new export markets, to offer and pay bribes.
Export strategies in the sector for manufacturing of medical, high-precision and optical
devices and tools should be designed and implemented with attention to the huge difference
between the two groups of countries, which are the major markets for this type of products: 1)
markets in EU Member States and 2) markets in non-EU countries. There is a major difference in
the overarching environment, in which institutions and businesses perform their functions.
Accordingly, this reflects not only on the scope and spread of corruptive practices in the second
group of countries, but also on the way their national companies do business abroad.
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The design and implementation of export strategies in the sector for manufacturing of
medical, high-precision and optical devices should be made with reference to the data for the most
important markets:
A) MARKETS IN EU MEMBER STATES: BELGIUM, GERMANY, ITALY,
AUSTRIA, FRANCE
The Corruption Perception Index puts Germany, Austria, Belgium and France at the top of
the rating list. These countries demonstrate high institutional efficiency in countering corruption.
While the EU average value of the Index is 6.27 points, the CPI values for these countries stand at 8
for Germany, 7.8 for Austria, 7.5 for Belgium and 7 for France. Within this group of countries, the
one having more serious issues with the spread of corruption is Italy with CPI 3.9 for 2011, which
suggests that the country’s efforts in combating corruption are not efficient enough.
The other comparative survey, the Global Corruption Barometer, demonstrates that the
public institutions in these countries work efficiently and apply leading standards for prevention and
combating corruption.
The designers and implementers of export strategies in the above countries should take into
account the likelihood of encountering corruption pressures in Italy. The most serious corruption
pressures can be expected from the judicial system, customs, agricultural agencies and in the
medical services sector. This conclusion can be supported with data from the Global Corruption
Barometer, which reflects citizens’ immediate experiences from their encounters with corruptive
practices. The respondents’ answers to the straightforward question “Have paid any bribe during the
last 12 months?” indicate that the most serious corruption pressure is in the judicial system (28.8%
of the citizens have paid bribes), customs (13.9%), agricultural agencies (12.9%) and the medical
services sector (10%). Concerning the medical services, it should be borne in mind that the
questions relate to the provision of medical services for citizens. Nonetheless, the GCB exposes
deficiencies in the integrity of the key actors in this system. The spread of corruptive practices is
relatively lower with the tax services (6.9%), registration services (6.4%) and police (3.8%). France
and Germany have created a much more integrated environment. More serious risks of corruption
pressure in France can be expected from the agricultural agencies (to which bribes were paid by
8.1% of the citizens during the past year), customs (5.4%), and the medical services (5.1%), while
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competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
businesses can expect more efficient assistance from the tax and registration services, police and the
judiciary (2 to 3 per cent are the cases in which citizens paid bribes during the last year). German
and Austrian institutions and businesses can be expected to operate at highest levels of integrity.
German businesses are practically free from any corruption pressures on the part of customs, the tax
services and the judiciary; the highest percentage of those who paid bribes is among the citizens and
companies interacting with the registration services (1.9%).
According to the listings of the Global Corruption Barometer, the highest risk of
proliferation of corruptive practices of various nature in the group of countries under consideration
can be expected from political actors – political parties are the sector believed to be most heavily
affected by corruption in Germany. Similar data can be seen in respect of Austria.
B) MARKETS IN NON-EU COUNTRIES: CHINA (INCL. HONG KONG), TURKEY,
JAPAN, REPUBLIC OF KOREA, CANADA, TAIWAN, USA, RUSSIA, SWITZERLAND,
SINGAPORE, MEXICO, INDIA
Compared to the EU states, this group of countries offers a less favourable business
environment due to two main deficiencies: less efficient work of public institutions and stronger
corruptive pressure exerted on businesses.
In designing export strategies in this sector, the first dataset to be taken into account is the
Corruption Perception Index. This international ranking can be used for making regional and
subregional comparisons in order to give broad guidance to businesses as to which countries in a
given region present the highest corruption risk and accordingly offer the most inappropriate
business environment as a whole. According to the corruption index, the above countries are classed
as follows (in terms of corruption-free environment):
a) Asia and Pacific Asia (9.2 points on a scale of 10), Hong Kong (8.4), Japan (8), Taiwan
(6.1), China (3.6), India (3.1), Russia (2.4), Republic of Korea (1);
b) the Americas: Canada (8.7), USA (7.1), Mexico (3);
c) Europe and Euro-Asia: Switzerland (8.8), Turkey (4.2), Russia (2.4).
According to the Global Corruption Barometer, the most corrupt domain in China is the
business sector followed by political parties, police and Parliament. This specificity should be taken
into account when designing export strategies for this country, bearing also in mind that Chinese
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
companies are quite prepared to offer bribes in other countries as well. Indian political parties,
police and Parliament bear the heaviest onus of corruption risk. The most corrupt sector in Taiwan
is police followed by the state administration, while the risk of political corruption is only the third
most important one. Similar is the situation in Russia, where the risk of administrative corruption
considerably outweighs the politically underpinned risk: the most corrupt sectors are police and
public administration, followed by the judiciary and Parliament.
The heaviest corruption risk in Turkey exists in the business and administrative sectors.
According to the Bribe Payers Index (based on a scale from 10 – absence of bribe payments,
to 0 – profuse bribing practices), Chinese companies come second after Russian ones in terms of
willingness to pay bribes abroad: the BPI values are 6.1 for Russia and 6.5 for China. Very similar
is the situation in Mexico with BPI of 7 as well as Taiwan and India with BPI of 7.5. Conversely,
the companies in Switzerland, US, Singapore and Japan are far less willing to pay bribes.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
FINANCIAL ANALYSIS
The present analysis of the financial state of the enterprises in sector “Manufacturing of
medical, precision and optical apparatus and instruments” is carried out on the basis of the
following types of financial and performance indicators:
Profitability indicators.
Efficiency indicators
Financial stability/autonomy
Liquidity indicators.
The analysis is based on data from the financial reports1 of 20 export-oriented small and
medium enterprises from the sector that participated in the sociological survey during the month of
November 2011, with the data output presented in the following table:
Table 58 Output data: financial analysis of 11 SMEs from the sector “Manufacturing of medical, precision
and optical apparatus and instruments”, (BGN thousand)
2007 2008 2009 2010
ASSETS 5014 5951 5950 3899
Fixed assets 2467 3135 3184 1713
Current assets – total, out or which: 2519 2756 2693 2158
Inventory 931 1304 999 831
Accounts receivable 929 693 809 566
Cash 659 626 885 759
LIABILITIES 5014 5951 5950 3899
Equity capital 2408 2697 3863 2986
Long-term liabilities 1036 1738 615 192
Short-term liabilities 1570 1516 1472 721
Accounts payable 1565 1499 1424 690
Liabilities to suppliers and clients 734 743 588 173
TOTAL REVENUES 10090 8354 7554 4384
Net sales income 9049 8090 7191 4214
TOTAL EXPENDITURES 8574 7623 7161 3982
Accounting profit 1516 731 393 402
Tax expenses 152 81 51 42
Net profit 1364 650 342 360
1 The data source is the Trade Register at the Registry Agency, Ministry of Justice.
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The listed statistics delineate a decrease in practically all financial parameters in 2010
compared to 2007, with the exception of cash reserves. The most significant decrease regards the
profits, especially in 2009, most likely under the influence of the global economic crisis. In 2010
the enterprises recorded a minor improvement, while profits remain far below the pre-crisis levels.
Three of the analysed enterprises hold two-thirds of all the assets and are responsible for
more than 80% of the profits for 2007-2010.
Profitability indicators
The indicators for profitability regard the overall yields and returns. They show the
efficiency in using the input resources and turning them into revenue for the enterprises. The
coefficients for profitability are positive values when the financial results of the company represent
a profit, and negative when it is a loss.
When elaborating the profitability analysis of the enterprises we have used the following
indicators:
Net profit margin
This coefficient shows how much financial profit the company makes as a result of one unit
of generated revenue – or in other words how much profit/loss has 1 BGN of revenue produced. It
is calculated according to the following formula:
Net profit margin = _____After-tax net profit_____
Net sales income
The values of this indicator for the surveyed SMEs are presented in the following
table:
Table 59 Net profit margin coefficient
2007 2008 2009 2010
Total for 20 SMEs 0,15 0,08 0,05 0,09
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
During the analysed period the coefficient for the net profit margin has deteriorated because
of the more rapid drop in profits of the enterprises compared to the net sales income since 2007.
The decreasing values of this indicator demonstrate that the enterprises cannot maintain higher net
profits from the sales they record. Nevertheless, the interruption of the trend in 2010 gives
promising signs of recovery.
Return on Equity
The return on equity (ROE) ratio reveals the amount of profit/loss generated by a unit of
equity (owner and paid-in capital), and consequentially the share of the current profits/losses
compared to the total equity. This is among the frequently used ratios when analysing prospective
investment in a given enterprise. The coefficient is calculated according to the following formula
Return on equity = _____ Net income ________
Shareholders’ equity
The values of this indicator for the SMEs are listed in the following table:
Table 60. Return on Equity (ROE) ratio
2007 2008 2009 2010
Total for 20 SMEs 0,57 0,24 0,09 0,12
Using equity capital for the SMEs leads to positive financial results. The significant
decrease in the ROE values in 2009 is owed to the drastic drop (by around 50% annually in the
period 2007-2010) of the profits compared to the increase in total equity.
Return on assets
The return on assets (ROA) indicator demonstrates how profitable a company is relative to
its assets. The ratio is calculated according to the following formula:
Return on assets = _____ Net income ________
Total assets
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Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Values of the indicator for the 20 analysed SMEs are presented below:
Table 61 Return on Assets (ROA) ratio
2007 г. 2008 г. 2009 г. 2010 г.
Total for 20 SMEs 0,40 0,15 0,08 0,11
The dependency of these profitability indicator ratios on the amounts of profits reported
established once again in the ROA ratio and manifests a directly proportional correlation between
short-term changes and the volume of profits posted.
Thus calculated, the profitability ratios indicate that higher profitability for the enterprises in
question is gained by net sales and equity “employed” rather than total assets.
Efficiency indicator
The efficiency ratio is an indicator of the relation between revenues and expenses of the
enterprise. They reveal the economic effects the enterprises manage to obtain out of a unit of
expenditures (or alternatively a unit of revenues).
Classic indicators of efficiency are the ratios of expense efficiency or revenue efficiency.
They are reciprocal and the difference in their values is in the value of the coefficients and the
direction of the indicator itself. Hence in this analysis we will use the revenue efficiency ratio which
is the one rather more often. It shows the amount of expenditures needed to realise one unit of
revenues and is calculated according to the following formula:
Efficiency ratio = _____ Total expenditures_______
Total revenues
The values of the indicator for the analysed SMEs are presented herewith below:
Table 62 Efficiency ratio indicator
2007 2008 2009 2010
Total for 20 SME 0,85 0,91 0,95 0,91
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0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
If we have positive financial results for the period in question, the efficiency coefficient is
below 1,0. The increase of the ratio – closer to 1,0 – during the analysed period speaks of a negative
trend in the financial results reported by the 20 SMEs.
Indicators of financial stability/autonomy
Indicators of financial autonomy give quantifiable characteristics to the degree of financial
independence of the company from creditors. They express the ratio between equity capital and the
total amount of various amounts of financing that the enterprise uses.
Financial autonomy ratio
The financial autonomy ratio gives a quantifiable description of the degree of financial
independence of the enterprise from creditors. If the coefficient is below 1,0 then the company has
exceeding liabilities compared to equity capital, and vice versa. It is calculated according to the
formula:
Financial autonomy ratio = _____ Equity capital_______
Total liabilities
The values of the indicator for the analysed period are presented in the following table:
Table 63 Financial autonomy ratio
2007 2008 2009 2010
Total for 20 SMEs 0,92 0,83 1,85 3,27
In all of the analysed enterprises from sector “Manufacturing of medical, precision and
optical apparatus and instruments” we have a prevalence of liabilities in the beginning of the period
in question. However, with the overall upturn in their economic performance and development, in
2010 we register a stable dominance of equity compared to liabilities and we can consider the
enterprises financially independent from outside funds.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Indebtedness ratio
This indicator represents the degree of dependence of the enterprise on its creditors for
settling its liabilities and payments. It shows how much liabilities have been incurred when
compared to one unit of equity capital. When larger than 1,0, the coefficient demonstrates a certain
degree of dependence of the SME on external sources of funds. The ratio is calculated according to
the following formula:
Indebtedness ratio = _____ Total liabilities_______
Total equity
The values for the 20 analysed SMEs are presented below:
Table 64 Indebtedness ratio
2007 2008 2009 2010
Total for 20 SME 1,08 1,21 0,54 0,31
Despite the fact that in the beginning of the analysed period the SMEs report a high
indebtedness ratio, the dynamic changes in its value demonstrate a clearly positive trend in
progress. The results correlate with the calculated values for the financial autonomy ratio, thus
showing that by the end of the reported period the SMEs in question could safely and securely
cover their liabilities with own equity and resources.
Liquidity measurement ratios
Indicator ratios for liquidity demonstrate the capacity of a company to liquidate current
accounts payable. The liquidity of the 20 enterprises is reported in terms of the following indicators:
Current liquidity ratio
This indicator accounts for the degree to which current liabilities are covered by assets and
is calculated thus:
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Current liquidity ratio = _____ Current assets_______
Current liabilities
Quick liquidity ratio
This indicator is calculated according to the formula:
Quick liquidity ratio = Cash & equivalents + Short-term investments + Accounts receivable__
Current liabilities
Cash liquidity ratio
The indicator is calculated according to the formula:
Cash liquidity ratio = ___ Cash + Cash equivalents + Accounts receivable______
Current liabilities
Absolute liquidity ratio
This ratio is represented by the following calculations:
Absolute liquidity ratio = _____ Cash
Current liabilities
Average values for the above described liquidity ratios for the 20 SMEs in the survey are
presented in the following table:
Table 65 Liquidity radios
2007 2008 2009 2010
Current liquidity ratio 1,60 1,82 1,83 2,99
Quick liquidity ratio 1,01 0,97 1,19 1,92
Cash liquidity ratio 1,01 0,88 1,19 1,92
Absolute liquidity ratio 0,42 0,42 0,62 1,10
The higher the values for the liquidity ratios, the better prepared is a company to meet its
liability payments. Values below 1,0 are significative of the incapability of an enterprise to
eliminate all short-term liabilities and accounts, should they be required at a short notice. Given
such a situation the company may opt for alternative sources of financing (such as loans). Ratios for
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
current, quick and cash liquidities keep their values above 1,0 for the analysed enterprises,
especially in 2010; and we also notice an increase in the indicators’ values due to the drop in overall
short-term liabilities. Therefore enterprises from the sector have at their disposal more current assets
than liabilities. At the present levels the degree of risk that the SMEs face of possibly being
incapable of meeting their financial obligations is much lower.
The analysis of the coefficient of absolute liquidity – which characterises the solvency of the
enterprise, should the maturity of current liabilities be close to the date of balance elaboration –
demonstrates favourable present financial conditions for the 20 surveyed enterprises, although it is
not able to outline a long-term security and stability at the current values reported.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
RESULTS FROM THE SOCIOLOGICAL SURVEYS AND PUBLIC
DISCUSSIONS
In the framework of the project “Elaboration of 18 export strategies and analyses” with a
contracting authority the Bulgarian Small and Medium Enterprise Promotion Agency a sociological
survey has been carried out among 362 small and medium enterprises in Bulgaria, distributed in 18
industrial manufacturing sectors. The field work on the survey has been conducted successfully
during the period 31 October – 28 November 2011. It was implemented by more than 80
interviewers from across the country.
Main goal of the survey is the accumulation of empirical information to be analysed and
intended to facilitate the elaboration of the export strategies.
Subject matter of the study is the export activity of small and medium enterprises from 18
industrial sectors; their present capacities and future possibilities and intentions to export.
Subjects are representatives from the managing teams of the SMEs in question. The
interviews with members of upper management have allowed the accumulation of relevant and
reliable information about the current state, opportunities and perspectives in the export activities of
the analysed industrial units.
Method of data collection – face to face interviews with the manager/owner of the
enterprise or with a substitute of their choice. Apart from a paper copy (a printed survey card), some
of the interviews (at the express consent of the respondents) have been recorded in audio, thus
complementing and expanding the information that is reported in the survey cards.
Criteria for inclusion of the enterprises as survey subjects. In order for an SME to be
considered for inclusion, it has to comply with each and all of the following conditions:
1) to qualify as a small or medium enterprise (according to the definition of the SME
national Law); 2) to be registered in Bulgaria; 3) to be represented by at least 51 % Bulgarian
capital ownership; 4) not to represent a foreign company as a branch; 5) to currently export or
intend (and have the capacity) to export in the near future.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Fieldwork of the survey. For the implementation of the survey to be carried out in the field
for each one of the 18 sectors there have been lists made available containing the names,
headquarters and possible contacts (telephone, e-mail) of SMEs from the entire country. Depending
on the location of the enterprises, the lists were divided between the 28 territorial administrative
districts in Bulgaria. (The division of the lists is related to the fact that the survey network is
structured by districts. That is in each administrative and territorial district in Bulgaria there are
teams in place, led by a local supervisor, which carry out “in the field” the empirical examinations.
For every specific survey the supervisors and the interviewers undergo a separate training and/or are
presented with written instructions that should be able to guarantee the collection of quality and
reliable empirical information). For each one of the sectors within the districts the appropriate
number of enterprises was defined amongst which to carry out the survey.
The preliminary assignment has been to survey 20 enterprises for each of the 18 industrial
sectors. For most of the manufacturing categories this requirement was fulfilled, and for some of
them even overachieved. Some of the interviewed managers have responded readily and given
valuable information, conscious that without their active participation the present survey could
hardly achieve its goals. Some of them were even managing enterprises that in one form or another
have received assistance by the BSMEPA.
In the process of implementing the fieldwork, however, some obstacles have arisen. With
some SMEs from the sector “Manufacturing of medical, precision and optical apparatus and
instruments” in particular they were the following:
The total number of enterprises for the entire country listed in the preliminary
database presented certain problems reaching the required number of enterprises – 20. Nevertheless
this problem has been overcome. The multitude of criteria that the enterprises had to meet
concurrently led to the exclusion of some of them, mainly because they are not relevant as units to
be surveyed (they do not export or do not even have the potential to do so.)
Out-datedness of the lists – in the work process it appeared that a considerable part of
the SMEs listed do not exist in reality; others have changed their address or telephone numbers and
remain difficult to trace.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Refusals from potential and suitable respondents for participation in the survey. For a
variety of reasons (very busy; negative attitude towards governmental structures which so far have
not provided assistance needed; fear of “information leakage” from the enterprise; or mere
unwillingness to participate in any kind and form of surveys and studies) some SME managers did
not wish to share their opinions.
Despite all the difficulties the survey has achieved its goals – the necessary empirical
information was assembled. It does not claim to represent the sector in its entirety but nevertheless
offers insight into the current development of the enterprises and their export efforts in times of
crisis; their export prospects, obstacles to those, measures to overcoming such barriers and the
manners and forms of support that the SMEs expect from the state authorities in order to continue
developing their industrial activities.
For sector “Manufacturing of medical, precision and optical apparatus and instruments”
the survey includes 20 small and medium enterprises producing:
Optical apparatus, instruments and elements – microscopes for various medical
areas, optical lenses, spherical and flat optical elements;
Instruments and devices for automatisation;
Medical equipment – for electro-surgery;
Mechanical details;
Devices for physiotherapy and sauna control;
Apparatus for cosmetic procedures.
The enterprises are located in five different Bulgarian towns. Predominantly they are
situated in the city of Sofia.
The locations of the surveyed enterprises are presented in the following table:
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 66. Location of the SMEs in the sociological survey
Location Number of
enterprises
Sofia-city 11
Panagyurishte 3
Botevgrad 1
Plovdiv 1
Gabrovo 1
Velingrad 1
Bourgas 1
Varna 1
Data source: Sociological survey
Below we present the distribution of the surveyed enterprises according to the number of
employees and the annual turnover they record.
Table 67. Distribution of the surveyed enterprises according to the number of employees in 2011
Employees Number Percentage
Less than 10 9 45,0
Between 11 and 50 5 25,0
Between 50 and 250 4 20,0
Total 2 10,0
Table 68 Annual turnover of the surveyed enterprises
Turnover Number
of SMEs
Percentage
Less than BGN 3,900,000 16 80,0
Between BGN 3,900,000 and 19,500,000 3 15,0
Between BGN 19,500,001 and
97,500,000 1 5,0
Total 20 100,0
Data sources: Sociological survey
The enterprises that took part in the survey are primarily of “micro” size. In about half of
them (45,0%) the number of employees is less than 10. In the annual turnover statistics we notice
the dominant share (80,0%) of those with less than BGN 3,900,000 reported (2,000,000 Euro).
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
For sector “Manufacturing of medical, precision and optical apparatus and instruments” the
interviewed 20 respondents are members of upper management with positions of general manager
or director (13) or owner (2). There have been five experts and managers interviewed as well. Their
summarised opinion about the priority measures needed to promote small and medium enterprises
in the sector before 2013, as well as in the next planning period (2014-2020) are given in Table 52.
Table 69 Priority measures for promoting SMEs in the sector
Priority Extremely high or a
high priority
Average priority Low or no priority
before 2013 2014 - 2020 before 2013 2014-2020 before 2013 2014 - 2020
Promotion of SME export efforts 72,7 77,8 22,2 16,7 5,6 5,6
Support for technological
modernisation of the production
94,4 94,5 5,6 5,6 0,0- 0,0
Support in adhering to
EU standards
77,8 72,2 22,2 27,8 0,0 0,0
Financing of
innovative projects
88,9 88,9 5,6 5,6 5,6 5,6
Vocational education and training
of SME employed professionals
61,6 66,7 38,9 27,8 0,0 5,6
Attracting direct foreign
investment
52,9 64,7 29,4 23,5 17,6 11,8
Business cooperation and
industrial cluster participation
31,6 44,5 57,9 50,0 10,5 22,2
Consulting and
information services
44,5 61,1 33,3 16,7 22,2 22,2
Improving access
to financing
89,4 83,4 10,6 16,7 0,0 0,0
Note: The percentages are calculated on the basis of valid responses.
In a textual addition one of the respondents has pointed out that “The creation of a
Guarantee Fund to match business plans” could also be a high priority measure, while another one
wrote “None of those measures have any effect on the company. Relying on own efforts.”
The data analysis from the table allows us to mark the following important aspects in
relation to the set of priority measures for promoting the SMEs in the sector.
There are no considerable differences in opinion of the management as to the importance of
the promotion measures in support of SMEs up until 2013 and in the following programme period,
2014 to 2020. According to the experts both periods share analogous distribution of the measures’
importance in ranking. The crucial ones, however, are considered to be:
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Support for technological modernisation of the manufacturing process;
Improvement of the access to finance;
Financing for innovation projects aiming to develop new products, technologies
and services.
These measures are pointed out as having primary importance for both periods by about
90% of the interviewees. The ones that follow also represent a practically equal percentage of
importance for both periods:
Overall promotion of exports of the SMEs
Support for meeting standards of the EU
As far as other measures are concerned, the respondents have defined them as substantial
but to a lower degree; and what stands out for the next planning period of 2014-2020 is that their
significance in supporting and promoting the small and medium enterprises increases. In other
words, the interviewees regard the listed measures as ever growing in importance and requiring
more resources in the future. Worth noting is for example the fact that the importance of
“consultancy and information services” grows by 20 percent for the next period.
When comparing the relative shares of the positive (‘exceptionally high’ and ‘high’ priority)
with the negative (‘low or no priority’) range of responses it is clear that the experts are focused in
the positive part of the scale and the margin between these shares is clearly defined. For the
measures pointed out by the experts as the ones with the highest priority there are no responses in
the negative, as well as the neutral part of the scale. For most of the remaining measures the shares
in the positive range exceed significantly the ones in the negative part of the table. In other words,
according to the evaluations of the interviewed individuals most of the listed measures – although to
a different extent – have their meaning and could assist the existence and growth of SMEs in the
sector. The only exception is made for “business cooperation and cluster participation” with less
than half of the surveyed participants defining them as having high priority. It has been given an
average priority by about half the participants.
Worth noting is the response that according to more than half of the experts (52,9%) the
measure “attracting direct foreign investment” is thought to be of ‘extremely high or high’ priority.
The rest place it within the measures of average or low importance. For the next programming
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
period however its priority grows up to 64,7% which is in line with the overall opinion of the
significance of foreign investment.
In only 3 of the surveyed enterprises there has been some of co-financing of their projects. It
is only related to the European Structural Funds. In general the projects that have been financed
have covered meeting international standardisation requirements, as well as technological
modifications – two projects in 2008 and 2010; one under Programme PHARE in 2008, and one
project related to the enhancement of the competitiveness of Bulgarian enterprises in 2011 that has
been accounted for and financing is expected to be dispensed by the beginning of 2012. But keeping
in mind that institutional support for the technological modernisation of production is a highly rated
priority measure by 90,0% of all experts, it can be concluded that co-financing of these proportions
appears rather insufficient.
Goods and services which the surveyed companies produce are principally within the sector
“Manufacturing of medical, precision and optical apparatus and instruments”. Insignificant
(between 7% and 30% of their production capacity) is the share of those that operate in other
sectors as well. Data from this study show the following distribution of the enterprises according to
the number of the manufactured goods and the share that those occupy in the overall manufacturing
activity of the companies:
Three of the enterprises have pointed to a single main item that has successfully
established its market shares. And it occupies 100% of their main production activity.
One of the enterprises reported one successful principal product that occupies 80% of
their manufacturing activity, while their operations are completed by 20% production of other
goods and services outside the sector in question.
Five enterprises have two successfully positioned products on the market which take
up between 70% and 100% of their production capacity.
Five SMEs have established three products on the market, taking up their entire
production capacity, with said products having success on the markets occupied.
Six enterprises have successfully positioned more than three products on the markets,
while for two of them the number of said products is five.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
In another perspective (regarding product shares) where the first and main product occupies
a certain productive capacity of the enterprises, the distribution is as follows:
For twelve companies their first and main product takes up 50% or less than their full
operational capacity.
For three companies the first and only product encompasses 100% of their
productive capacities.
For the remaining five companies the first product represents anywhere between 60%
and 80% of their main activity as a manufacturer.
The product assortment of the companies in the sector is relatively ample – 6 of them
produce more than three products that have established themselves on the market, while for 5
enterprises one of the proven products occupies more than 50% of their entire manufacturing
activity.
As for the productive capacities regarding exportable goods and services, the data shows
30% of the companies do not have the necessary capacity, while the remaining 70% think they do.
95,0% of the managing teams have the will to export the products they manufacture. And keeping
in mind the almost unanimous (94,4%) opinion of all the experts that technological modernisation
of the manufacturing processes is a measure of the highest priority needed to promote the
development of SMEs, we can deduce that by overcoming insufficient productive capacities and
through their technological improvement a substantial barrier to successful export efforts could be
worked out of the way for most SMEs in the sector.
Data for the capabilities and knowledge of employed staff regarding export activities are
shown in the below Table. According to the interviewed managers about half of the employees in
their enterprises have the necessary knowledge and skills. The largest share is the one representing
employees with high capabilities for carrying out export sales; while their weakest trait is the
command of foreign languages and operating on the foreign markets. Foreign language knowledge,
on the other hand has the lowest share in the negative part of the rankings.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 70 Assessment of the abilities and knowledge of employees in the surveyed SMEs
High Average Low
Accomplishing export sales 63,2 26,3 10,5
Operating on foreign markets 47,4 36,8 15,8
Collecting payments 57,9 21,1 21,1
Command of foreign languages 47,4 47,4 5,3
Source: Sociological survey
This said, we can understand the reasoning behind 66,7% of the managers considering
vocational education and training of employees among the leading priority measures for
promoting SMEs during the 2014-2020 planning period.
For the reporting period 2008-2011 the number of companies which have increased their
turnover compared to the pre-crisis 2007 (that is 2007-indexed basis=100%) has naturally decreased
and those that have seen their turnover shrink have increased. Moreover, in the period 2008-2010
every following year their number grows in comparison with the previous year. In the following
Table we can observe the changes in the average indexed values of the turnover.
Table 71 Changes in turnover of SMEs for the period 2008 – 2011 (basis 2007 = 100 %)
year Number of
SMEs with
decreased
turnover
Number of
SMEs that
maintain
turnover
Number of
SMEs with
increased
turnover
Did not exist
in 2007
Did not
answer
Ratio of companies
with increased to
decreased turnover
Average indexed
values: median
changes in %
2008 6 5 8 1 1,33 100,0 6
2009 9 3 7 1 0,78 100,0 9
2010 13 2 4 1 0,31 90,0 13
2011 10 3 4 3 0,36 90,0 10
Source: Sociological survey
For the enterprises in question the data analysis related to their turnover can lead us to the
following conclusions:
Six of the companies experience a lasting decrease in turnovers, with two of those
reporting levels of around 30% for 2011 compared to 2007.
Two enterprises in 2011 have succeeded in surpassing turnovers from the 2007 level
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Four companies, although hesitantly, have reached 2007 turnovers and are
maintaining them
The remaining seven enterprises do not have a clearly delineated trend in their
turnover changes
One company has not revealed turnover change data for the period
Figure 7 Average change in turnover within the surveyed companies by years (in %)
Data source: Sociological survey
From the graphic example above we can see that for the companies with a positive change in
turnover for the 2008-2011 period the values keep increasing. For the group of enterprises that have
dropped below 2007 levels there is no particular trend. Despite that we can note that the most
critical one has been 2010. And for the time period 2009-2011 the average drop in turnover has
exceeded the average increases, apparently reflecting the adverse effects on the surveyed
companies. (The graph omits data for enterprises which have kept their turnovers at 2007 levels).
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Over the entire reporting period (2007-2011) the direct export of the enterprises has been the
preferred approach – they export their production on their own. About a quarter of all enterprises
have used the services of other companies or trade associations, with one of them reporting the
share of mediated export to exceed 50% in each one of the years in question. One company exports
only through an intermediary, however the volume of exports is always within 1% for the period
2007-2011. At present they are establishing their own trade contacts. Two enterprises have reported
neither a direct nor a mediated export simply because it expects to start exporting in the near future.
If we trace the export trends in the years 2007-2011 we will notice that despite the decrease
in turnover of the companies, the average share of the exported production remains stable. Attention
should be placed on the fact that four of the enterprises have exported all of their production for the
period in question. 7 economic units have exported half or more of their production, while for three
of them this share reaches 94-95%. Only three companies report shares of under 5%.
Table 72 Number of SMEs according to the share of self-sustained exports for 2007 – 2011
year Share of own exports
No
exports
up to 50
%
51 – 99 % 100 % Median % value of
exports
2007 5 5 5 5 55,0
2008 5 5 5 5 55,0
2009 5 6 4 5 50,0
2010 4 6 6 4 55,0
2011 3 8 5 4 50,0
The data shows that during 2007 – 2011 the number of non-exporting companies has
decreased; but so has the number of those that export 100% of their production. There is a trend for
increasing the number of enterprises that export up to 50% of their production. For 2011 this trend
compensates for the decrease in number of economic units that have exported more than 50% of
their production in the past years.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Managers of those SMEs have also evaluated the degrees of importance of the principal
barriers (obstacles) to the export functions of their enterprises, as well as for the sector as a whole
for the reported period 2007 – 2011. The data is presented in Table 56.
Table 73 Table 73. Evaluation of the importance of barriers (obstacles) to SME and overall sectoral export
efforts for 2007 – 2011 (in %)
Barriers (obstacles)
Degree of importance/gravity of barriers (obstacles)
Very serious
and serious obstacle
Not especially serious
or not an obstacle at all
for the
enterprise
for the
sector
for the
enterprise
for the
sector
1. High input prices
of produced goods and services 36,8 27,8 63,2 72,2
2. High export-related expenditures 27,8 27,8 72,2 72,2
3. Insufficient quality levels
of produced goods and services 15,8 22,2 84,2 77,8
4. Lack of qualified staff/experts
able to guarantee quality 16,7 33,3 83,3 66,7
5. Lack of experience
in foreign trade matters 36,9 44,4 63,2 55,6
6. Language barriers 15,8 17,6 84,2 82,4
7. Unfavourable business environment
in Bulgaria 68,5 77,8 31,6 22,3
8. High risk on the
various foreign markets 29,4 33,3 70,5 66,7
9. Customs and non-customs limitations
imposed by other countries 35,3 33,3 64,7 66,7
10. The need to upgrade economic and
administrative support for the sector on behalf
of the Bulgarian state authorities, esp. in
formulating tasks for the new programming
period of EU financing
72,2 72,2 27,8 27,8
Note: The percentages are calculated on the basis of valid responses.
With some provisional delineations we could place the responses into three different groups
of barriers to the export development of SMEs from the sector: 1) barriers tied to the technological
conditions and levels of performance /1, 2 and 3/; 2) obstacles connected to the human factor /4, 5
and 6/; 3) obstacles related to the actions (and inactions) of the state administration and institutions
/7, 8, 9, 10/. The analysis of the data in the above table allows us to draw several important
conclusions.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
To begin with, in the first two groups (technological and human factors) the predominant
evaluations characterise the listed barriers as not so serious or defining for the export capabilities of
the enterprises and the sector as a whole. Here we can underline the above-mentioned opinion of the
experts that only 5,3% of the personnel possess sufficient language training.
Secondly, the last group of barriers (those that to a large extent are associated with the
“environment”) are evaluated by the surveyed managers as representing a much greater and more
serious group of obstacles that the exporting companies face. The foreign market risks and the
customs and non-customs limitations do not represent a serious barrier to the business.
Lastly, but just as important to be singled out as a prevailing impression among the
interviewees, the most serious barrier to their export efforts is the “lack of support from the
Bulgarian state authorities for the exporters” (conditionally placed in the “third” group of barriers –
actions/inactions of the public authorities and institutions). This was pointed out by 72,2% of the
respondents. From the point of view of the sector as a whole the most serious barrier remains the
unfavourable business environment in Bulgaria – 77,8%. It is important to emphasise that almost all
other obstacles to the exporting enterprises have been evaluated as “very serious or serious” by less
than half of the respondents.
We could summarise:
The most serious barriers to the exporting SMEs are: the lack of state support (72,2%), the
unfavourable business environment in Bulgaria (68,5%), and at third place with almost 37% are the
high production prices of the goods and services, along with the lack of experience in conducting
foreign trade.
For the sector the unfavourable business environment in Bulgaria has the greatest share
among the serious barriers to exporting (77,8%). It is followed in second place (72,2%) by the lack
of support from the State for the export.
The respondents value very highly the quality of the produced goods and services that they
manufacture, with 80,0% pointing out that it does not represent an obstacle to exports.
126 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Tied to all the above-mentioned barriers are the measures that the respondents have qualified
as having priority in overcoming said obstacles to exporting enterprises and the sector as a whole.
Likewise, they are tied mostly to an adequate state policy in support and promotion of the export by
small and medium enterprises, state protectionism measures including:
Provision of State assistance for participation in expos and other forums, including
expenditures reimbursement;
Cooperation and support in advertising the products;
Promoting Bulgarian products in public procurement tenders;
Support in seeking new markets;
Expansion and modernisation of the manufacturing capacities of the enterprises
which is to a certain extent also related to an improved access to financing;
Better OP’s with a higher percentage rate of co-financing, better project
implementation and funds absorption;
Creation of a Fund for stimulation of the exports;
Quality programmes for vocational training in foreign trade matters.
The following table presents the evaluations that the respondents have given to factors more
or less critical to the enterprises’ success in positioning as exporters of goods and services.
Table 74 Evaluations of the respondents to the degree of importance of factors tied to export success (in %)
Critical factors Evaluation
Very important Important Not important
Low labour costs 31,6 42,1 26,3
High employee qualifications 52,6 42,1 5,3
High technological levels 73,7 26,3 -
Own R&D basis 57,9 26,3 15,8
Staff that is experienced in
foreign trade 47,4 42,1 10,5
Logistic support by the State
authorities when exporting 52,6 31,6 15,8
Source: Sociological survey
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The most important factor for successful export activity is the high technological
levels (or operation and development), voted at 73,7% as very important by the experts.
Followed in second place with 57,9% by the need to possess a research facility. Joint third
most influential with 52,6% categorizing them as “very important” are the personnel
qualification and the logistic support by the government. If we take a look at which factors
the respondents have considered not so important, at the top of such ranking we find the
low labour costs with 26,3%.
Figure 8 depicts the export markets of the surveyed enterprises.
Figure 8. Export markets for SMEs in the survey
Source: Sociological survey
The majority of the enterprises export their production in counties of the European Union.
Second place in the rankings share the North American countries. Followed by equal shares of
Balkan countries (not in the EU), other European countries and the Asian countries. The remaining
export markets are ones with a lower total share – under 5 %.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Figure 9. Percentile distribution of exports according to the number of export markets
Most numerous are the markets on which single SME export volumes amount to 30%.
In the opinion of the respondents their principal competitors among the EU countries are
mainly the Western-European ones – Germany, Italy and France. Among the Central European
competitors those that stand out are the Czech Republic, Poland and Hungary. Eastern-European
competition is mainly represented by Romania.
The main competition coming from outside the EU is perceived to present itself from the
Asian countries – China first and foremost; but also Japan and Korea with a smaller share. Taiwan
is also on that list, as well as manufacturers from the USA, from from Turkey, Ukraine and Iran.
One of the managers claims to have no perceivable competitors.
For the two types of markets (those within EU and outside the EU) we can call attention to
the fact that the neighbouring countries do not present competing enterprises in the sector (with the
exception of Romania). This could probably signal the existence of possible local market niches for
the Bulgarian exporters in the sector.
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
The main comparative advantages of the competitors outlined by the respondents are
connected to: 1) low prices – especially coming from China and Taiwan; 2) better state policy and
strong governmental support; 3) access to financial resources and financial aid; 4) the possibility to
develop basic research and R&DI, and as a result of which to be able to offer innovative products;
5) established trademarks; 6) more attractive design of the products; 7) larger and better developed
technological base; 8) common policy – “united in something like a holding” [sic]; 9) highly
qualified staff; 10) extremely well developed retail/trade network. Among the advantages we also
find high [quality] standards and brand loyalty.
In other words, the advantages of the EU competitors to a great extent are connected to
exactly those factors which the surveyed managers define as highly critical and with a high priority
for the Bulgarian enterprises in the sector.
As far as the advantages of the Asian countries are concerned (mainly China cited) the low
input prices and final product price levels – except for labour costs – could also be tied to a high-
technological manufacturing establishments, access to cheaper financial resources, etc.; all of the
factors that the foreign competitors have and the Bulgarian enterprises do not.
The respondents’ opinions on some potential markets and their evaluation of their separate
viability is presented in Table 58.
Table 75 Potential markets, according to the managers of the surveyed SMEs
Potential
market
Number of
SMEs that
regard it as
potential
Why do favourable prospects exist?
European
Union
5 They have established contacts and contracts,
agreed to be partners
1 did not specify
Europe 2 Ratio price/quality
Faster procedural developments
Easier movement of goods
Price-wise it is more profitable and quality is better
Customer service is better
Italy 2 European Trade centre
1 did not specify
Germany 2 Very strong economy
Company’s particular product is demanded
France 2 Market expands
130 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Did not specify
Greece 2 Lack of domestic production of equipment for optics stores
Demand for pellet fuel boilers
Austria 1 Very strong economy
UK 1 Market expands
Czech Republic 1 New projects starting, tied to medicine
Hungary 1 Market underenexploited by China
Romania 2 Lack of domestic production of equipment for optics stores
Accept quality and prices
The Balkan
countries
1 Easier communications
Easier access
Close-by
There’s no language barrier
Turkey 3 Strong economy
The price is good – 2 companies
FYROM 2 Lack of domestic production of equipment for optics stores
Accept quality and prices
Serbia 1 Lack of domestic production of equipment for optics stores
Russia 2 Traditional market that can absorb anything
Did not specify
Ukraine 1 Accept quality and prices
Japan 1 Did not specify
Rep. Korea 1 Did not specify
China 1 A huge and developing market
Australia 1 Interesting market
USA 3 Buying European production regardless of country of origin,
happy with quality
Direct clash and taking over the segments from leading
companies
A huge and developing market
Possibility of quick payments
Middle East
“Arab world”
2 Unsaturated
Unsure
Developing market
Possibility of quick payments
Abu Dhabi 1 Have the intention to position there single items
Source: Sociological survey
To summarise, the European market represent good prospects mostly because of the
developed economies of the countries it includes, because of already established contacts and
partnerships, easier circulation of goods and faster services, in addition to better sale prices.
131 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
We present the opinion of the respondents on the changes in export performance that they
expect in the next five years:
Table 76. Changes in export performance of the enterprise in the next 5 years (in %)
What type of change do you expect %
Exports will grow rapidly 10,0
Exports will grow slowly 50,0
Exports will maintain current levels 10,0
Company yet to begin exporting 10,0
Cannot decide 20,0
A simple analysis shows that 70,0% of the enterprise managers are optimistic and think they
will be able to maintain their current export performance over the next five years. Half of the
companies expect this to happen at a slower rate. Pessimistically inclined ones – who think that
exports will drop – are missing. About 20,0% cannot presently decide what may happen to the
export performance of the enterprise.
When surveyed the respondents have evaluated a list of information sources they use (or do
not use) in their enterprises. The distribution of these ratings is presented in the table below.
Table 77 Frequence of use of some information sources (in %)
Information source Rating
Main most
frequent
info source
Additional most
frequent
info source
Additional
non-frequent
info source
Do not use
as info source
BSMEPA 10,5 10,5 10,5 68,5
Branch association 10,5 15,8 15,8 57,9
Colleagues within the sector
in Bulgaria
15,8 47,4 26,3 10,5
Colleagues within the sector
abroad
47,4 31,6 5,3 15,8
Own research 63,2 31,6 - 5,3
Internet 57,9 36,8 - 5,3
Source: Sociological survey
It is clear that for the most part the surveyed enterprises acquire the necessary information
for carrying out export functions on their own. The main permanent information sources are own
research (63,2%) and the Internet (57,9%). What makes an impression is that 47,4% of the experts
use their colleagues and partners abroad as a main information source. Those who use the Agency
132 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
and the Branch association as a main information source are quite few – 10,5%. Between 10 and
15% use those two sources as an additional source – whether it’s regularly or not so much. A high
percentage (68,5%) of respondents admit to not using information from a governmental structure
such as the BSMEPA. Also high is the share of managers who do not rely on information from their
branch association (57,9%).
For the interviewed experts the necessary information is above all logistics-related (45.0%).
Additional information on the mechanisms of international commercial payment settlements is
needed barely by 20%. An answer “Other” has been given by 45,0% and they have clarified that
such needs include marketing analyses, information about the markets, about “an easier access to
foreign markets, communications with them, a single trade market, not only Internet exposure”.
(Percentages add up to more than 100, since the question allows more than one answer.)
Out of the services provided by the BSMEPA, the highest effect on export performance of
the enterprises have had participations at international expos and fairs (30,0%), followed by
information campaigns organisation (20,0%) and information about offers and inquiries from
foreign companies (20,0%).
Table 78 Evaluation of the effect on the SME export performance of the services provided by the BSMEPA
(in %)
BSMEPA provided services High
effect
Average
effect
Low
effect
No
effect
Did not
answer
Foreign trade information 15,0 15,0 - 30,0 40,0
Information on foreign
and regional markets 10,0 20,0 - 30,0 40,0
Organisation of participations at
international expos and fairs 30,0 5,0 - 25,0 40,0
Organisation of business forums
in Bulgaria and abroad 15,0 15,0 - 30,0 40,0
Organisation of
information campaigns 20,0 10,0 - 30,0 40,0
Information on international
tenders and auctions 15,0 15,0 - 30,0 40,0
Information on offers and inquiries
by foreign companies 20,0 10,0 - 30,0 40,0
Source: Sociological survey
40% of the respondents have not evaluated the effect of the services provided by the
BSMEPA on their companies’ export operations. They have given textual answers to those. Three
133 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
of them have pointed out that they have not used the services of the Agency and one has specified
that it entails “controversies, bureaucracy, complicated procedures”. One of the managers has
admitted “not to have had the need” and to “not even know what the Agency does”; another that “it
does not provide information”. One of the opinions is that “activity is inexistent, candidates have
been pre-selected. Seven years ago they have presented a project and have been answered that there
is no funds available for them, it has been appropriated to someone else.”
Experts from the surveyed enterprises have ranked a set of factors according to the effect
they have on the export performance of the companies, where with a 1 has been given to the most
important ones and a 9 – to the least important factors. With the highest rank (4,0) has been voted
the factor “provision of information and consultancy services”. “Financial services and products” is
ranked next with 4,5. The lowest rankings (6,0) are achieved by “organisation of instructional
seminars” and “promoting participation at international fairs, expos and other business forums”. All
of the other factors have been given more or less the same importance (graded from 5,0 to 5,5).
Half of the enterprises surveyed (50,0%) have a clear, thought-out and solid export strategy.
With a 95.0% willingness of the managers to actually export, the elaboration of a clear and well-
founded strategy in this respect is grounds for successful exportation in the future.
All forms of cooperation with foreign partners have been narrowed down to merely imports
and exports. Sixteen of the enterprises have established contacts through their export, eleven of the
SMEs also through imports. Three of the companies do not currently have any contacts with foreign
partners. They are about to begin exportation or are in the process of establishing contacts.
A relatively high share of the surveyed enterprises have been able to put on the market a
new product after 2007 – 80,0% of the participants.
Merely 35,0% of the enterprises already use web-sites for advertisement and/or electronic
commerce. The share of exports that has actually been carried out through such sites is presented in
the following table:
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Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
Table 79 Share of exports carried out via web-sites (in %)
Share of the enterprise exports %
Up to 10% of exports 66,7
Between 10 and 20 % of exports 16,7
Between 41 and 50 % of exports 16,7
Source: Sociological survey
The majority of the enterprises carry out up to 10% of their exports through websites.
The share of the surveyed companies in the sector that invest in R&DI is reported as 60,0%.
Most of the investment in innovations is appropriated to expanding the existing activities (61,5%),
followed by the diversification of the production lines (addition of products) (46,2%). The
alternative two suggested forms of investment have a considerably lower share. (Percentages add
up to more than 100 since the question allows for more than one answer.)
As far as owning a trade mark goes, the surveyed enterprises are divided exactly in half –
50% own one while the others do not. 90,0% of the manufacturing units possess international
certificates (mainly ISO), which can be considered good perspectives for future exports.
Some of the interviewed managers have considered sharing their own additional opinions,
needs and problems which may pose an interest to the survey. They are formulated as an answer to
an open-ended question at the end of the survey. We quote these opinions.
“Trainings on managerial and organisational systems”
“The Government should take measures to actively promote the link between students and
business”
135 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
“To remove the currency board – it impedes exports”
“They had a trade mark but they lost it”
“Bureaucracy impedes”
“Not able to co-finance; heavy and slow procedures related to projects”
“Too much pressure with rules and regulations, over-regulated environment that kills business”
“Cosmetics should carry Bulgarian labels, and at the same time foreign goods to not have the
requirement – e.g. French imports. The Hygiene Inspectorate approves the equipment, hence they
impose the equipment of those who bribe them. Certification – ISO (2006) – the HI should not
interfere and pressure the cosmeticians”.
“Goods that are on sale (China) have no rights to be sold according to safety standards because they
have no certificates but put false labels”
“There are no courts and no control”
“Do not see the point of expos. The single items that they sell benefit from of personal contacts and
acquaintances”
“The person refuses to reply to the questions as they have been presented. To him this is just talk
that will not lead to real changes. The Government is taken out of the equation as a factor that can
stimulate, it only creates problems and obstacles.”
“The success of the company is due mainly to own efforts (there is continuity in upper management
– the partners are family members). They have no desire or need to rely on the State in any way. All
the state institutions expect is only money from the companies.”
“Corruption. Pointless requirements, incompetence and bureaucracy. Lazy government employees
that do not know what it means to take responsibility for people that actually work and have to
receive their salaries. We have no faith in the Government, do not participate in political games and
want to be left alone to develop our business.”
136 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
“The enterprise relies on own efforts and direct contacts with foreign partners from which it
receives orders of specific technical assignments”.
“I have a sad experience when submitting a project for financial support. Straightforwardly asked
for money to participate in the project. Do not want to have anything to do with this structure”
“EU membership bonuses are: 1)VAT refunds, and 2)customs procedures made easier”
“Sporadically have received support from the Branch association when participating in expositions
(partial reimbursement of expenses)”
„Procedures of applying through the Agency are very complicated – too much paperwork and time”
“More efficient approach is the directly contacting foreign companies and memberships in branch
organisations with a foreign participation (e.g. Bulgarian-German Chamber)”
137 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
BIBLIOGRAPHY AND STATISTICAL SOURCES:
1. Member States competitiveness performance and policies – EC, Brussels
SEC(2010)1272, accompanying document to „ An integrated Industrial Policy for the
Globalisation Era. Putting Competitiveness and Sustainability at Front Stage”. {COM(2010)61}
2. National Reform Programme (2011-2015) of the Republic of Bulgaria. (In compliance
with “Europe 2020”) – Council of Ministers of Bulgaria, Sofia, 13 April, 2011.
3. Research, Innovation and Competitiveness Package – a Proposal for a Regulation of
the EP and of the Council establishing a “Programme for the Competitiveness of Enterprises and
SMEs (2014 - 2020) – Brussels, 30.11.2011; COM(2011) 834 final.
4. Methodology for strategic planning in Bulgaria – Council for administrative reform at
the Council of Ministers of Bulgaria, Sofia, April 2010
5. Foundations of economics – Gillespie, Andrew; (2nd
ed.) Oxford University Press, 2011
6. Industrial Policy: Reinforcing competitiveness – EC, Brussels, 14 October 2011;
COM(2011) 642 final.
7. Standard Trade Classification (STC-2008) – NSI, Sofia 2008
8. Innovation.bg – 2010 report by Applied Research and Communications Foundation,
Sofia, 2010
9. “Small Business Act” for Europe – EC, Brussels, 25 June 2008; СОМ(2008) 394 final
10. Analysis of the state and factors of development of SMEs (Bulgarian SMEs in crisis
conditions) – NOEMA, BSMEPA, Sofia 2011
11. In developing the present strategy we have consulted and used publicly accessible
statistical data and documents bases from:
i. NSI
ii. Eurostat
iii. MEET of Bulgaria
138 | P a g e
Operational programme “ Development of the
competitiveness of the Bulgarian economy” 2007-2013,
Priority axis 4.2. “Promoting the internationalisation of the
Bulgarian enterprises” Project № BG161РО003 – 4.2.01-
0001 “Promotion Of The Internationalization Of The
Bulgarian Enterprises”
iv. WTO (UN)
v. International Trade Centre, Genève
vi. Data and publications of the BIA, BCCI, BICM
vii. Information from a sociological survey carried out in the period between 31 October and
28 November 2011 with upper management from micro, small and medium enterprises from the
analysed sector
viii. Other official digital information sources
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