Export Strategy MANUFACTURE OF MACHINERY, EQUIPMENT...

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

Export Strategy

For Sector

„MANUFACTURE OF

MACHINERY,

EQUIPMENT AND

HOME APPLIANCES”

Bulgarian Small and Medium Enterprises

Promotion Agency

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”

2







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.

3







CONTENTS:

INTRODUCTION .......................................................................................................................8

APPROACH FOR COMPOSING THE EXPORT STRATEGY OF THE SMALL AND

MEDIUM ENTERPRISES IN THE SECTOR „MANUFACTURE OF MACHINERY,

EQUIPMENT AND HOME APPLIANCES” ..........................................................................9

MAIN CONCLUSIONS OF THE ACTUAL SITUATION ANALYSIS .............................16

MACROECONOMIC CHARACTERISTICS OF THE PRIORITY BULGARIAN

EXPORT MARKETS. BILATERAL TRADE RELATIONS ..............................................68

SWOT AND PESTEL ANALYSIS – SECTOR “MANUFACTURE OF MACHINERY,

EQUIPMENT AND HOME APPLIANCES” ........................................................................88

OBJECTIVES AND STRATEGY TO PROMOTE THE EXPORT OF THE SECTOR

SMALL AND MEDIUM SIZE ENTERPRISES ....................................................................93

STRATEGY FOR PROMOTING THE SECTOR SMEs EXPORT ...................................96

ACTION PLAN – SECTOR “MANUFACTURE OF MACHINERY, EQUIPMENT AND

HOME APPLIANCES” ..........................................................................................................100

MONITORING AND CONTROL SYSTEM .......................................................................111

SOURCES ................................................................................................................................115

4







List of Tables:

Table 1 Regional distribution of companies and employed in sector “Manufacture of

machinery, equipment and home appliances” in 2009 ................................................................18

Table 2 Dynamics of the export by sectors, 2001 – 2010 ....................................................24

Table 3 Base index, 2001=100 ..............................................................................................26

Table 4 Indices for the condition of the export of the SMEs in the manufacturing industry

.....................................................................................................................................................28

Table 5 Indicator for the export of the SMEs in sector “Manufacture of machinery,

equipment and domestic appliances” ..........................................................................................30

Table 6 Export of Bulgaria in sector “Manufacture of machinery, equipment and home

appliances” (million EUR) ..........................................................................................................33

Table 7 Ranking of exporters of hydraulic pumps, hydraulic and pneumatic engines

worldwide for the period 2001 – 2011 (million EUR) ................................................................36

Table 8 Dynamics of the export (base index, base 2001) of hydraulic pumps, hydraulic and

pneumatic engines worldwide for the period 2001 – 2011 (million EUR) .................................36

Table 9 Leading partners in export (million EUR) ...............................................................38

Table 10 Ranking of exporters of furnaces and furnace burners worldwide for the period

2001-2011 (million EUR) ...........................................................................................................39

Table 11 Dynamics of the export (base index, base 2001) of furnaces and furnace burners

worldwide for the period 2001-2011 (million EUR) ..................................................................39

Table 12 Leading partners in export (million EUR) .............................................................40

Table 13 Ranking of exporters of office equipment, except computers worldwide for the

period 2001-2011 (million EUR) ................................................................................................40

Table 14 Dynamics of the export (base index, base 2001) of office equipment, except

computers worldwide for the period 2001-2011 (million EUR) .................................................41


Table 16 Ranking of exporters of extracting and construction machinery worldwide for the

period 2001-2011 (million EUR) ................................................................................................43

Table 17 Dynamics of the export (base index, base 2001) of extracting and construction

machinery worldwide for the period 2001 – 2011 ......................................................................44


5







Table 19 Ranking of exporters of turbines and engines, except aircraft, vehicle and cycle

engines worldwide for the period 2001 – 2011 (million EUR) ...................................................46

Table 20 Dynamics of the export (base index, base 2001) of turbines and engines, except

aircraft, vehicle and cycle engines worldwide for the period 2001 – 2011.................................46


Table 22 Export of Bulgaria in goods group Industrial cooling and ventilation equipment

for the period 2000 – 2010 (million EUR) ..................................................................................50

Table 23 Export of Bulgaria in the group of goods “Machinery and equipment for foods,

beverages and tobacco processing” for the period 2000 – 2010 (million EUR) .........................52

Table 24 Leading partners in export by groups of goods in sector “Manufacture of

machinery, equipment and home appliances with general and special purpose” for the period

2000 - 2010 ..................................................................................................................................60

Table 25 Main economic indicators for Romania and bilateral trade relations with Bulgaria

.....................................................................................................................................................70

Table 26 Economic indicators for Greece and bilateral trade relations with Bulgaria .........72

Table 27 Main economic indicators for the Czech Republic and bilateral trade relations

with Bulgaria ...............................................................................................................................74

Table 28 Trade turnover between Bulgaria and Slovakia (million USD) .............................76

Table 29 Main economic indicators for Hungary and bilateral trade relations with Bulgaria

.....................................................................................................................................................79

Table 30 Main economic indicators for Serbia and bilateral trade relations with Bulgaria ..80

Table 31 Main economic indicators for Macedonia and bilateral trade relations with

Bulgaria .......................................................................................................................................81

Table 32 Main economic indicators for Russia and bilateral trade relations with Bulgaria .83

Table 33 Trade turnover between Bulgaria and Ukraine (million USD) ..............................84

Table 34 Trade turnover between Bulgaria and Kazakhstan (thousand USD) .....................86

Table 35 SWOT and LOED Analyses .................................................................................88

Table 36 PESTEL-analysis ...................................................................................................91

Table 37 Action Plan for Implementation of the Export Strategy of the Sector .................100

6







List of Graphs:

Graph 1 Prognosticated values for export growth /2010-2015./ (in million EUR) ...............22

Graph 2 Export of Bulgaria in sector “Manufacture of machinery, equipment and home

appliances” ..................................................................................................................................34

Graph 3 Export of non-domestic cooling and ventilation equipment ...................................49

Graph 4 Value of the Bulgarian export – motor trucks, electrical trucks and other trucks

/2001 – 2010 / (in thousand EUR) ..............................................................................................53

Graph 5 Value of Bulgarian export – air conditioning machines /2001 – 2010/ ( in thousand

EUR) ............................................................................................................................................54

Graph 6 Value of the Bulgarian export – washing machines /2001 – 2010 / (thousand EUR)

.....................................................................................................................................................55

Graph 7 Value of the Bulgarian export – laundries and other laundry-type washing

machinery /2001 – 2010 / (in thousand EUR) .............................................................................56

Graph 8 Value of the Bulgarian export – sewing machines /2001 – 2010/ (in thousand

EUR) ............................................................................................................................................57

Graph 9 Value of the Bulgarian export – central heating boilers /2001 – 2010 / (in thousand

EUR) ............................................................................................................................................57

7







List of Abbreviations:

GDP Gross Domestic Product

BBCMB Bulgarian Branch Chamber – Machine Building

SOC State-owned company

SPLC Sole Public Limited Company (Joint Stock Company with single member)

EU European Union

EU-27 27 European Union Member States

BSMEPA Bulgarian Small and Medium-size Enterprises Promotion Agency

CEA Classification of Economic Activities

SME Small and Medium-size Enterprises

CM Council of Ministers

NACE Classification of Economic Activities in the European Community

8







INTRODUCTION

The export strategy for economic activity “Manufacture of machinery, equipment and

home appliances” is developed under Project No BG161PO003 – 4.2.01-0001 “Promoting the

internationalisation of the Bulgarian enterprises” under Operational programme “Development

of the competitiveness of the Bulgarian economy”, in implementation of Contract

BG161PO003 – 4.2.01-0001 for direct grant allocation, on which the Bulgarian small and

medium enterprises promotion agency (BSMEPA) is the institutional beneficiary.

The aim of the Export strategy for economic activity “Manufacture of machinery,

equipment and home appliances” is to support the Bulgarian micro, small and medium sector

enterprises to promote their competitiveness, their internationalization level and introduction

and expansion of market positions of the Bulgarian products, and in particular of those, having

higher added value.

The Bulgarian state, represented by BSMEPA, MEET and other government bodies, has

recognized the SME sector to be extremely sensible and at the same time as having decisive

importance in the economic field, deserving special attention. The diversity in the development

of the various industrial sectors, where the SME development has its place, as well as national

priorities, related to promoting the country’s export, require drafting of export strategies for

certain sectors, being the “Manufacture of machinery, equipment and home appliances” sector

one of them. Focusing the support and giving of precise reference points for State intervention

through its institutions, as well as offering development options for the rest of the participants

in the process will strengthen in positive aspect the plan-based principle in State activities and

as a result will improve the sectors functioning. The successful realization of the Expert

strategy is expected to result in the improvement when entering international markets and the

active expansion and strengthening of the market positions of the Bulgarian small and medium

enterprises, manufacturing machinery, equipment and home appliances.

At developing the present Export strategy has been considered the “Methodology for

strategic planning”, drafted by the Council for administrative reform at the Council of

Ministers/CM/ of the Republic Bulgaria.

9







APPROACH FOR COMPOSING THE EXPORT STRATEGY OF THE

SMALL AND MEDIUM ENTERPRISES IN THE SECTOR

„MANUFACTURE OF MACHINERY, EQUIPMENT AND HOME

APPLIANCES”

The export strategy is a strategic document, setting short-term objectives and priorities

within the small and medium sized enterprises (SMEs) export development in Bulgaria. It has

been drafted on the basis of the strategic planning approach, which adroit use has the following

advantages:

Ensures good comprehension among the stakeholders for the trends and what could

bring the future;

Creates general vision and consensus among the stakeholders, coordinating the

various initiatives under the chosen objectives;

Identifies the projects and actions undertaken or planned;

Strengthens the partnership among the management bodies, the business and others

for solving complex problems.

When developing such a strategic document it is extremely important to precisely

formulate the “owner” of the strategy, i.e. the institution or institutions responsible for the

overall implementation of the strategic documents, as well as for the concrete phases of

strategic planning.

Most commonly the phases of elaboration of the strategic document are:

Assignment

Preparation

Development

Coordination

Adoption

Implementation

Evaluation

Update

10







Each of these phases contains certain activities, some of which, as assignment,

preparation, elaboration, coordination, adoption and update at a later stage, will be part of the

project, implemented by the contract, mentioned at the beginning. Consequently, the main

“owner” of the export strategy is the Bulgarian Small and Medium Enterprise Promotion

Agency. This formal logic does not contradict to the fact that as stakeholders in the different

phases are included significant number of institutions, businesses and even the country’s

population.

Strategic planning tools

The strategic planning process includes the following steps:

Identification of the stakeholders

Analysis of the environment

SWOT analysis

PESTEL analysis

Vision

Definition of the targets

Selection of alternative – development strategy

Action plan

Monitoring system

Each of these steps has certain peculiarities, mainly:

Identification of the stakeholders. A stakeholder is each person or group, that

requires attention, that can influence certain decision, may contribute with resources or

may be affected by given decision. The implication of the stakeholders at an earlier stage

of the strategic document development may lead to better expressed consensus on the

targets and bigger readiness to support the decision. The stakeholders to the Export

strategy may include different people and organizations: companies, government bodies,

manufacturer associations, certain businesses, the corresponding products consumers, non-

governmental organizations and experts.

11







Analysis of the environment. The analysis of the environment (the conclusions on

which is based the SWOT analysis) permits the definition of targets and priorities that are

going to synchronize the efforts and to be in line with the time and environment.

The analysis describes the present situation of the SMEs in the sector and the

export process, establishes the reasons that provoke problems in the development, and sets

the future development trends.

SWOT analysis. The SWOT analysis gives the opportunity to identify the main

internal factors, differentiated as “strengths and weaknesses” and the external factors –

“opportunities and threats”, helps formulating the strategic objectives, priorities and

measures. The use of SWOT protects from setting unreachable objectives and priorities for

the export development of the SMEs of sector “Manufacture of machinery, equipment and

home appliances” within the Strategy period.

The use of SWOT analysis when developing the Export strategy has certain

specifics, as the “owner” of the strategy is the BSMEPA, but the analysis is focused on the

export process of the SMEs in this exact sector and not on the industry itself.

PESTEL analysis. There are number of factors and “variables” that have a direct

or indirect influence on the business environment in our country as well as on the whole

manufacturing industry state. Tax rates, amendments in law, trade barriers and

administrative requirements, political and social trends represent macro factors having

perceivable effect on the enterprise operation.

PESTEL analysis is focused on analyzing the factors and tendencies on macro level

influencing the development of Bulgarian manufacturing industry, SME and the

“¨Manufacture of machinery, equipment and home appliances” sector in particular.

The use of this analysis shall present key conclusions for the positioning and

planning of SME development in this sector.

Vision: Defining the vision is extremely important for the future development of

the export of SMEs in “Manufacture of machinery, equipment and home appliances”, as it

demonstrates the view of the institutions and the business towards the future. The vision

12







seeks answer of one basic question – How do the stakeholders and the main participants in

the process want the sector export to look at the end of the period, covered by the strategy?

Definition of targets. The strategic planning is focused on the issues of critical

importance, the opportunities and the problems, faced by the SMEs export of sector

“Manufacture of machinery, equipment and home appliances”. It helps to outline the really

important decisions from those decisions with temporary impact.

The definition of the targets by making hierarchical tree of goals is a working

instrument, giving the opportunity to work out in detail as the most common general

objectives, as well as the most specific ones.

Reaching the level of the specific targets permits finding the answer of the questions

“who”, “what” and “when”, as to guarantee the achievement of the defined general goals.

Selection of alternative – development strategy. After the objectives definition,

the paths for their achievement are sought. Practice shows that this may be done through

different ways, representing different alternatives for development and achievement of the

set objectives. At this stage of the strategic planning the various alternatives are evaluated

by different point of views and criteria, and as a result one alternative is chosen, that is to

become a development strategy.

Action plan. The chosen strategy is to be supplied with certain activities and

measures, bound by deadlines, people in charge, executors and funding. The action plan

and the measures provided therein represent the transformation of this strategic instrument

into our everyday work and the realization of policy of supporting the SMEs from sector

“Manufacture of machinery, equipment and home appliances”.

Monitoring system. The last stage of the strategic planning process is the

monitoring and evaluation of the progress of implementing the general and specific

objectives, laid down in the export strategy and in the action plan. Monitoring is important

as it gives the possibility to undertake corrective actions, if the progress is unsatisfactory or

if the conditions are changed. Reporting the progress in achieving the general objectives in

front of the society and the business is also important, as to grant them the possibility to

evaluate the work of the corresponding institutions and stakeholders for the strategy

13







realization. We must note that very often impacts may not be visible or obvious, that

makes their measurability difficult. Moreover, impact may often result in cumulative effect

and it may additionally complicate the analysis. This gives particular importance of the

monitoring, which is closely related with all stages of implementation of the Export

strategy – preliminary (ex ante), current (parallel to realization) or posterior (ex post)

evaluation.

In order to monitor the export strategy implementation and to evaluate the results

achieved in terms of the set goals, it is necessary to use a set of indicators related to the

implementation of the strategic document, that are to be determined preliminary or early

enough, as to use the data obtained thereof. In most of the cases these will be targets,

which in aggregate will correspond to the objectives of the strategic document.

The monitoring provides the feedback, helping to render account about the success

or failure of the planning document.

In order to perform the monitoring process it is necessary to define:

Monitoring indicators (what is to be monitored)

Periodicity of the monitoring and the evaluation (when are going to be prepared

the corresponding reports)

Responsibilities, related to the monitoring and evaluation implementation (who

and for what is going to be responsible), and competences on taking decision on

changes (update of the strategic document).

Information sources

When developing the export strategy the following basic information sources have

been used:

National Institute of Statistics;

Information, given by BSMEPA;

Information from the Ministry of Economy, Energy and Tourism;

14







Eurostat;

World Trade Centre;

Information, published in relation to the celebration of international forums and

meetings;

Official electronic information sources;

Information, published by the Branch chamber of wood-working and furniture industry

Information by the Bulgarian Chamber of Commerce and the Bulgarian Chamber of

Commerce and Industry, as well as their regional divisions;

Information from sociological survey, carried out within the period October 31st –

November 28th, 2011 together with the senior management of 13 SMEs, working in

the sector;

Focus group carried out with the participation of sector SMEs representatives, branch

organizations and sector experts.

Structure of the Export strategy for sector “Manufacture of machinery, equipment and

home appliances”

At determining the structure of the Export strategy for sector “Manufacture of

machinery, equipment and home appliances” has been considered the use of the strategic

planning approach, setting the general parameters of the strategic document. At the same time

has been conducted a survey of the structure of other institutional strategic documents, using

for evaluation the following criteria:

– Is there a possibility for comparably easy acquaintance with the document through a

comprehensive and logic structuring of the various parts;

– Is the content represented in an attractive and easy to understand way, accessible for

non-professionals;

15







– Is it possible to grant the information thematically, i.e. is the material structured in a

way to allow in-depth introduction into the issues and analysis only if the reader is

willing to.

Some of the studied strategies met the so selected criteria, where there was a clear distinction

between two separate parts, in particular:

1. Main document, where according to the described above logic of the strategic plan tools

contains definition of the various sections.

2. Annexes, containing the complete text of the prepared analysis, including the

introduced in the main material conclusions.

This approach was preferred also when structuring the Export strategy for sector

“Manufacture of machinery, equipment and home appliances”.

16







MAIN CONCLUSIONS OF THE ACTUAL SITUATION ANALYSIS

This part contains the conclusions of the various analysis, included in the “Analysis of

the environment”, being one of the main steps in the strategic planning technology. In addition

to this strategic document is given the complete text of the facts, as well as of the made

analysis, on the basis of which made conclusions have been formulated. The conclusions and

the analysis themselves are structured in 5 parts, as follows:

CONDITION AND DEVELOPMENT OF THE SECTOR IN

BULGARIA

EXPORT ORIENTATION OF THE SECTOR

PRODUCTS WITH EXPORT ADVANTAGES AND

POTENTIAL

COMPETITIVENESS OF THE EXPORT OF GOODS TO

FOREIGN MARKETS

BARRIERS TO THE INTERNATIONALIZATION OF SMALL

AND MEDIUM SIZED ENTERPRISES AND MEASURES AND

PERSPECTIVES FOR EXPORT PROMOTION AND

DEVELOPMENT

17







CONDITION AND DEVELOPMENT OF THE SECTOR IN BULGARIA

Small and medium enterprises are the backbone of European economy, its priority and

long-term commitment, being also an important social factor for the development of

common economic space. The situation in Bulgaria is similar and requires long-term

vision and particular efforts supporting the non-financial sector and enterprises,

ensuring employment to more than two thirds of the population.

Especially vulnerable of the abrupt changes in economic cycles, SMEs are following

the upsurges and falls of the global financial and economic path. Among the basic

principles of the European Community – principles Bulgaria has always underlined its

aspiration to follow – is the commitment to ensure stability and protection namely of

such priority economic structures, combining important economic and social roles. This

priority of National and European performers, lawmakers and consultative bodies

require far-sighted strategic and export interference in the last three years, as a result of

the global and economic crisis.

The indicated below findings represent a concentrated expression of the conclusions,

based on the detailed analysis and sociological surveys made with representatives of the

SME of sector “Manufacture of fabricated metal products, except machinery and

equipment” in the process of drafting the present strategy. The objective is to emphasize

the place of the SME in the sector and their export possibilities.

The sector for manufacture of machinery, equipment and home appliances covers

slightly over 3.0% of the industrial production in the country and creates around 3.5%

of the added value in the industry. The participation of the sector in external trade is

about 6.9% of the total export in the country and 10.7% of the total import of the

country.

The manufacture consists in the production of turbines and engines, hydraulic pumps,

compressors, fittings, bearings, gears, furnaces and burners, lifting and handling

equipment, office equipment, tools, cooling and ventilation equipment, agricultural

18







equipment, metalworking machinery, equipment for metallurgy and moulding and other

industrial machinery, home appliances.

Sector “Manufacture of machinery, equipment and home appliances” is part of the

Machinery building industry. The companies in the sector are members of the Branch

chamber “Machine building”.

There is clearly expressed uneven distribution of enterprises and people employed by

regions. There are 950 companies operating in the sector, small, medium and large

sized, where around 40% of them are situated on the territory of the South-western and

Southern Central planning region. Lowest is the concentration of companies in the

North-eastern region.

Among the companies, dealing with the manufacture of machinery and equipment,

show up “Vidima Ideal Standard” PLC, “Remotex Radnevo” SPLC, “M+C Hydraulic”

PLC, “SKF Bearings Bulgaria” SPLC, “Atomenergoremont” SOC, “Sparky Eltos”

PLC, “Palfinger Productiontechnic Bulgaria” SLTD, “Kaproni” PLC, “Hraninvest –

Hranmashcomplekt” PLC, “Mashstroi” PLC.

Table 1 Regional distribution of companies and employed in sector “Manufacture of machinery,

equipment and home appliances” in 2009

Employed

in the

sector

(persons)

% of employed in

the

manufacturing

industry

% of

employed

in the

sector

Companies

in the

sector

(units)

% of

companie

s in the

sector

North-western region 5082 8,4% 16,5% 81 8,8%

Northern central region 7281 8,6% 23,6% 150 16,2%

North-eastern region 1358 2,3% 4,4% 80 8,7%

South-eastern region 6430 7,9% 20,9% 126 13,6%

Southern central region 6081 4,5% 19,7% 242 26,2%

South-western region 4591 2,9% 14,9% 245 26,5%

Source Eurostat

The salary level in the sector is around the average for the country. The average

monthly remuneration is estimated at 590 BGN and ensures employment of approximately 30

thousand persons (5.9% of the employed in the manufacturing industry).

19







The index of industrial production and that of the turnover in the sector in 2010 have

improved respectively by 6.9 and 5.9 points. At the same time there is change in the producer

prices in the sector.

At national level in the country is operating “Bulgarian branch chamber – Machine

building” with 260 member companies, active in the field of:

Manufacture of metalworking machinery;

Manufacture of woodworking machinery;

Manufacture of hydraulic machinery;

Manufacture of tools;

Manufacture of lifting/handling equipment;

Manufacture of machinery and equipment, used in the food industry;

Manufacture of agricultural machinery.

According to this branch organization data about 70% of the total production in the field of

machinery building is created namely by the members of this association. Many of the

Bulgarian producers, especially from the SME sector are working on the principles of

subcontracting – i.e. these are accepting orders to implement from external for the country

assignors. The problem is that, as one of the characteristics of the manufacture of machinery

and equipment, this process of subcontracting continues to grow and is extremely noticeable,

being a precondition for development of this companies also in the future.

This economic activity is extremely energy consuming, expensive, material consuming and

consumes a number of incoming resources. Less than one third (31%) of the created economic

values is added value and the other 69% are due to input resources and materials.

One specific field of the economic activity “Manufacture of machinery, equipment and

home appliances”, that is developing especially dynamically, is the activity area of

Bulgarian small and medium size enterprises, based in cities as Stara Zagora, Plovdiv,

Pazardzhik, etc., which companies are producing machinery and equipment for the

foods, tobacco and wine industry.

In 2010 the turnover of the SME in sector “Manufacture of machinery and equipment”

accounts to 883 555 thousand BGN and the labour productivity, expressed as realized

added value for 1 employed is 55,44 thousand BGN.

20







Within the period 2009 – 2011 as a result of the economic crisis the sector has slow

down its development, a trend continuing also at the moment. The crisis on the

European market in 2009, accompanied with extreme reduction of the internal

consumption are the main factors for the sharp lowering of the production and sales of

goods of the Bulgarian companies.

Situation analysis

Main factors, representing a barrier to the export of the SME of sector “Manufacture of

machinery, equipment and home appliances” are the following:

Deteriorated policy of crediting;

Insufficient financial resources;

Seriously limited and insufficient choice of funding sources;

Risk of insolvency due to the specificity of the SME structure;

Incapability for entering into the field of highly industrialized export.

Analysis of the Bulgarian export of products, marking the highest values within the studied

period.

Among all studied products there are such, being absolute leaders by indicators both

concerning absolute value and growth for the period. There are products with relatively

constant levels of demand and such, having more specific demand.

In order to evaluate the possibilities of the present strategy to help them develop even

more, identical indicators for monitoring and evaluation of the set measures will be undertaken,

as there are different possible development scenario and the market situation at the moment is

unfavourable. From the time perspective the main task and objective of the present strategy will

be to introduce strategic planning into the sector. This is first and foremost related to

overcoming falls in export and achieving sustainable growth, as each harsh reduction in the

export value may result fatal for one small or medium-size Bulgarian enterprise.

An evaluation of the present strategy efficiency may give a more complete and deeper

analysis of the reached results about the export values. Without considering the absolute values,

it is important to find the trend development and to analyse the export development line. The

introduction of the strategy is expected to promote the export and to lead it to sustainable

growth, subjected to stable development rates. Another key instrument is to build systematic

monitoring and to perform analysis of different product segments.

21







Analysis of the Bulgarian export of products, marking the lowest values within the studied

period.

If in the case of the products having stable export positions, marking the highest export

values the objective is the achieve sustainable development, in the case of the products with

relatively lower export values the priority should be to push it out to higher export levels. It

could be realized through aggressive policy on behalf of the exporting country in relation to the

price level or preferential conditions. The export value is determining to a higher extent if a

trade policy is effective or not. In the case the aim is to break or enter into a foreign market by

all marketing tools. This may include discounts for larger orders, preferential prices for regular

and loyal clients, as well as other bonuses.

Occupying new niches by the SME in the sector, willing to establish their position into

the foreign market is related to finding ways to produce and export channels. One of the

possibilities before the small and medium-size business is equipment hiring or licensing and

cluster creation, specialized in producing the good. The set strategic goals, measures and the

following of certain action plan to promote the economic activity production export may be

done mostly if performing regular market monitoring and publishing specialized bulletins, as

well as information from the NSI for the development of the sector and alternative market

studies, carried out by business or non-profit organizations.

An evaluation of the present strategy efficiency may give a more complete and deeper

analysis of the reached results about the export values. Without considering the absolute values,

it is important to find the trend development and to analyse the export development line. The

introduction of the strategy is expected to promote the export and to lead it to sustainable

growth, subjected to stable development rates.

What is noticed in the export of goods in sector “Manufacture of machinery, equipment

and home appliances” is that the introduction of strategic planning will lead to levelling the

values and achieving stable growth, without admitting serious amplitudes in the export values.

Another key instrument is to build systematic monitoring and to perform analysis of different

product segments.

The given graph shows the prognosticated values for the development of various market

segments for the period 2010 – 2015.

As it may be seen on the graph enclosed the manufacture of office equipment, except

computers, is undergoing the most dynamic development and has the widest export potential,

22







second comes the manufacture of furnaces and burners, third – turbines and engines, except

aircraft, vehicle and cycle engines; fourth – hydraulic pumps, hydraulic and pneumatic engines;

fifth – construction and extracting machinery.

Graph 1 Prognosticated values for export growth /2010-2015./ (in million EUR)

0 100 200 300 400 500 600 700

Други машини с общо

предназначение

Други обработващи машини

Машини за каучук или пластмаса

Машини за хартия, картон и изделия

от хартия и картон

Машини за добива и строителството

Машини за селското и горското

стопанство

Офис техника, без компютърната

Подемно-транспортни машини

Промишлено хладилно и

вентилационно оборудване

Хидравлични помпи, хидравлични и

пневматични двигатели

2 015

2 010

Source: Own calculations

Hydraulic pumps, hydraulic and

pneumatic engines

Industrial cooling and ventilation

equipment

Hoists

Machinery for paper, pasteboard

and articles from paper and pasteboard

Machinery for mining and construction

Machinery for agriculture and forestry

Office equipment without computers

Machinery for rubber and plastic

Other processing machinery

Other machinery with general purpose

23







In other words, the sector companies must have clear and precise vision regarding the

extent to which they could apply the strategic objectives of the present document and what

expenditure levels they need to realize export. Therefore it should be added that a number of

methods could be applied to optimize the financial structure of given company with view to

reducing costs and increasing the relative income share.

In the case of companies from this economic activity – Manufacture of machinery,

equipment and home appliances, it is necessary to act in both directions or rather to reduce the

expenses for an activity, redirecting them to investment in developing the export activity. This

restructuring is related to costs for drafting prognosis, strategic plans, projects and mainly

vision for introducing the product into the foreign market.

EXPORT ORIENTATION OF THE SECTOR

Due to lack of information for the total export by sectors from the NSI, the dynamics of

the total export of goods by sectors is made on the basis of the information available in the

International trade centre (ITC). Due to the fact that in the ITC is used the Combined

nomenclature (2010) for goods classification, all four-groups positions were analyzed and

compared to the appropriate class of CEA-2008, allowing to compare with data, given by the

NSI. Notwithstanding this “division” there might be some discrepancies between the value of

the export turnover for the corresponding sector according to ITC data with the official NSI

data (due to discrepancy in some of the six-groups codes), but such discrepancy should be

insignificant from the perspective of the analysis goals.

24







Table 2 Dynamics of the export by sectors, 2001 – 2010

Sector

number Export (million BGN) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1 Manufacture of food products 644,3 904,9 817,6 1 050,2 1 199,3 1 297,4 1 434,8 2 379,6 2 404,2 2 953,4

Share of the sector in the country export (%) 5,78 7,61 6,28 6,73 6,5 5,52 5,41 7,96 10,39 9,73

2 Manufacture of beverages 150,2 144,9 141,3 140,4 162,8 174,7 217,4 209,7 157,3 180,5


3 Manufacture of textile and textile products,

except wearing apparel 340,1 409,2 493,3 581,6 589,5 701,3 803,2 738,5 560,3 614,5


4 Manufacture of wearing apparel, incl. leather

clothes, tanning and dressing of leather 2 435,7 2 691,7 3 068,6 3 190,8 3 160,0 3 320,4 3 321,8 3 035,0 2 598,6 2 741,3


5 Manufacture of rubber and plastics products 244,3 275,7 309,6 364,2 458,9 579,5 702,9 662,8 575,7 785,5


6 Manufacture of chemical and pharmaceutical

products 953,5 850,8 890,1 923,1 1 250,7 1 322,0 1 775,9 2 138,9 1 603,4 2 144,4


7 Manufacture of non-metallic and mineral

products 258,7 265,1 293,7 301,2 334,5 514,7 614,2 633,7 562,7 688,9


8 Manufacture of machinery, equipment and

household appliances 700,2 767,6 800,2 948,1 1 154,0 1 390,4 1 931,5 2 182,0 1 538,0 1 926,0


9 Manufacture of medical, precise and optical

apparatus and instruments 68,5 114,3 153,7 150,8 205,4 303,8 359,5 395,1 392,5 479,5


10 Manufacture of office equipment and

computers 47,5 70,6 98,0 121,8 151,7 189,0 227,6 271,2 228,4 281,8

25







Sector

number Export (million BGN) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


11 Manufacture of electric machinery and

apparatus 359,5 406,5 545,0 598,3 701,6 899,5 1 154,2 1 325,8 1 327,2 1 774,5


12 Manufacture of wood and products of wood,

except furniture 192,3 220,1 245,5 288,1 286,0 311,2 380,9 274,0 259,8 359,1


13 Manufacture of pulp, paper and paperboard 120,6 129,0 170,6 196,7 200,4 191,2 237,2 265,0 134,3 303,9

Share of the sector in the country export (%) 1,08 1,09 1,31 1,26 1,09 0,81 0,89 0,89 0,58 1

14 Manufacture of furniture 86,5 124,7 161,8 196,4 221,6 237,5 273,5 256,7 206,6 237,1


15 Publishing, printing and reproduction 4,2 6,3 10,1 7,7 9,3 11,4 22,0 25,8 17,8 14,8


16 Manufacture of motor vehicles, except cars 28,6 41,5 34,7 42,3 77,7 100,0 150,5 208,9 253,7 390,1


17 Manufacture of metal products, except

machinery and equipment 525,9 508,2 539,2 748,5 851,7 1 256,1 1 615,7 1 508,3 1 107,3 1 427,1


18 Manufacture of radio, television and

telecommunication equipment 89,2 155,2 170,7 186,2 473,2 514,5 421,4 528,1 490,2 464,1


Total for the 18 sectors 7 249,8 8 086,5 8 943,7 10 036,3 11 488,1 13 314,6 15 644,2 17 039,0 14 418,0 17 766,7

Share of the 18 sectors in the country export(%) 64,99 68,03 68,66 64,28 62,31 56,63 59,03 57,01 62,3 58,53

Total export from BG 11 155,6 11 886,8 13 026,8 15 613,7 18 436,1 23 511,7 26 503,7 29 889,7 23 143,1 30 353,3

Source: International trade centre

26







Table 3 Base index, 2001=100

Sector

number

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1 100 140,5 126,9 163,0 186,1 201,4 222,7 369,3 373,2 458,4

2 100 96,5 94,1 93,5 108,3 116,3 144,7 139,6 104,7 120,2

3 100 120,3 145,0 171,0 173,3 206,2 236,2 217,1 164,8 180,7

4 100 110,5 126,0 131,0 129,7 136,3 136,4 124,6 106,7 112,6

5 100 112,9 126,7 149,1 187,9 237,3 287,8 271,4 235,7 321,6

6 100 89,2 93,4 96,8 131,2 138,6 186,3 224,3 168,2 224,9

7 100 102,5 113,5 116,4 129,3 198,9 237,4 244,9 217,5 266,3

8 100 109,6 114,3 135,4 164,8 198,6 275,8 311,6 219,6 275,1

9 100 167,0 224,5 220,2 300,0 443,5 524,9 576,9 573,2 700,2

10 100 148,8 206,3 256,5 319,6 398,2 479,5 571,3 481,1 593,7

11 100 113,1 151,6 166,4 195,2 250,3 321,1 368,9 369,2 493,7

12 100 114,5 127,7 149,8 148,7 161,9 198,1 142,5 135,1 186,8

13 100 107,0 141,5 163,1 166,1 158,5 196,7 219,7 111,4 252,0

14 100 144,1 187,0 227,0 256,1 274,5 316,1 296,7 238,8 274,0

15 100 150,7 242,1 183,8 222,9 272,7 527,5 617,1 425,9 354,4

16 100 145,2 121,3 147,8 271,5 349,5 526,0 730,1 886,8 1 363,7

17 100 96,6 102,5 142,3 161,9 238,8 307,2 286,8 210,6 271,4

18 100 173,9 191,3 208,7 530,2 576,6 472,2 591,8 549,3 520,1

Total for

the 18

sectors

100 111,5 123,4 138,4 158,5 183,7 215,8 235,0 198,9 245,1

Total

export from

BG

100 106,6 116,8 140,0 165,3 210,8 237,6 267,9 207,5 272,1

Source: International trade centre

The analysis of given data shows the following:

In 2010 the export of the analyzed sectors as a share of the total export of Bulgaria is

at one of the lowest levels of the ten-year period in question.

The volume of the realized export in 2010 is the biggest for sector „Manufacture of

food products”, ranking it at first place by share of the total export of Bulgaria.

Out of the 18 studied sectors, 10 have increased the share of their export in relation to

the total export of Bulgaria for 2010 and respectively in the case of eight of the sectors

a decrease has been registered.

27







Sectors „Manufacture of motor vehicles, except cars” and „Manufacture of medical,

precise and optical apparatus and instruments” are improving at the strongest their

positioning for the period 2001 – 2010 by share in the total country export among the

rest of the analyzed sectors, while sector “Manufacture of beverages” is losing the

highest number of places in the ranking.

Out of the studied sectors 13 there is an increase in the export volume having faster

rate than the average for the 18 sectors. As the total country export grows faster than

the export of the 18 sectors, in the case of ten sectors the realized export is increasing

faster than the average for the country.

The highest growth in the export volume in value expression has been registered by

sector “Manufacture of motor vehicles, except cars”- over 13 times relative to 2001.

The highest growth in 2010 relative to 2009 has been registered by sector

“Manufacture of pulp, paper, paperboards and products” – over 2 times.

By share of the export in the total country export, sector “Manufacture of machinery

and equipment lines fourth, immediately after sectors for manufacture of foods

products, apparel and chemical and pharmaceutical products.

28







Table 4 Indices for the condition of the export of the SMEs in the manufacturing industry

Groups of companies Export share in the

total export of SMEs

in the

manufacturing

industry (%)

Change in

export

2010/2009

Export volume per

1 employed (BGN)

2009 2010 2009 2010

Manufacture of food products 4,32 3,00 92,43 13867 13428

Manufacture of beverages 0,34 0,16 61,35 9933 6325

Manufacture of textiles and textile products,

except wearing apparel

0,57 0,34 79,33 18701 16139

Manufacture of wearing apparel 6,18 4,36 93,83 16896 17649

Manufacture of leather, manufacture of

footwear and other related products

1,15 0,96 110,87 20217 23182

Manufacture of wood and of products of

wood and cork, except furniture;

manufacture of articles of straw and plaiting

materials

0,50 0,27 72,51 8030 6198

Manufacture of paper, paperboard and

products thereof

0,27 0,13 64,38 8282 6233

Printing and reproduction of recorded

media

0,16 0,10 85,97 4040 3449

Manufacture of chemicals and chemical

products

1,26 0,70 74,07 32860 25165

Manufacture of basic pharmaceutical

products and pharmaceutical preparations

0,10 0,07 88,16 13785 11410

Manufacture of rubber and plastics

products

1,43 1,12 104,29 15586 17860

Manufacture of other non-metallic mineral

products

0,41 0,29 94,52 4928 5768

Manufacture of fabricated metal products,

except machinery and equipment

1,36 1,09 106,77 7667 9490

Manufacture of computer and

communication equipment, electronic and

optical products

1,05 0,52 66,50 43944 30410

Manufacture of radio, television and

telecommunication equipment and

apparatus

0,08 0,05 92,24 18173 14242

Manufacture of electrical equipment 1,00 0,74 98,08 23978 27133

Manufacture of machinery and equipment

n.e.c.

0,96 0,81 112,23 13024 15408

Manufacture of motor vehicles, except cars 0,27 0,18 88,12 26492 25793

Manufacture of furniture 0,49 0,42 114,73 5187 6764

Source: NSI

The analysis of the date from the table 4 gives ground to make the following conclusion:

29







The SMEs of sector “Manufacture of machinery, equipment and home appliances”

take 4th

place among the studied 18 sectors of the manufacture industry by share of the

export in by share of the export within the total country export in 2010;

In terms of the indicator “volume of the export per 1 employed” sector “Manufacture

of machinery, equipment and home appliances” marks an improvement. From 11th

place among the analyzed sectors in 2009, in 2010 in terms of this indicator the sector

moves to 10th

place and the export volume per 1 employed marks growth of 18% in

2010 in relation to 2009. At first place in this rating for both years is the sector

“Manufacture of computer and communication equipment, electronic and optical

products”,

The inter-sector division of the SMEs is given in the table below.

30







Table 5 Indicator for the export of the SMEs in sector “Manufacture of machinery, equipment and domestic appliances”

2009 2010 2009 2010 2009 2010 2009 2010

(CODE) Economic activity Companies Companies Employed Employed Export Export Export by 1

employed

Export by 1

employed

Number

Number

Number

Number

Thousands

BGN

Thousands

BGN

Thousands BGN Thousands

BGN

28.1 Manufacture of

general-purpose

machinery

92 94 2428 2465 33581 77051 13,83 31,26

28.11 Manufacture of

engines and turbines,

except aircraft,

vehicle and cycle

engines

12 12 188 125 5069 5683 26,96 45,46


hydraulic pumps,

hydraulic and

pneumatic engines

25 28 837 1093 17566 58273 20,99 53,31

28.13 Manufacture of taps

and valves

20 18 386 429 3075 2907 7,97 6,78


fittings

22 22 633 469 5954 .. 9,41


bearings, gears,

gearing and driving

elements

13 14 384 349 1917 .. 4,99

28.2 Manufacture of

other general

purpose machinery

351 343 6326 6387 83919 104247 13,27 16,32


furnaces and furnace

burners

14 12 .. 183 .. ..

31







2009 2010 2009 2010 2009 2010 2009 2010


lifting and handling

equipment

112 114 2810 2371 28077 13540 9,99 5,71


office equipment,

except computer

9 13 376 634 18887 20603 50,23 32,50


portable tools with

drive-in motor

6 6 .. .. .. ..

28.25 Manufacture of non-

domestic cooling and

ventilation

equipment

81 76 1414 1552 9188 53503 6,50 34,47

28.29 Manufacture of other

general purpose

machinery n.e.c

129 122 1437 1475 25209 14660 17,54 9,94

28.3 Manufacture of

agricultural and

forestry machinery

61 63 1116 1034 4772 5102 4,28 4,93

28.4 Manufacture of

machine tools

86 75 1993 1381 33828 8837 16,97 6,40


metalworking

machine tools

49 42 1340 1009 21828 7605 16,29 7,54


machine tools

37 33 653 372 12000 1232 18,38 3,31

28.9 Manufacture of

other special

purpose machinery

330 320 4935 4669 62682 50312 12,70 10,78

32







2009 2010 2009 2010 2009 2010 2009 2010


machinery for

metallurgy

7 13 .. 289 .. ..


machinery for

mining, quarrying

and construction

29 23 736 592 13959 16391 18,97 27,69


machinery for food,

beverage and tobacco

processing

97 102 1673 1783 27197 18551 16,26 10,40


machinery for textile,

apparel and leather

production

10 8 137 105 .. ..


machinery for paper

and paperboard

production

7 8 69 60 429 - 6,22


machinery for

working rubber or

plastics

18 17 399 280 955 .. 2,39


special purpose

machinery n.e.c

162 149 1702 1560 16926 13153 9,94 8,43

28

28

Manufacture of

general and special

purpose machinery

and equipment

920 895 16798 15936 218782 245549 13,02 15,41

Source: NSI

33







In 2010 the number of SMEs in the sector and the number of employed decrease, but

the volume of the export and the value of the indicator “realized export by 1 employed”

increase. Notwithstanding the increased export volume, its share in the realized turnover by

SMEs in 2010 is decreasing to 28% relative to 31% for 2010.

The export in the sector is realized mainly by large companies, not object of this

strategy. The export realized by the SMEs in 2009 and 2010 with a share in the total

export of sector “Manufacture of machinery, equipment and home appliances” is

respectively 9,9% and 8,6%.

A specific field of the economic activity Manufacture of machinery, equipment and

home appliances, developing quite dynamically, is the field of operation of the

Bulgarian small and medium-size enterprises, situated in towns as Stara Zagora,

Plovdiv, Pazardzhik, etc., manufacturing machinery for food, beverage, tobacco and

wine processing. For example, recently for the production process become popular

the packaging machinery in the field the spices micro-packaging.

Machinery for wrapping vanilla, sugar, baking soda, etc. have extremely high level of

profitability, the parts are interchangeable, these can be found on the Bulgarian

industrial market, maintenance is fast and cheap and the built-in electronics in modern

machinery, manufactured by a Bulgarian manufacturer may be easily diagnosed and

easily repaired.

Table 6 Export of Bulgaria in sector “Manufacture of machinery, equipment and home

appliances” (million EUR)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Export of Bulgaria

5253,1 5714,2 6062,8 6668,2 7984,9 9466,4 12011,9 13511,9 15204,0 11699,2 15561,2

Total for the sector

370,5 450,9 524,2 543,5 659 806,2 1051,8 1312 1468,9 1132,6 1469,8

Share of the total export of Bulgaria

7,1 7,9 8,6 8,2 8,3 8,5 8,8 9,7 9,7 9,7 9,4

Base index (base 2000)

100.0 769,5 894,5 927,5 1124,6 1375,8 1794,9 2238,9 2506,7 1932,8 2508,2

Chain index

100.0 121,7 116,3 103,7 121,3 122,3 130,5 124,7 112,0 77,1 129,8

Source: BNB and ITC

34







Until 2008 the value of the export is constantly increasing. Among the peak pre-

crisis years – 2007 and 2008 the export in this group is decreasing in 2009, but

manages to reach the pre-crisis levels in 2010, that is observed also in the next

figure.

Graph 2 Export of Bulgaria in sector “Manufacture of machinery, equipment and home

appliances”

Source: NSI

GOODS WITH EXPORT ADVANTAGES AND POTENTIAL

The sector “Manufacture of machinery, equipment and home appliances” is as a whole

export orientated and is present in the country export with a share of approximately 10%.

Regarding the manufactured goods the companies from sector “Manufacture of machinery

and equipment” have preserved their traditions and are supporting a wide assortment of the

manufactured goods:

drilling machinery;

metalworking machinery;

Export of machinery, equipment and home appliances

Eu

ro (

mil

lion

)

35







lathes with or without digital control;

oil country lathes;

assemblies, details, parts, wheels, mechanisms;

band saw machines;

After the relatively slow and painful forming of the companies in the sector during the

transition from public to private companies, began the creation of a constellation of

companies, forming the chain of supplies, distribution, advertising, as well as other subjects

were formed, performing specialized services for these companies.

At the beginning of the first decade of the new XXIst century in the country entered

many contemporary and modern companies, that settled in cities like Sevlievo (“Vidima”;

equipment for sanitary premises), Plovdiv (“Liebherr”; domestic refrigerators), Sopot (“SKF”,

bearings manufacturing), Gabrovo (“Zeratizit”, hard material matters) and others. This gave

relatively new impulse of the economic activity in the country, as competitive products started

to be manufactured. After the country joined the EU, in various towns in the country like

Yambol, Haskovo, Kazanluk and others many innovative companies entered with already

acquired market shares, which objective to restore or outsource their production has been

prompted mostly by the economic logic for lowering the production and operating costs.

The sector covers a wide range of products but their main exporters are the large

companies. The sector SMEs are mainly subcontractors and are manufacturing elements and

spare parts. Based on the data of NSI the SMEs from the sector are exporting the following

machinery and equipment, with the following share of the total export of SMEs in the sector

in 2010:

hydraulic pumps, hydraulic and pneumatic engines – 23,7%;

industrial cooling and ventilation equipment – 21,8%;

office equipment, except computers – 8,4%;

extracting and construction machinery – 6,7%;

machinery and equipment for food, beverages and tobacco processing – 6,7%;

36







turbines and engines, except aircraft, vehicle and cycle engines – 2,3%.

The export of these goods by the SMEs in the sector in 2010 amounts to 173 004

thousand BGN and represents 6% of the total export in the sector.

Hydraulic pumps, hydraulic and pneumatic engines

The main exporters, dynamics of the export and country positioning for this group of

goods according to data of the ITC are given in the tables below.

Table 7 Ranking of exporters of hydraulic pumps, hydraulic and pneumatic engines

worldwide for the period 2001 – 2011 (million EUR)

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 26 084 26 870 26 386 29 275 32 799 39 864 45 183 48 110 40 858 49 252

China 1 232 1 613 1 970 2 362 3 029 4 548 5 878 6 644 5 415 7 395 8 538

Germany 3 811 4 108 4 036 4 629 5 266 6 310 6 915 7 420 6 267 7 356 8 161

USA 3 989 3 633 3 237 3 274 3 752 4 343 4 583 4 787 4 676 5 872 6 746

Italy 3 385 3 435 3 548 3 877 4 121 5 011 5 769 6 320 5 164 5 125 5 592

Japan 1 886 1 882 1 790 2 097 2 191 2 384 2 489 2 571 2 115 3 382 3 822

Bulgaria 60 69 70 74 77 96 142 147 101 120 125

Share of Bulgaria in world export (%)

0,2 0,3 0,3 0,3 0,2 0,2 0,3 0,3 0,2 0,2

Share of Bulgaria in the export of the leading exporter (%)

4,9 4,3 3,6 3,1 2,5 2,1 2,4 2,2 1,9 1,6 1,5

Source: ITC

Table 8 Dynamics of the export (base index, base 2001) of hydraulic pumps, hydraulic

and pneumatic engines worldwide for the period 2001 – 2011 (million EUR)

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 100 103 101 112 126 153 173 184 157 189

Germany 100 131 160 192 246 369 477 539 440 600 693

Japan 100 108 106 121 138 166 181 195 164 193 214

USA 100 91 81 82 94 109 115 120 117 147 169

China 100 101 105 115 122 148 170 187 153 151 165

France 100 100 95 111 116 126 132 136 112 179 203

Bulgaria 100 114 117 122 128 159 235 244 167 198 208

Source: ITC T

In comparison to the leading 5 exporters of this group of goods the export of Bulgaria

is increasing with faster rates mostly for the period after 2003, where the higher peak is in

37







2007. Only Germany is surpassing it, which export increases more than 5 times. The

Bulgarian export is increasing more than twice in relation to the base 2001.

The following table represents the main markets for Bulgarian goods of

position hydraulic pumps, hydraulic and pneumatic engines for the period 2000 – 2010. The

main market of the Bulgarian goods is Germany, followed by Italy and the Russian

federation.

38







Table 9 Leading partners in export (million EUR)

2000 2001 2002 2003 2004 2005

Hydraulic pumps,

hydraulic and

pneumatic engines

59,1 60,5 68,5 69,5 73,4 78,1

1 Germany 34,6 Germany 32,9 Germany 36,5 Germany 39,3 Germany 38,6 Germany 37,0

2 Italy 8,6 Italy 9,9 Italy 12,0 Italy 12,0 Italy 13,5 Italy 14,0

3 France 2,7 Mexico 3,7 Russian

Federation

4,7 Russian

Federation

6,0 Russian Federation 7,3 Russian

Federation

10,2

4 Greece 2,3 Russian

Federation

2,6 Greece 2,5 Greece 2,7 Greece 3,0 Greece 3,6

5 Russian

Federation

1,5 Greece 2,5 Mexico 2,1 Ukraine 1,2 Spain 1,2 Ukraine 2,5

2006 2007 2008 2009 2010

Hydraulic pumps,

hydraulic and

pneumatic engines

95,7 141,2 146,4 36,4 120,2

1 Germany 31,2 Russian

Federation

34,7 Russian

Federation

35,4 Germany 10,4 Germany 30,7

2 Russian

Federation

19,9 Germany 31,4 Germany 32,8 Italy 5,6 Russian Federation 19,2

3 Italy 13,9 Italy 22,7 Italy 21,1 France 5,5 Italy 18,3

4 France 10,4 France 18,1 France 19,2 Russian

Federation

4,7 France 15,2

5 Greece 4,0 Greece 5,8 UK 6,1 UK 2,2 Denmark 6,4

Source: ITC

39







Furnaces and furnace burners


goods according to data of the ITC are given in the tables.

Table 10 Ranking of exporters of furnaces and furnace burners worldwide for the period 2001-

2011 (million EUR)

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 89 242 92 113 91 539 101 818 110 160 124 151 127 749 129 176 111 814 136 255

China 7 321 8 982 10 345 13 040 16 916 20 934 22 025 23 485 22 112 29 622 33 057

Germany 10 082 10 897 10 716 12 414 13 491 15 235 15 191 16 044 13 895 14 999 16 011

Italy 10 741 10 861 10 944 11 830 11 257 12 483 13 167 12 366 10 216 10 729 10 783

USA 10 259 9 026 7 730 8 145 9 056 9 898 8 985 9 160 8 303 9 709 10 460

Japan 5 315 5 170 5 159 5 592 5 522 5 676 5 823 5 744 4 486 6 039 6 630

Bulgaria 38 58 71 88 106 136 177 236 217 223 235


0,0 0,1 0,1 0,1 0,1 0,1 0,1 0,2 0,2 0,2


0,5 0,6 0,7 0,7 0,6 0,7 0,8 1,0 1,0 0,8 0,7

Source: ITC

Table 11 Dynamics of the export (base index, base 2001) of furnaces and furnace burners

worldwide for the period 2001-2011 (million EUR)

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 100 103 103 114 123 139 143 145 125 153

China 100 123 141 178 231 286 301 321 302 405 452

Germany 100 108 106 123 134 151 151 159 138 149 159

Italy 100 101 102 110 105 116 123 115 95 100 100

USA 100 88 75 79 88 96 88 89 81 95 102

Japan 100 97 97 105 104 107 110 108 84 114 125

Bulgaria 100 152 188 230 277 358 464 619 569 585 616

Source: ITC

The growth rate of the export of Bulgarian goods surpasses that of the leading five

world exporters and is an indication for the export orientation of the Bulgarian manufacturers of

this good. This is a market niche to be studied by the sector SMEs, to look for cooperation with

Bulgarian large companies, exporters or cooperation with international ones.

According to the table for the main markets for export of Bulgarian manufacture of

furnaces and furnace burners as traditional exporter come to be Germany, followed by France

and Italy.

40








2000 2001 2002 2003 2004 2005

Furnaces and

burners

10,5 28,0 45,6 58,8 73,0 82,4

1 Germany 2,2 Germany 9,1 Germany 10,3 Austria 14,6 Germany 20,8 Germany 26,4

2 Russian

Federation

1,3 France 3,2 Austria 7,6 Germany 14,0 Austria 13,1 France 9,7

3 France 1,1 Russian

Federation

1,4 France 5,4 France 6,1 France 6,5 Austria 5,5

4 Serbia 0,9 Bulgaria 1,3 Bulgaria 2,9 Bulgaria 3,2 Bulgaria 3,9 Italy 3,8

5 Italy 0,6 UK 1,2 Hungary 2,7 Poland 2,2 Italy 3,0 The

Netherlands

3,5

Leading partners in export (million EUR)

2006 2007 2008 2009 2010

Furnaces and

burners

103,6 127,0 174,0 59,7 170,7

1 Germany 31,1 Germany 36,1 Germany 53,3 Germany 20,3 Germany 57,5

2 France 11,1 France 14,0 Italy 22,0 France 5,9 France 16,2

3 Italy 6,3 Italy 10,1 France 15,1 Italy 5,8 Russian

Federation

12,8

4 UK 5,7 The

Netherlands

7,5 Russian

Federation

9,8 Russian

Federation

3,6 Romania 9,6

5 The

Netherlands

4,8 Romania 7,4 The

Netherlands

7,7 The

Netherlands

2,7 Italy 8,8

Source: ITC

Office equipment, except computers



Table 13 Ranking of exporters of office equipment, except computers worldwide for the

period 2001-2011 (million EUR)

Export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total

world

465 420 466 342 442 039 494 801 564 304 640 593 398 542 371 664 314 349 388 743

China 33 784 45 776 52 806 68 539 92 281 115 324 66 537 65 460 58 447 71 987 70 390

USA 67 137 55 139 47 995 49 162 51 919 57 039 46 338 42 269 37 072 44 220 45 569

Hong

Kong

32 762 36 784 38 716 44 444 53 344 56 617 39 547 36 050 31 505 39 782

Germany 34 365 35 854 32 766 40 600 45 744 49 649 32 445 30 722 25 030 30 801 32 804

Japan 45 867 43 734 44 361 48 529 47 385 47 734 31 724 29 956 22 509 29 147 28 423

Bulgaria 38 64 85 93 117 178 214 224 204 237 278


0,0 0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,1


0,1 0,1 0,2 0,1 0,1 0,2 0,3 0,3 0,3 0,3 0,4

Source: ITC

41







Table 14 Dynamics of the export (base index, base 2001) of office equipment, except

computers worldwide for the period 2001-2011 (million EUR)

Export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 100 100 95 106 121 138 86 80 68 84

China 100 135 156 203 273 341 197 194 173 213 208

USA 100 82 71 73 77 85 69 63 55 66 68

Hong Kong 100 112 118 136 163 173 121 110 96 121 0

Germany 100 104 95 118 133 144 94 89 73 90 95

Japan 100 95 97 106 103 104 69 65 49 64 62

Bulgaria 100 168 223 245 310 470 564 592 539 625 733

Source: ITC

The export of office equipment, except computers for Bulgaria is developing in a dynamic way

as the growth rates are considerably surpassing that of the leading exporters. According to the

table for the main markets for export of these goods, as traditional Bulgarian markets are

positioned that of Belgium, German, Italy and USA and as perspective are that of Sweden,

Romania and Russia.

42








2000 2001 2002 2003 2004 2005

Office equipment,

except computers

26,8 33,7 56,5 65,6 84,4 106.1

1 Germany 4,0 France 5,6 UK 13,1 UK 12,9 Serbia 14,5 Belgium 23.0

2 Italy 3,3 Germany 3,8 Germany 4,7 Germany 6,7 Germany 11,9 UK 13.8

3 The Netherlands 3,3 UK 3,8 Italy 4,7 Romania 6,4 UK 10,5 Germany 11.7

4 Romania 3,1 Italy 3,8 Romania 4,6 Italy 5,0 Romania 5,7 Italy 6.7

5 UK 2,5 Sweden 3,3 The

Netherlands

3,6 France 4,5 Italy 5,2 USA 6.7

2006 2007 2008 2009 2010

Office equipment,

except computers

163,6 191,3 197,1 57,1 200,4

1 Belgium 56,7 Belgium 83,4 Belgium 85,0 Belgium 23,9 Belgium 84,8

2 UK 17,0 Germany 16,9 Germany 21,8 Germany 7,8 Germany 24,3

3 Germany 16,9 USA 13,0 USA 8,8 USA 2,8 Italy 12,2

4 USA 11,5 Sweden 9,7 Sweden 8,0 Russian

Federation

2,5 USA 9,2

5 Italy 9,6 Romania 9,3 Romania 8,0 Italy 2,4 Russian

Federation

6,9

Source: ITC

43







Extracting and construction machinery

The main exporters, dynamics of the export and country positioning for this group of goods according to data of the ITC are given in

the tables.

Table 16 Ranking of exporters of extracting and construction machinery worldwide for the period 2001-2011 (million EUR)

Export 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total

world

541 034 562 931 542 970 585 419 641 957 711 592 777 461 768 307 533 351 705 983

Germany 101 398 108 918 108 159 111 463 122 810 132 136 145 827 143 077 102 519 131 813 149 388

Japan 79 555 87 932 81 955 84 552 89 924 103 287 108 482 110 655 63 497 99 317 96 953

USA 53 557 53 766 47 735 49 538 60 066 67 941 75 052 77 362 51 808 69 491 81 331

Korea 16 497 17 508 18 824 23 883 26 893 30 330 32 216 29 766 22 996 33 967 42 555

Canada 52 224 49 897 41 465 43 146 45 336 44 996 41 259 31 284 22 351 33 527 34 937

Bulgaria 64 70 67 75 99 114 159 197 180 284 422


0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0 0,0


0,1 0,1 0,1 0,1 0,1 0,1 0,1 0,1 0,2 0,2 0,3

Source: ITC

44







Table 17 Dynamics of the export (base index, base 2001) of extracting and construction

machinery worldwide for the period 2001 – 2011

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 100 104 100 108 119 132 144 142 99 130

Germany 100 107 107 110 121 130 144 141 101 130 147

Japan 100 111 103 106 113 130 136 139 80 125 122

USA 100 100 89 92 112 127 140 144 97 130 152

Korea 100 106 114 145 163 184 195 180 139 206 258

Canada 100 96 79 83 87 86 79 60 43 64 67

Bulgaria 100 110 105 117 155 178 248 308 281 443 659

Source: ITC

The Bulgarian export of extracting and construction machinery marks trend of

continuous growth, except during the crisis in 2008, where the growth rates are considerably

surpassing that of the leading exporters. Bulgaria is increasing the export volume on this

position more than 6 times, however, for the correct positioning of our export can be judged by

the increase in the share of Bulgaria in the export of the leading exporter.

According to the data for the main markets for export of Bulgarian extraction and

construction machinery, as traditional and perspective markets are that of Germany, Austria,

France, Belgium, Slovenia. Potential markets for the Bulgarian goods are that of Syria, Ghana,

Denmark and Macedonia.

45








2000 2001 2002 2003 2004 2005

Extracting and

construction

machinery

15,4 21,6 28,1 27,7 30,2 57,9

1 Austria 2,8 Germany 6,0 Germany 7,2 Slovenia 6,0 Austria 6,5 France 9,2

2 Jordan 2,2 Austria 3,9 Austria 4,8 Germany 4,3 Slovenia 4,9 Germany 8,7

3 Ghana 0,8 Italy 2,9 Italy 2,7 Austria 3,5 France 3,1 Austria 7,9

4 Germany 0,8 Ghana 1,6 Slovenia 2,4 Denmark 2,4 Germany 2,1 Slovenia 6,4

5 Syria 0,8 Denmark 0,9 Macedonia 1,7 Romania 1,6 Denmark 1,3 Belgium 3,9

2006 2007 2008 2009 2010

Extracting and

construction

machinery

68,1 101,5 135,1 125,9 209,2

1 France 16,0 France 19,7 Romania 25,3 Romania 23,8 Germany 54,2

2 Austria 10,4 Austria 16,2 France 18,7 Germany 21,6 Romania 18,9

3 Slovenia 8,0 Slovenia 10,8 Austria 14,7 France 19,7 The Netherlands 15,7

4 Germany 7,0 Germany 8,2 Slovenia 13,0 Austria 16,2 Macedonia 14,2

5 Belgium 6,1 Belgium 7,7 Germany 11,8 Germany 8,2 Austria 10,7

Source: ITC

46







Turbines and engines, except aircraft, vehicle and cycle engines



Table 19 Ranking of exporters of turbines and engines, except aircraft, vehicle and cycle engines

worldwide for the period 2001 – 2011 (million EUR)

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total

world

206 536 216 890 211 492 230 127 255 057 278 805 297 048 294 856 234 676 318 082

Germany 30 438 33 447 34 680 39 627 43 899 48 381 51 403 51 280 39 482 51 998 59 641

Japan 25 493 26 244 25 269 27 158 29 102 29 421 29 741 29 279 25 869 38 278 39 903

USA 41 357 39 629 32 070 31 906 33 357 35 536 34 361 30 960 25 524 35 894 39 521

China 2 331 2 900 3 077 4 905 7 238 9 852 12 636 14 978 13 268 19 543 23 268

France 15 454 16 073 15 792 16 015 15 885 17 308 18 175 17 618 14 314 17 093 18 196

Bulgaria 50 55 62 87 118 140 180 201 117 204 327


0,0 0,0 0,0 0,0 0,0 0,1 0,1 0,1 0,0 0,1


0,2 0,2 0,2 0,2 0,3 0,3 0,3 0,4 0,3 0,4 0,5

Source: ITC

Table 20 Dynamics of the export (base index, base 2001) of turbines and engines, except aircraft,

vehicle and cycle engines worldwide for the period 2001 – 2011

EXPORT 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Total world 100 105 102 111 123 135 144 143 114 154

Germany 100 110 114 130 144 159 169 168 130 171 196

Japan 100 103 99 107 114 115 117 115 101 150 157

USA 100 96 78 77 81 86 83 75 62 87 96

China 100 124 132 210 311 423 542 643 569 838 998

France 100 104 102 104 103 112 118 114 93 111 118

Bulgaria 100 109 124 172 234 280 358 401 234 406 652

Source: ITC

The export of Bulgarian turbines and engines, except aircraft, vehicle and cycle engines is

dynamic and in 2011 the realized growth is over six times the value of the export in relation to

2001.

47







The dynamics of the Bulgarian export follows that of the world one, but with much bigger

rates, where in terms of export rate relative to the largest world exporters it is surpassed only by

China.

According to the table for the main markets for export of Bulgarian goods of this position,

as traditional and perspective markets are that of Austria, Germany, Italy, France, Russian

Federation, where the most potential is that of Turkey.

48








2000 2001 2002 2003 2004 2005

Turbines and

engines, except

aircraft, vehicle

and cycle

engines

1 Italy 8,0 Italy 9,8 Italy 11,1 Italy 12,1 Austria 14,3 Austria 22,5

2 Germany 5,0 Germany 7,3 Germany 6,7 Germany 9,3 Italy 14,2 Germany 18,2

3 France 4,6 Bulgaria 5,0 Austria 5,9 Austria 6,5 Germany 11,1 Italy 17,1

4 Austria 4,4 Austria 4,5 France 4,7 France 6,0 France 8,5 France 13,5

5 Turkey 3,5 France 3,9 Turkey 2,6 Russian

Federation

3,5 Russian

Federation

6,2 Russian

Federation

8,1

2006 2007 2008 2009 2010

Turbines and

engines, except

aircraft, vehicle

and cycle

engines

146,7 186,4 201,0 41,4 204,6

1 Austria 28,5 Austria 38,7 Austria 35,7 Austria 5,7 Germany 34,1

2 Italy 18,6 Russian

Federation

21,5 France 28,8 Germany 5,7 Austria 24,4

3 Germany 17,8 France 21,3 Russian

Federation

25,1 France 5,0 France 22,6

4 France 16,2 Italy 21,0 Germany 20,9 Italy 4,6 Russian

Federation

20,2

5 Russian

Federation

14,3 Germany 20,7 Italy 20,6 Russian

Federation

4,2 Italy 17,8

Source: ITC

49







Industrial cooling and ventilation equipment

In 2010 in the sector SME the export of Industrial cooling and ventilation equipment is

increasing five-fold relative to 2009 and is reaching a share of 21,8% of the total export of

SME in the sector (relative to 4,2% in 2009).

On the next graph is showed the increase in the export of this good by the SMEs and its

increase in its share in the export of Industrial cooling and ventilation equipment of the sector

as a whole.

Graph 3 demonstrates the share of the export of Industrial cooling and ventilation

equipment of the SMEs out of the total export of the sector on this position (million EUR)

Graph 3 Export of non-domestic cooling and ventilation equipment

Износ на промишлено хладилно и вентилационно

оборудване

0

20

40

60

80

100

2009 2010

мл

н.е

вр

о

МСП

общо С28

Source: NSI

According to data for the markets of the Bulgarian export of position “Industrial

cooling and ventilation equipment”, as traditional and perspective markets are that of

Austria, Germany, Russian Federation, Greece, The Netherlands, and as potentials are

that of Kazakhstan, Egypt, Belarus, Jordan.

Export of industrial cooling and ventilation equipment

Eu

ro (

mil

lion

)

SME

Total C28

50







Table 22 Export of Bulgaria in goods group Industrial cooling and ventilation equipment for the period 2000 – 2010 (million EUR)

2000 2001 2002 2003 2004 2005

Total 2,4 Total 2,4 Total 3,3 Total 4,5 Total 7,5 Total 18,4

Germany 0,9 Ukraine 0,5 Germany 0,8 Germany 1,9 Germany 3,4 Germany 11,7

Greece 0,4 South Africa 0,4 Russian Federation 0,5 Romania 0,6 The Netherlands 0,8 The Netherlands 1,9

Romania 0,3 Romania 0,3 Romania 0,5 Macedonia 0,4 Russian Federation 0,5 Belarus 1,2

Macedonia 0,2 Germany 0,2 Jordan 0,5 Belarus 0,2 Albania 0,4 Austria 0,8

Ukraine 0,1 Serbia 0,2 Macedonia 0,2 Russian Federation 0,2 Austria 0,4 Ukraine 0,5

2006 2007 2008 2009 2010

Total 16,6 Total 50,1 Total 53,4 Total 60,0 Total 54,7

Germany 10,5 Germany 17,4 Germany 20,9 Austria 27,3 Austria 23,0

Austria 2,0 Austria 9,2 Austria 16,1 Germany 15,7 Germany 16,5

The

Netherlands

1,5 Kazakhstan 7,7 Greece 3,5 Egypt 7,2 Serbia 1,8

Belarus 0,5 UK 3,1 Romania 2,7 Greece 2,0 Romania 1,8

Romania 0,5 Greece 3,0 The Netherlands 1,7 The Netherlands 1,2 Greece 1,7

Source: ITC

51







Machinery and equipment for food, beverages and tobacco processing

The export of the SMEs of Machinery and equipment for food, beverages and tobacco

processing increases in 2010 to 8,4 million EUR (having 7,1 million EUR in 2009) and takes a

share of 6,7% of the export of the SMEs in sector “Manufacture of machinery, equipment and

home appliances”. The relative share of the export of Machinery and equipment for food,

beverages and tobacco processing of the SMEs in the total export of the sector on this position

decreases to 29% in 2009 and to 24% in 2010.

The data for the markets of the Bulgarian export regarding position Machinery and

equipment for food, beverages and tobacco processing, as traditional and perspective markets

are that of Germany, Romania, Russian Federation, Greece, Switzerland, where potential are

that of Kazakhstan, Belarus, Moldova, USA.

52







Table 23 Export of Bulgaria in the group of goods “Machinery and equipment for foods, beverages and tobacco processing” for the period 2000 –

2010 (million EUR)

2000 2001 2002 2003 2004 2005

Total 10,8 Total 11,6 Total 15,2 Total 9,9 Total 12,5 Total 16,5

Russian Federation 2,0 Germany 1,7 Germany 2,6 Romania 1,7 Romania 1,6 USA 2,4

Switzerland 1,1 Switzerland 1,5 Switzerland 1,5 Switzerland 1,1 Switzerland 1,0 Switzerland 2,4

Azerbaijan 0,9 Russian

Federation

1,4 Russian

Federation

1,0 Moldova 0,7 Macedonia 1,0 Romania 2,2

Macedonia 0,9 Azerbaijan 1,4 Ukraine 0,8 Macedonia 0,7 Germany 0,9 Ukraine 0,8

Germany 0,8 Greece 0,7 Macedonia 0,8 Russian

Federation

0,6 Russian

Federation

0,7 Russian

Federation

0,7

2006 2007 2008 2009 2010

Total 13,0 Total 45,4 Total 47,1 Total 23,6 Total 36,0

Romania 2,5 Greece 11,3 Belarus 10,6 Russian

Federation

3,5 Russian

Federation

5,9

Ukraine 1,3 Russian

Federation

6,0 Russian

Federation

6,5 Macedonia 1,9 Romania 3,3

Russian Federation 1,2 Romania 5,9 Kazakhstan 3,1 Azerbaijan 1,9 Moldova 2,7

Belarus 1,1 Kazakhstan 3,7 Romania 2,8 Romania 1,8 Belarus 2,6

Switzerland 1,0 Belarus 3,0 Ukraine 2,7 Germany 1,5 Hungary 2,6

Source: ITC

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







Graph 4 Value of the Bulgarian export – motor trucks, electrical trucks and other trucks /2001 –

2010 / (in thousand EUR)

Source: NSI

Former market positions of Bulgarian mastodon “Balkancar” of about 60,000 and more

handling and lifting trucks exported on the Russian market can never be recovered by the

SMEs from sector. And it is found out, as a result of in-depth research, that namely the

Bulgarian market niche is occupied by Chinese manufacturers, and the Russian market

constantly needs such "absorption". Especially here, the Bulgarian SMEs could hardly

overcome the powerful Chinese State companies, which are supported in a number of ways by

the Chinese country, on the one hand, and by the preferential duties the Russian state had

created for former Bulgarian enterprises in this sector. Therefore, one of the strategic objectives

is to restore the so-called “Bon-ton” in diplomacy between Bulgaria and Russia and to set new

market coordinates of the economic relations.

The given graph shows that each year the value of the export of the export of air

conditioning machines for the entire period from 2001 to 2010 is continuously growing, to

reach from nearly half a million euro to almost 30 million euro for the last two reported years.

54







Graph 5 Value of Bulgarian export – air conditioning machines /2001 – 2010/ ( in thousand

EUR)

Source: NSI

Somewhat more slowly, but gradually upwards moves the export of washing

machines. On the attached graph can be seen that if ten years ago exports amounted to just over

7 EUR (million), then in the year of accession to EU-27 the value of exports increased almost

three times and a half, and for the period 2001 - 2010 the value of the export categorically has

tripled. This is one of the most dynamically developing fields of Bulgarian exports in this

sector and with great potential for development.

55







Graph 6 Value of the Bulgarian export – washing machines /2001 – 2010 / (thousand EUR)

Source: NSI

Analogous to the situation of the washing machines export is the situation of the

exporters of laundries and other household laundry equipment, the value of which is also

constantly growing since the beginning of the decade. For comparison, the lowest value has

been recorded in 2002 - 181,000 EUR; to the year of joining the EU-27 this value increased 16

and a half times, and by 2010 this figure has grown to almost 26 times to almost 4.8 million

EUR. As in the case of the other export lines in the sector the country's accession to the EU-27

has a relatively “ground-breaking” role for the market participants, but exports in this direction

is quickly recovering its positions and continues to conquer new market spaces. Dynamics

since the accession of the country is slightly delayed because for the period 2007 - 2010 the

export in this area has grown by only one and a half, but in average for the decade - the values

are very high, where the “turbulent” years, as evidenced by the following

graph, were before 2007.

56







Graph 7 Value of the Bulgarian export – laundries and other laundry-type washing machinery

/2001 – 2010 / (in thousand EUR)

Source: NSI

In contrast to the previous chart is the illustration of the value of exports of sewing

machines in Bulgaria. At the beginning of the decade the value of exports varies between

650,000 and 850,000 euros, where the first breakthrough of the “psychological” barrier of 1

million EUR is in 2004. In the years immediately before the accession of the country the value

of exports falls below 1 million EUR, but then slowly regains its position as the new record

level of 1.5 million EUR is reached in 2009.

In the last reported year - 2010, the export value is below 2004, where the fluctuations

in the export of sewing machines are at extremely short intervals of time - from one to two

years at the maximum, which creates some uncertainty among the market participants.

However, we must not forget, that the market for wearing apparel in the country has

also developed very rapidly and much of the Bulgarian SMEs especially here focused on

servicing the Bulgarian counterparts.

57







Graph 8 Value of the Bulgarian export – sewing machines /2001 – 2010/ (in thousand EUR)

Source: NSI

Regarding the value of the Bulgarian exports of boilers for central heating, it is found

that from the beginning of the decade to the country's accession to the EU-27 the value of

exports has been constantly decreasing. Only in 2007 and 2008 is passed the 1 million EUR

again, then again in 2009 and 2010 these values fall dramatically.

Graph 9 Value of the Bulgarian export – central heating boilers /2001 – 2010 / (in thousand

EUR)

Source: NSI

58







At this stage the export is at the levels of 2004 and, in fact, many of the Bulgarian

manufacturers of boilers and similar appliances are seriously troubled, where the prospects of

recovery from this economic crisis are referred to after two or three years.

The analysis of the most exported products that have successful marketing realisation

onto foreign markets shows two relatively recognizable trends: either deterioration of the

production, respectively, export positions, or clear cycle recurrence of “influx” and “reflux” in

different areas, where the cycle recurrence is about one or two consecutive years, due primarily

to the execution of certain larger or smaller orders. It is this uncertainty and lack of rhythm that

causes serious problems in forecasting and organizing of the activities of the SMEs from the

sector. Inability to clearly define the short and medium term objectives at company level

through the instruments of forecasting and planning, is creating unpredictable consequences for

the sector and the export, as traditional business relationships are destroyed, distorting the

regularity of payments on the line companies - companies (or known also as “business-to-

business”) and on the line companies-workers.

In addition to machinery and equipment should be mentioned that according to EU

statistical nomenclature the household appliances are included in group 29.7р and can be

perfectly traded on international markets. This group includes a wide manufacturing range

of various products such as:

Domestic electric appliances – like refrigerators, freezers, washing machines;

Domestic electro-thermic appliances

Non-electric domestic cooking equipment;

The main users of these products are primarily households. Therefore, innovations

that are implemented in the production of these products are focused mainly on efficiency in

households and their impact on the environment. Here, for example, are taken into

account factors such as electricity consumption, water consumption, change in habits, and even

change in lifestyle. Because of the direct and almost daily contact of the people with this type

of equipment, it is necessary to make more and more improvements in design, ergonomics,

materials and other products characteristics.

On EU-27 level there about 5,200 companies, engaged in manufacturing of home

appliances, with annual turnover in 2006 only from the sale of these products accounted for

52.7 billion EUR, and generated value added value for 12.7 billion EUR. This value

corresponds to 6.6% of the total added value, created by all companies, engaged in the field.

59







Of course, the nomenclature of the home appliances does not exhaust the full list of

potential solutions available for export, as the Bulgarian manufacturers of machinery and

equipment have also something to offer abroad at competitive prices.

COMPETITIVENESS OF THE EXPORT OF GOODS ON INTERNATIONAL

MARKETS

This chapter goes through the main export markets of our country for each group of

goods, identified as having export advantages and potential.

The next tables shows the leading trade partners of Bulgaria by groups of goods in

sector “Manufacture of machinery, equipment and home appliances” for a 10 year period.

60







Table 24 Leading partners in export by groups of goods in sector “Manufacture of machinery, equipment and home appliances with general and

special purpose” for the period 2000 - 2010

2000 EUR

(million)

2001 EUR

(million)

2002 EUR

(million)

2003 EUR

(million)

2004 EUR

(million)

2005 EUR

(million)

Furnaces and furnace burners

1 Germany 2,2 Germany 9,1 Germany 10,3 Austria 14,6 Germany 20,8 Germany 26,4

2 Russian

Federation

1,3 France 3,2 Austria 7,6 Germany 14,0 Austria 13,1 France 9,7

3 France 1,1 Russian

Federation

1,4 France 5,4 France 6,1 France 6,5 Austria 5,5

4 Serbia 0,9 Bulgaria 1,3 Bulgaria 2,9 Bulgaria 3,2 Bulgaria 3,9 Italy 3,8

5 Italy 0,6 UK 1,2 Hungary 2,7 Poland 2,2 Italy 3,0 The

Netherlands

3,5

Office equipment,

except computers

26,8 33,7 56,5 65,6 84,4 106,1

1 Germany 4,0 France 5,6 UK 13,1 UK 12,9 Serbia 14,5 Belgium 23,0

2 Italy 3,3 Germany 3,8 Germany 4,7 Germany 6,7 Germany 11,9 UK 13,8

3 The

Netherlands

3,3 UK 3,8 Italy 4,7 Romania 6,4 UK 10,5 Germany 11,7

4 Romania 3,1 Italy 3,8 Romania 4,6 Italy 5,0 Romania 5,7 Italy 6,7

5 UK 2,5 Sweden 3,3 The Netherlands 3,6 France 4,5 Italy 5,2 USA 6,7

Extracting and construction

machinery

15,4 21,6 28,1 27,7 30,2 57,9

1 Austria 2,8 Germany 6,0 Germany 7,2 Slovenia 6,0 Austria 6,5 France 9,2

2 Jordan 2,2 Austria 3,9 Austria 4,8 Germany 4,3 Slovenia 4,9 Germany 8,7

3 Ghana 0,8 Italy 2,9 Italy 2,7 Austria 3,5 France 3,1 Austria 7,9

4 Germany 0,8 Ghana 1,6 Slovenia 2,4 Denmark 2,4 Germany 2,1 Slovenia 6,4

5 Syria 0,8 Denmark 0,9 Macedonia 1,7 Romania 1,6 Denmark 1,3 Belgium 3,9

Turbines and engines, except aircraft, vehicle and cycle engines

1 Italy 8,0 Italy 9,8 Italy 11,1 Italy 12,1 Austria 14,3 Austria 22,5

2 Germany 5,0 Germany 7,3 Germany 6,7 Germany 9,3 Italy 14,2 France 18,2

3 France 4,6 Bulgaria 5,0 Austria 5,9 Austria 6,5 Germany 11,1 Italy 17,1

4 Austria 4,4 Austria 4,5 France 4,7 France 6,0 France 8,5 France 13,5

61







5 Turkey 3,5 France 3,9 Turkey 2,6 Russian Federation 3,5 Russian

Federation

6,2 Russian

Federation

8,1

Hydraulic pumps, hydraulic and

pneumatic engines

59,1 60,5 68,5 69,5 73,4 78,1

1 Germany 34,6 Germany 32,9 Germany 36,5 Germany 39,3 German

y

38,6 Germany 37,0

2 Italy 8,6 Italy 9,9 Italy 12,0 Italy 12,0 Italy 13,5 Italy 14,0

3 France 2,7 Mexico 3,7 Russian

Federation

4,7 Russian

Federation

6,0 Russian

Federation

7,3 Russian

Federation

10,2

4 Greece 2,3 Russian

Federation

2,6 Greece 2,5 Greece 2,7 Greece 3,0 Greece 3,6

5 Russian

Federation

1,5 Greece 2,5 Mexico 2,1 Ukraine 1,2 Spain 1,2 Ukraine 2,5

2006 EUR

(million)

2007 EUR

(million)

2008 EUR

(million)

2009 EUR

(million)

2010 EUR

(million)

Furnaces and furnace burners 103,6 127,0 174,0 59,7 170,7

1 Germany 31,1 Germany 36,1 Germany 53,3 Germany 20,3 Germany 57,5

2 France 11,1 France 14,0 Italy 22,0 France 5,9 France 16,2

3 Italy 6,3 Italy 10,1 France 15,1 Italy 5,8 Russian

Federation

12,8

4 UK 5,7 The Netherlands 7,5 Russian

Federation

9,8 Russian

Federation

3,6 Romania 9,6

5 The

Netherlands

4,8 Romania 7,4 The

Netherlands

7,7 The

Netherlands

2,7 Italy 8,8

Office equipment, except

computers

163,6 191,3 197,1 57,1 200,4

1 Belgium 56,7 Belgium 83,4 Belgium 85,0 Belgium 23,9 Belgium 84,8

2 UK 17,0 Germany 16,9 Germany 21,8 Germany 7,8 Germany 24,3

3 Germany 16,9 USA 13,0 USA 8,8 USA 2,8 Italy 12,2

4 USA 11,5 Sweden 9,7 Sweden 8,0 Russian

Federation

2,5 USA 9,2

5 Italy 9,6 Romania 9,3 Romania 8,0 Italy 2,4 Russian

Federation

6,9

Extracting and

construction machinery

68,1 101,5 135,1 125,9 209,2

62







1 France 16,0 France 19,7 Romania 25,3 Romania 23,8 Germany 54,2

2 Austria 10,4 Austria 16,2 France 18,7 Germany 21,6 Romania 18,9

3 Slovenia 8,0 Slovenia 10,8 Austria 14,7 France 19,7 The

Netherlands

15,7

4 Germany 7,0 Germany 8,2 Slovenia 13,0 Austria 16,2 Macedonia 14,2

5 Belgium 6,1 Belgium 7,7 Germany 11,8 8,2 Austria 10,7

Turbines and engines,

except aircraft, vehicle and

cycle engines

146,7 186,4 2

01,0

41,4 204,6

1 Austria 28,5 Austria 38,7 Austria 35,7 Austria 5,7 Germany 34,1

2 Italy 18,6 Russian

Federation

21,5 France 28,8 Germany 5,7 Austria 24,4

3 Germany 17,8 France 21,3 Russian

Federation

25,1 France 5,0 France 22,6

4 France 16,2 Italy 21,0 Germany 20,9 Italy 4,6 Russian

Federation

20,2

5 Russian

Federation

14,3 Germany 20,7 Italy 20,6 Russian

Federation

4,2 Italy 17,8

Hydrauli

c pumps,

hydrauli

c and

pneumat

ic

engines

95,7

141,2 146,4 36,4 120,2

1 Germany 31,2 Russian

Federation

34,7 Russian

Federation

35,4 Germa

ny

10,4 Germany 30,7

2 Russian

Federation

19,9 Germany 31,4 Germany 32,8 Italy 5,6 Russian

Federation

19,2

3 Italy 13,9 Italy 22,7 Italy 21,1 France 5,5 Italy 18,3

4 France 10,4 France 18,1 France 19,2 Russian

Federation

4,7 France 15,2

5 Greece 4,0 Greece 5,8 UK 6,1 UK 2,2 Denmark 6,4

Source: ITC

63







Bulgaria could encourage the export by SMEs into the following five markets,

where a relative growth is noticed in the EU: Romania, the Czech Republic,

Slovakia, Greece and Hungary;

The identified key markets outside the EU are: Russia, Serbia, Ukraine, Kazakhstan,

Macedonia;

The priorities regarding machinery and equipment should be directed to the

restoration of existing and working until the near past markets, where the Bulgarian

production is accepted with readiness and willingness and the traditionally good

relationship still exist;

Regarding home appliances it should be looked even for the “new old” target

markets, including in the countries in the Middle East and also to some more solvent

African countries like Egypt, Tunisia, Algeria, Morocco, where Bulgaria has been

traditionally accepted as reliable and trustful trade partner;

Main rivals in the EU countries are that of Western Europe. In first place is

Germany, followed by Italy, France, Spain, the Czech Republic, Sweden;

Among the countries out of the EU main rival to Bulgarian companies is China,

followed by Turkey, USA and Russia;

Main advantages of the EU rivals, indicated by the respondents of the carried out

sociology survey, are related to:

high quality of the competitive products (way forwards in the rating);

low product cost (indisputably related to the high technical and technology

level);

good technologies;

traditions in the export of these countries;

imposed on the markets brand of certain products;

financial capacity;

large investments in marketing and advertising.

64







BARRIERS TO THE INTERNATIONALIZATION OF SMALL AND MEDIUM

ENTERPRISES AS WELL AS MEASURES AND PERSPECTIVES FOR

STIMULATION AND DEVELOPMENT OF EXPORT

The most serious barriers to the Bulgarian export according to the carried out

sociological survey are the unfavourable business environment in Bulgaria, high

production cost of goods and the lack of support by the Bulgarian state for the

export, i.e. the most serious barriers to the export are the barriers of the

“surrounding environment”;

The companies from the sector are clearly understanding the need of modernization

of the production process to be competitive, including into the international markets,

as well as the lack of own financial resources. This is reaffirmed by the fact that

among the priority measures the highest priority is given to the support for

technology modernisation of the production process, corresponding to the most

serious barrier to the export – high production cost of goods and services;

Most of the measures to overcome the barriers to the export are expected to be

undertaken by the state. Most often is indicated the need of creating normal business

climate in Bulgaria. Moreover there is an accent for such business environment,

adequate to the existing at the moment serious crisis;

Companies are counting to the highest extent on their own to ensure the necessary

information for the export and to a much lesser extent to the administrative

structures of BSMEPA and the branch organizations.

65







ANTICORRPUTION COMPONENTS OF THE EXPORT STRATEGIES

The experts’ assessments outline the following potential corruption risk profile:

Lack of information and of attempts to bridge this information gap by seeking

intermediaries capable of recommending a potential partner, as well as falling into

the frames of already existing dependencies. The lack of information for the

existing dependencies for ensuring and guaranteeing the claims, as well as for the

more general defence of the exporters’ rights;

Insufficient technical capacity and resource availability, including the lack of

investments in innovations, as an objective factor for the increase of the risk of

attempts to bribe foreign public officials.

High level of corruption risk in some of the markets of the Arab countries, e.g.

Africa and the Middle East countries, due to incomplete and unclear legal

framework, volatile regulatory environment, incomplete or partial definition of the

scope of competence of the various agencies and institutions, lack of mechanisms

for control and penalization of unfair competition practices;

In internally national context – lack of knowledge about the legislation in force,

high level of mistrust in public authorities, lack of information and coordination in

the requirements of the administrative units, responsible for the export activity.

As tools for assessment of the corruption risk and for planning export strategies could

be used three already recognised international surveys of the international anti-corruption

organisation Transparency International: Corruption perceptions index (CPI), Global

corruption barometer (GCB), Bribe payers index (BPI). These give relative information

regarding the level of expansion of the corruption worldwide and the extent to which the

national institutions and sectors are affected.

66







A) MARKETS IN EUROPEAN UNION MEMBER STATES: GREECE, ROMANIA,

THE CZECH REPUBLIC, SLOVAKIA, HUNGARY

According to CPI the efficiency of the anti-corruption policy in these countries is below

the average values for the EU (6,27). The given above countries may be divided in two groups:

the first includes Greece (index 3,4) and Romania (3,6), where in the last 3 years shows an

increase of the indicators for anti-corruption efficiency. The other group of countries show

more stable progress in fighting the corruption in the last years and as a whole is offering more

appropriate business conditions.

According to GCB the most seriously affected institutions and sectors by the corruption

are: in Romania – political parties and the parliament; Greece – political parties and media; the

Czech Republic – political parties, parliament and public administration; Hungary – business.

Less affected institutions and sectors by the corruption are: in Greece – fiscal services,

police and judicial system; the Czech Republic – judicial system, fiscal services and customs;

Hungary – public administration, judicial system.

Most significant pressure for bribe payment (expressed as percentage of nationals asked

to pay a bribe in the last year) exists in the following sectors: in Greece – customs (16,9%),

agricultural services (4,9%) and registry offices (4,4%); the Czech Republic – registry services

(8,7%), agricultural services (8,6%), Romania – police (16,2%), judicial system (13,0%) and

registry services (10,8%).

B) MARKETS OUTSIDE THE EUROPEAN UNION MEMBER STATES: RUSSIA,

SERBIA, UKRAINE, KAZAKHSTAN, MACEDONIA

This group of countries is creating less favourable environment for business realization

due to two main deficits: lower efficiency of the public institutions work and more serious

corruption pressure on the business.

67







According to CPI most serious problems related to anti-corruption encounter in first

place Ukraine (2,3), followed by Russia (2,4) and Kazakhstan (2,7). In comparable

international aspect the Balkan states Serbia (3,3) and Macedonia (3,9) are showing relatively

more favourable to the international business conditions.

According to GCB the most seriously affected institutions and sectors by the corruption

are: in Ukraine and Russia – judicial system, public administration and the parliament (the risk

of administrative corruption is leading relative to the risk of politically favoured corruption);

Macedonia – judicial system, political system; Serbia – political parties, public administration,

parliament, judicial system and police.

Less affected institutions and sectors by the corruption are: Macedonia – fiscal services,

media.

Most significant pressure for bribe payment (expressed as percentage of nationals asked

to pay a bribe in the last year) exists in the following sectors: Russia – police (27,7%),

agricultural services (20,2%), judicial system (17,7%), customs (10,9) and registry offices

(8,6%); Ukraine – police (29%), customs (23,4% paid a bribe and another 20,8% do not

answer), agricultural services and forest management services (24%), registry services (22,1%

and another 12,1% do not answer), judicial system (16,9%) and fiscal services (10,4%);

Macedonia – customs (25%), judicial system (20,6%); Serbia – police (14,5%), judicial system

(13%) and customs (12,4%).

68







MACROECONOMIC CHARACTERISTICS OF THE PRIORITY BULGARIAN

EXPORT MARKETS. BILATERAL TRADE RELATIONS

In order to get clearer vision of the overall condition and peculiarities of the defined as

main Bulgarian export markets for the production of the analyzed by us sector, we are offering

a general view of the leading five countries of this rating, that are part of the European Union,

as well as of the leading five outside its borders.

For sector “Manufacture of machinery, equipment and home appliances” the most

important markets, as we have already found out are: Romania, Greece, the Czech Republic,

Slovakia and Hungary. Outside EU these are Russia, Serbia, Macedonia, Kazakhstan and

Ukraine.

Actual data and characteristics for big part of the developed markets could be found

also on the National export web portal, supported by BSMEPA.

Romania. The contractual legal basis between the two countries in the field of the trade

and economic relations has been established and continues to develop. Among the signed

agreements and contracts are the following:

Protocols for liberalisation of trade for industrial and agricultural products in the frame

of the Accession agreement of Bulgaria to the CEFTA, effective since 1999; Agreement on

cooperation and mutual assistance in customary matters since 1999; Agreement on bilateral

recognition of diplomas and academic degrees; programmes for cooperation in the field of

science and education; multiple agreement on border cooperation.

A new stage in the development of the bilateral economic relations begins after signing

the protocols for liberalisation of trade for industrial and agricultural products in the frame of

the Accession agreement of Bulgaria to the CEFTA (in force of 01.01.1999), being Romania

69







party to it. The removal of the barriers to bilateral trade is reflecting positively on the trade and

has positive effect on the trade and economic relations in bilateral and regional plan.

The accession of Bulgaria and Romania to the European Union in 2007 put the

development of the bilateral relations in the trade and economic field into new environment,

transforming it into intercommunity ones. Romania is an important economic partner of

Bulgaria. The markets of both countries have similar characteristics, keeping some

peculiarities, relatively foreseeable economic environment, decreased in the last year internal

consumption due to the economic crisis.

For the last 4 years the trade turnover between Bulgaria and Romania has been marked

by significant growth, where only in 2009 is marked a slight fall in the export of Bulgaria and

higher in the import. In 2010 the trade turnover between the two countries is growing and is

about 2,5 billion EUR. Both the import and the export have marked increase of one third in the

volume for 2010 relative to the previous year.

The joint European projects, both countries taking part in, the building of Danube

bridge 2, the cross-border projects, the European funds for infrastructure modernisation, the

agriculture, AGRI and other give ground to consider that the trade and economic relationship

will deepen and develop even more in short and long term.

In the next years is expected the internal consumption to grow and both economies to be

more and more export orientated that is possible to be ensured by means of mutual support and

bilateral flexible trade policy both of State institutions and the various subjects and companies

in both countries.

Independently of the economic crisis many Bulgarian companies have marked interest

to be present and develop activity on the Romanian market, not lacking respectively Romanian

companies, orientated towards the Bulgarian market.

70







Table 25 Main economic indicators for Romania and bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 11,600

Growth of GDP (%, 2010) -1,3%

Inflation (%, 2010) 6%

Export volume (2010) $ 51,91 billion

Position as world exporter (2010) 51

Main trade partners in export

(2009)

Germany 18,8%, Italy - 15,4%, France 8,2%,

Turkey 5%, Hungary 4,3% (2009)

Main export positions (2009) machinery and equipment, textile and shoes,

metal and metal products, minerals and fuels,

chemicals, agricultural products


(2009)

Germany 17,3%, Italy - 11,7%, Hungary

8,5%, France 6.1%, China 4,9%, Austria 4,8%

(2009)

Main import positions (2009) machinery and equipment, metal and metal

products, minerals and fuels, chemicals,

agricultural products

Export volume of Bulgaria

(million EUR, 2010)

1.441.244

Share of the export (%) in the total export

of Bulgaria, in EURO (2010)

9,25 %

Main positions of the export of Bulgaria

in 2010

iron rods or non-alloy steel, petroleum oils

and oils obtained from bituminous minerals,

rape seed, sugar cane sugar, sunflower seeds,

wheat and rye, tractors, meat and offal;

pharmaceuticals; corn

Import volume of Bulgaria,

(million EUR, 2010)

1.336.488

Share of the import (%) in the total import

of Bulgaria, in EURO (2010)

6,97 %

Main positions of the import of Bulgaria

in 2010

petroleum oils and oils obtained from

bituminous minerals, petroleum gas and other

gaseous hydrocarbons; copper waste and

debris; waste and debris of cast-iron, iron and

steel; meet and offal; pneumatic rubber tires,

new; oil-cakes; pharmaceuticals, passenger

cars and other motor vehicles; sugar cane

sugar.

Source data: ITC and MEET

For 2009 the amount of the Romanian investments in Bulgaria is 152.5 EUR (million)

and it sets them on 26th

place among the countries investors here. Again for same year but

according to data of the Ministry of foreign affairs of Romania, a total of 36 companies and

71







representatives with Romanian participation have been registered in Bulgaria, out of which 9

are constituted with 100% Romanian capital.

In Romania, according to data of the Romanian Ministry of trade, as small and medium-

sized enterprises and the business environment have been registered 1014 companies with

Bulgarian participation, with capital 18 529,7 EUR (million), ranking Bulgaria at 41th place

among the investors in the country. The Bulgarian investment in Romania, according to BNB

until the end of 2009 are 41,2 EUR (million), where the Bulgarian investment flow there for

2009 is 4,1 EUR (million) and for the first 6 months of 2010 is 1,6 EUR (million) with 40,2

EUR (million) total flow, i.e. falling of Bulgarian investment abroad for the same period.

Greece. The trade and economic relations between Bulgaria and Greece are developed

on the basis of bilateral agreements and that with the EU, directly related to the Republic of

Greece as EU member state. Greece is traditionally entering in the first five of our trade

partners from the EU and takes the leading place among the SEE countries. BTCC is

maintaining constant business contacts with the commerce chambers of the Republic of Greece,

the Greek unions and associations. A number of agreements for cooperation have been signed

between the BTCC and the Commerce chambers of Athens, Seres, Drama, Thessalonica,

Kavala, the Greek Association for Promoting the Export, the Federation of the Greek

Industrials, the Small-size Business Trade Chamber. Regional chambers of the Republic of

Bulgaria on their turn are concluding cooperation agreements for the realization of joint

projects, organization of business visits and meetings.

Legal framework:

Agreement for five-year programme for cooperation in the field of development

/2002-2006/, signed on 28th

August 2002;

Treaty for cooperation in the field of tourism /14th

May 1999/;

Agreement for avoiding double taxation with additional protocol /15th

February

1999, protocol on 18th

June 2000, in force since 1st January 2002/;

Agreement for cooperation and mutual assistance between the custom

administration /19th

January 1999, in force since 2d March 2000/;

72







Agreement for the construction of new road border bridge between both countries in

the region of the Kulata-Promahon border crossing point /2d July 1997, in force

since 1st March 1998/

Agreement for seasonal employment of workforce, with Annexes 1 and 2 /15th

December 1995, in force since 21st July 1997/;

Agreement for the inauguration of three new cross border points and road

connections between both countries /22d December 1995, in force since 19th

November 1996/;

Agreement for the use of the waters of the river Mesta /22d December 1995, in

force since 19th

November 1996/;

Agreement for promotion and mutual protection of investments /12d March 1993, in

force since 29th

April 1995/.

Table 26 Economic indicators for Greece and bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 29 600

Growth of GDP (%, 2010) -4,5%

Inflation (%, 2010) 4,5%

Export volume (billion USD, 2010) $ 21,14 billion



(2009) Germany 11,1%, Italy - 11%, Cyprus 7,3%, Bulgaria

6,7%, USA 4,9%, UK 4,4%, Turkey 4,2% (2009)

Main export positions (2009) food and beverages, manufactured products, petroleum

products, chemicals, textile

Main trade partners in import

(2009) Germany 13,7%, Italy - 12,7%, China 7,1%, France

6,1%, The Netherlands 6%, South Korea 5,7%, Belgium

4,3%, Spain 4,1% (2009)

Main import positions (2009) machinery, transport equipment, fuels, chemicals

Export volume of Bulgaria to Greece

(million EUR, 2010)

1 236,711

Share of the export to Greece (%) in the total

export of Bulgaria, in EURO (2010)

7,9 %

Main positions of the export of Bulgaria to

Greece in 2010

textile products and materials, base metals and electricity

Import volume of Bulgaria to Greece (million

EUR, 2010)

1 141,925

Share of the import from Greece (%) in the

total export of Bulgaria, in USD (2010)

5,9%


from Greece in 2010

textile products and materials, mineral and chemical

products, machinery and equipment and base metal

Data source: ITC and MEET

73







For the period 1996-2010 investments from Greece amount to 3.53 billion EUR,

representing around 9% of the total amount of the investments for the period (39,5 billion

EUR), and the country ranks 3rd place of total of 182 countries. In 2010 have been attracted

112,5 EUR (million) from Greece, amounting to approximately 1.3% of the total sum (3212

million EUR).

According to preliminary data of BNB for 2010 we are reporting PFI at the amount of

1.36 billion EUR (two-fold decrease relative to 2009). In 2008 the foreign investment are 3.28

billion EUR.

In Bulgaria are registered 4139 companies with from 5 to 100% Greek participation

until the end of 2007. In term of this indicator Greece ranks third after Turkey with 6290

companies and Russia with 4920 companies and before UK with 3902, Macedonia - 2724,

Syria - 2606, Germany - 2330, Italy - 2161 and China - 1842. Greece is the biggest foreign

investor in Albania and Macedonia and the third in Romania.

Promoting the investment activity in the Balkan regions is a priority of the economic

policy of Greece.

The Czech Republic is an industrially developed country with intensive agriculture.

Highly developed are the automotive and chemical industries, energy industry, machine

building, electronics, metallurgy and steel production industry, coal mining, glass, textile,

paper, leather and food industries.

In the last years the Czech economy marks continuous GDP growth, where in 2007 has

been reached the highest growth of 6,5%. In terms of volume of GDP per capita the Czech

Republic has reached in the first semester of 2008 82% of the average level for the EU. Main

economic problem for the Czech Republic in long-term is the public funds deficit. In 2008 the

Czech reached for the first time a rate in terms of this indicator, meeting the Maastricht criteria

– 1,5%. Considering the GFEC impact, in the first half-year of 2009 the GDP rate fall by 5,5%

in comparison to same period of 2008. As a whole, in 2009 the GDP drop reached minus 4,1%,

in comparison to previous year. The average annual inflation in 2009 was 1% (in 2007 it was

2,8% and in 2008 reaches 6,3%). The general unemployment rate at the end of 2009 reaches

6,7%. In 2009 the average nominal salary has increased by 5,2% (and is approximately 1010

EUR) and the actual with 4,8% relative to previous year.

The high influx of direct foreign investment, one of the largest for the region, helps

strengthening the country economic power. The total amount of direct foreign investment for

74







the period 1993 – 2004 is 45.5 billion USD. Only in 2005 direct foreign investment reach 8.8

billion EUR, where largest is the share of investments in telecommunication, real estate and

manufacturing industry.

The trade turnover between the two countries marks continuous growth rate.

Notwithstanding the export of the Bulgarian production to the Czech Republic in the first 10

month s of 2008 has increased by 60.5% relative to same period of 2007, there is stable trend

for negative trade balance for Bulgaria.

Table 27 Main economic indicators for the Czech Republic and bilateral trade relations

with Bulgaria

GDP (per capita, USD, 2010) $ 25,6 thousand

Growth of GDP (%, 2010) 2,3%

Inflation (%, 2010) 1,5%



Main trade partners in export (2010)

Germany 31,7%, Slovakia 8,7%, Poland

6,2%, France 5,5%, UK 4,9%, Austria

4,7%, Italy 4,5% (2010)

Main export positions (2010) machinery and transport equipment, raw

materials and fuels, chemicals


(2010)

Germany 25,6%, China 11,9%, Poland

6,5%, Russia 5,4%, Slovakia 5,2%

(2010)

Main import positions (2010) machinery and transport equipment, raw

materials and fuels, chemicals


(million EUR, 2010)

146,32

Share of the export (%)in the total export of

Bulgaria, in EURO (2010)

0,94 %

Main positions in the export of Bulgaria in 2010 copper waste and debris; chairs and

seats; copper rods and profiles; radiators

with non-electric heating; generators and

hot air distributors; sound recorder

devices or devices for analogue records;

aluminium rods and profiles; bread,

paste, cons or biscuit products; wires,

cables; other tubes and hollow profiles

from iron or steel; iron sheets, copper

sheets and bands, with gauge exceeding

0,15 mm.

Import volume of Bulgaria (million EUR, 2010) 363,81

Share of the import (%)in the total export of

Bulgaria, in BGN (2010)

1,9%

Main positions of the import of Bulgaria passenger cars and other motor vehicles

75







in 2010 for passenger transport; pharmaceuticals;

wool; spare parts for rail or tram

vehicles; TV receivers; printing

machinery and devices, electrical

apparatus for wire telephony and

telegraphy; automatic data processing

machines and units thereof; magnetic or

optical readers; machines for

transcribing data onto data media in

coded form and machines for processing

such data Data source: ITC and MEET

In average for the period 2000 – 2010 is observed the following:

– Diversification of the import: agricultural 13% and industrial 39%;

– Diversification of the export: agricultural 12% and industrial 15%;

– In Bulgaria a total of 1689 companies are importing, out of which 141 realize 75%

of the import;

– From Bulgaria a total of 423 companies are exporting, out of which 49 are

realizing 75% of the export;

– The number of Bulgarian companies with Czech participation from 5 to 100% is

293.

The direct Czech investment in Bulgaria for the period 2000 – 2010 amounts to 942.3

million EUR.

Slovakia is member of over 50 international political and economic organizations.

Since 01.05.2004 Slovakia is full member of the EU. In 1999 in Bratislava has been established

a Regional centre of the UN Development Programme (UNDP) for the Central European

countries.

The predominating part of the external trade of Slovakia is with EU countries. Leading

external trade partners of the country are Germany, Austria, the Czech Republic, Russia, China,

Korea, France, Poland, Italy, etc.

Leading main goods in the export list

– motor cars;

– LCD televisions;

– machinery and equipment;

76







– flat-rolled products of iron and steel;

– cables and wires;

– paper and paper products.

Leading main goods in the import list

– parts and accessories for the automotive industry;

– petroleum and mineral oils;

– natural gas;

– chemicals;

– pharmaceuticals;

– plastic products.

Table 28 Trade turnover between Bulgaria and Slovakia (million USD)

Year Export Import Balance Trade turnover

2000 6,1 44,6 -38,5 50,7

2001 9,9 42,3 -32,4 52,2

2002 18,7 47,8 -29,1 66,5

2003 15,9 63,1 -47,2 79,0

2004 30,4 85,2 -54,8 115,6

2005 33,2 92,5 -59,3 125,7

2006 58,3 118,7 -60,4 178,0

2007 115,2 224,9 -109,7 340,1

2008 106,02 221,4 -115,38 327,42

2009 94,71 193,20 -98,49 287,91

2010 104,62 208,3 -103,68 312,92 Datasource: ITC and MEET

The data for the trade turnover between the two countries in 2010 show the following

trends. The turnover has increased by 8,68% relative to 2009; the import from Slovakia has

increased by 7,8%, the Bulgarian export has increased by 10,46%. However, the balance in the

turnover is negative that is due to the increase of import, considering its lower level in the crisis

2009.

In the last years is noticed a serious drop in the Bulgarian export of iron and steel

products and chemical raw materials, that in 2008 consisted around 45% of the overall export.

At the present the data show fall in the export of iron and still of around 4 times, that is related

both to the closing of the metallurgical plant “Kremikovtsi” PLC, main export of metals for

77







Slovakia, and to the significantly decreased demand of similar production in the country as a

result of the crisis.

However during the reported period most drastic seems to be the drop of over 15 times

in the export of raw materials for the chemical industry, zinc and aluminium at the most, due on

one side to the significant decrease in the orders in the chemical production of Slovakia, as a

result of the crisis, but also as a result of the non-competitive prices of our producers.

The group of electro-technical equipment, cables and insulations in 2009 comes at first

place in our export for Slovakia, being well position also the food products, mainly rice,

sunflower oil, sugar products, cacao and spices, for example the rice supplies have grown

approximately twice, the oil with over 25 times, etc.

Serious drop with over 60% marks the export of traditionally strongly represented in the

import list products in our country from Slovakia, namely the passenger cars of Volkswagen,

Kia Motors and Peugeot-Citroen, due to the decreased demand of this group of goods as a

result of the crisis.

The entering of new articles in the Slovak export of our country is noticed, namely of

industrial oils, plastic goods, etc., showing the increased competitiveness of the Slovak in

comparison to the Bulgarian manufacturers in these sectors, as well as in relation to the similar

to them import goods. According to data of MEET and BNB in 2009 the Slovak investments

amount to 13 EUR (million). In 2009 was started the realization of new investment project in

hi-tech manufacture in the city of Lovech (blood banks plant). In 2010 the amount of the

Slovak investments has fallen by 9,4 EUR (million).

Leading main goods in the export of Bulgaria for Slovakia:

– Electronic equipment, cables, insulations;

– Food products and spices;

– Steel and flat-rolled iron;

– Plastic products.

Leading main goods in the export of Slovakia for Bulgaria:

78







– TV sets and other household appliances;

– Electronic equipment and cables;

– Plastic products;

– Office and other types of paper.

Hungary. The trade turnover between Bulgaria and Hungary in 2007 grow to 808,1

EUR (million) in the context of significant negative balance of 525,4 EUR (million). In the

Bulgarian export biggest is the share of the flat-rolled iron profiles – 13%, then come the shoes

– 7,5%, aluminium and other metal waste – 5,00%, food products – 3,5%, etc. In import first

come the motor cars and other vehicles – 22,68%, electrical appliances – 8,7%,

pharmaceuticals – 7,12%, Radio and other types of receivers – 5,41%, etc.

According to data of MEET, the amount of Hungarian investments in Bulgaria for the

period 1996-2008 /first trimester/ amount to 986.16 EUR (million), ranking Hungary on 9th

place in the rank list of the foreign investors. In 2003 is realized the biggest Hungarian

investment here by the Hungarian bank OTP, that purchased Bank DSK for 311 EUR (million).

In 2006 the Hungarian bank MKB bought the majority share of the actions of Unionbank for

244,3 EUR (million). In 2007 the Hungarian investments are accounting for 236,8 EUR

(million). There is precondition for the entering of new Hungarian investments not only in the

bank sector, but also in other fields of the Bulgarian economy. According to data of the

BULSTAD register, at the end of 2006 the total number of companies from Hungary, invested

here, is 88.

In 2008 between the Ministry of economy, energy and tourism of the Republic of

Bulgaria and the Ministry for national development and economy of the Republic of Hungary

was signed an Agreement for cooperation in the field of small and medium-size enterprises. In

compliance with the Agreement for cooperation Hungary was a “country-partner” of the

Autumn International Plovdiv Fair in 2009.

Between the government of the Republic of Bulgaria and the government of the

Republic of Hungary was signed a Treaty for mutual promotion and protection of investment,

that was ratified by law, adopted by the 37th

National assembly on 2d of March 1995 – SG No

24 of 1999, in force since 7th

September 1995. Issued by the Ministry of finance, it was

published in SG No 98 of 7th

November 1995.

79







Table 29 Main economic indicators for Hungary and bilateral trade relations with

Bulgaria

GDP (per capita, USD, 2010) $ 18,800 thousand

Growth of GDP (%, 2010) 1,2%

Inflation (%, 2010) 4,9%

Export volume (USD, 2010) $ 93,74 billion


Main trade partners in export (2010 ) Germany 25,5%, Italy 5,5%, UK 5,4%,

Romania 5,3%, Slovakia 5,1%, France

4,9%, Austria 4,7% (2010)

Main export positions (2009) machinery and equipment 61,1%, other

products 28,7%, food products 6,5%,

raw materials 2%, fuel and electricity

1,6% (2009)


(2010)

Germany 26,1%, Russia 7,7%, China

6,8%, Austria 5,9%, The Netherlands

4,4%, Poland 4,3%, Italy 4,2% (2010)

Main import positions (2010) machinery and equipment 50%, fuel and

electricity 11%, food products, raw

materials

Volume of the export of Bulgaria

(million EUR, 2010)

198,06

Share of the export (%) in the total export of

Bulgaria, in EUR (2010)

1,27 %

Main positions in the export of Bulgaria

in 2010

Footwear, food products, machinery,

aluminium, textile, organic chemistry,

batteries, petroleum oils and oils of

bituminous minerals

Volume of the import in Bulgaria

(million EUR, 2010)

597,98

Share of the import (%) in the total export of


3,12%

Main positions in the import of Bulgaria in 2010 TV and radio sets and parts thereof,

motor vehicles, pharmaceuticals,

electrical equipment, meat products,

appliances, etc. Datasource: ITC and MEET

Perspective fields for development of trade and economic relations:

In 2003 is realized one of the biggest Hungarian investments in Bulgaria. On 20th

May

2003 the governors of the Bank consolidation company (BCC) and the Hungarian bank OTP

80







signed in Sofia a contract for the sale of 100% of Bank DSK. The paid price by the buyer is

311 million euro.

In 2006 the Hungarian bank MKB purchases the majority share of the action of the

Bulgarian Unionbank.

Other Hungarian investors are “Videoton Holding PT” (majority share in “DZU” PLC,

Stara Zagora from the electrical and electronic sector), “Dunapak PT” (majority share in

“Rodina” and “Rodinvest” from the pulp and paper industry), “Hun-Ex” (hospitality). Separate

smaller investments are realized in the field of trade, consultancy, real estate, etc. There is a

positive trend of establishing cooperation between Hungarian and Bulgarian companies.

On 1st of April 2003 the Bulgarian “Lines Holding”, producer of natural juices and milk

with the BBB brand, bought the canned factory “Storko” PLC, Pleven. The holding has signed

a contract with the Hungarian company “Globus” for close cooperation, providing for acquiring

51% ownership for about 701 250 USD.

Serbia. In the export of Bulgaria for 2010, Serbia holds 8th

place, with a share of 3.5%,

regarding the import holds 21st place, with share of 1%. Given data determine the importance

of the Republic of Serbia as external trade partner of the Republic of Bulgaria.

Table 30 Main economic indicators for Serbia and bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 10 661

Growth of GDP (%, 2010) 1 %

Inflation (%, 2010) 10,3%

Export volume (2010) $ 9,794 billion



(2009)

Bosnia and Herzegovina 12,2%, Germany -

10,4%, Montenegro 10%, Italy 9,8%

Main export positions (2009) metals, electric machinery and equipment, copper,

plastics, wheat crops


(2009)

Russia 12,3%, Germany 12,2%, Italy 9,7%, China

7,1%, Hungary 4%

Main import positions (2009) mineral oils, machinery and equipment, electric

machinery and equipment, plastics, vehicles,

paper


(thousands EUR, 2010)

583,195

Share of the export (%) in the total export of 3,8 %

81








Main positions of the export of Bulgaria

in 2010

copper, pharmaceuticals, machinery and

equipment, glass, metals, steel, electric machinery

and equipment, essential oils

Volume of the import in Bulgaria

(thousands EUR, 2010

207,498

Share of the import (%) in the total import of


1,1 %


in 2010

Iron, steel, ores, plastic products, copper, animal

and vegetable oils, wheat crops, paper, etc.

Source: ITC and MEET

In the export list of the Bulgarian goods are prevailing mainly raw materials, materials

and goods with low level of processing. Leading positions are hold by the electricity (with

share 37%), refined copper and non-processed copper alloys, articles and products of the

chemical, pharmaceutical and glass industry, video recorders and video reproducers, etc.

At the moment, trade relations between the Republic of Bulgaria and the Republic of

Serbia are regulated by the Temporary agreement for trade and trade-related issues between the

EU and the Republic of Serbia signed on 29.04.2008 in Luxembourg. It is expected these to be

ruled by the Stabilization and Association Agreement, ratified on 19.01.2011 by the EU

Member States.

Macedonia. According to preliminary data of the Macedonian State Institution for

Statistics within the period January – April 2011 Bulgaria holds 5th

place as trade partner of

Macedonia. The common bilateral trade turnover amounts to 231 USD (million). The

Macedonian export for Bulgaria is 98 USD (million) and the import from Bulgaria is 133 USD

(million). The trade balance is positive for Bulgaria and amounts to 35 USD (million).

Table 31 Main economic indicators for Macedonia and bilateral trade relations with

Bulgaria

GDP (per capita, 2010) $ 9 728

Growth of GDP (%, 2010) 0,7%

Inflation (%, 2010) 1,6%

Export volume (2010) $ 3,332 billions


Main trade partners in export ( 2010) Germany 20,2%, Italy 7,1%, Bulgaria 7,1%,

Greece 6,4%

Main export positions (2010) food, beverages, tobacco products, iron and

82







steel

Main trade partners in import (2010) Germany 11,5%, Russia 11,1%, Greece

8,3%, Bulgaria 8,2%, UK 7%, Turkey

5,1%, Italy 5,1%

Main import positions (2010) machinery and equipment, vehicles,

chemicals, fuels, food products

Volume of the export of Bulgaria

(thousands EUR, 2010)

329,744

Share of the export (%) in the total

export of Bulgaria, in EUR (2010)

2,1 %

Main positions in the export of Bulgaria

in 2010

Electricity, petroleum oils and oils of

bituminous minerals, waste and debris of cast

iron, iron or steel, sunflower oil, iron or plain

steel, passenger cars and other vehicles

Volume of the import of Bulgaria

(thousand EUR 2010 )

252,890

Share of the import (%) in the total

import of Bulgaria, in EUR (2010)

1,3%

Main import position of Bulgaria in 2010 lead, copper and zinc ores, hot-rolled products

of iron or plain steel, raw or non-processed

tobaccos, copper waste, hot-rolled iron pipes Datasource; ITC and MEET

The external trade relations between two states are assisted by the bases, created upon the

signed on 15.12.2008 in Skopje new Agreement for economic cooperation between the

governments of Bulgaria and Macedonia, a mixed Bulgarian-Macedonian intergovernmental

Committee for economic cooperation. Other contracts, promoting the trade turnover between

two states are:

Agreement for cooperation between Bulgaria and Macedonia in the field of

standardization, metrology, accreditation and evaluation of the compliance – signed

in Skopje, 15.05.2000;

Agreement between the government of the Republic of Bulgaria and the Republic of

Macedonia for cooperation and mutual assistance in customary matters – in force

since 15 July 2000, etc.

83







Russia is traditional and one of the most important external-economic partners of

Bulgaria. After Bulgaria joined the EU the relations between the two countries received new,

even higher dynamic. This is confirmed by the registered growth in 2007 relative to 2006 of the

Bulgarian export for Russia - 96%, of the Russian investments in Bulgaria – 73,8%, of the

tourist flow from Russia – 14%, as well as of the signed agreement on the energy projects.

In 2009 the Russian federation realizes 8,7% of the external trade turnover of Bulgaria,

including 2,5% of the export and 13,1% of the import. In average for 2000 – 2008 it is

observed that from Bulgaria to Russia are exporting a total of 640 companies, 41 of which

constitute 75% of the export and in Bulgaria from Russia are importing 844 companies, out of

which 2 constitute 75% of the import (due to the energy resources). Bulgaria holds about 1% of

the external trade turnover of Russia.

Table 32 Main economic indicators for Russia and bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 15,900

Growth of GDP (%, 2010) 4 %

Inflation (%, 2010) 6,7%




(2009)

The Netherlands 12,2%, Italy 9%,

Germany 6,9% ,Turkey 5,9%, Ukraine

5%, China 4,5%, Poland 4,3%

Main export positions (2009) petroleum and petroleum products,

natural gas, wooden material and

wooden articles, metals, chemicals,

machinery and spare parts


(2009)

China 12,9%, Germany 12,6%, Japan

6,9%, Ukraine 6%, USA 5,1%, Italy

4,1%

Main import positions (2009) vehicles, machinery and equipment,

plastics, cast iron, steel and metal semi-

manufactured articles, consumer goods,

food

Export volume of Bulgaria to Russia (million

USD, 2009)

415,8

Share of the export for Russia (%) in the total

export of Bulgaria, in USD (2009)

2,5 %

Main positions in the export of Bulgaria for

Russia in 2009

pharmaceuticals, wine, aircrafts, fittings,

spare parts, refrigerators, freezers,

84







cables, beverages, cosmetics

Import volume of Bulgaria to Russia (USD -

billions, 2009)

3,03

Share of the import (%) from Russia in the total

import of Bulgaria, in USD (2009)

13,2 %

Main positions in the import of Bulgaria from

Russia in 2009

naphtha, natural gas, stone carbons,

refined copper and alloys, paper, calcium

phosphates, motor carriages, machinery

and equipment, spare parts Datasource; ITC and MEET

The Bulgarian export for Russia is diversified to a high extent, the share of

pharmaceuticals, fitting articles, car and trucks parts, cooling equipment, batteries, aircrafts,

fittings, cosmetics constitutes around the half of the Bulgarian export. The increase in supply

volumes of these and other positions will allow reducing the large negative balance in the

bilateral trade turnover, as a result of the import of energy and fuels.

Ukraine is one of the main trade partners of Bulgaria. In 2010 it holds 10th position in

the total trade turnover and generates 1.28% of the export and 4,16% of the import of Bulgaria.

The Bulgarian community (diasporas) in Ukraine counts for approximately 225 000 persons

(according to Ukraine data), being an additional precondition for expanding the cooperation in

the economic field between both countries.

Table 33 Trade turnover between Bulgaria and Ukraine (million USD)


2006 103,1 710,9 -607,8 814,0

2007 226,4 2137,5 -1911,1 2364,1

2008 261,8 2754,0 -2492,2 3015,8

2009 139,7 1111,4 - 971,7 1249,1

2010 264,5 1059,3 -794,8 1323,8 Data source; ITC and MEET

Within the period 2003 – 2008 there is a clear trend of increasing the mutual trade,

including the Bulgarian export. In 2009, as a result of the global economic crisis the general

trade turnover decreases harshly (-58.6%), as well as the Bulgarian export by 48.5% and the

Ukraine import by 59.9%. In 2010 there is growth in the trade turnover by 5.3% - 1323.8 USD

(million), due mainly to growth in the export by 96.4%, reaching 264.5 USD (million), where

85







at the same time there is a drop in the import of -4.5%, reaching 1059.3 USD (million). The

negative balance has also decreased to 794.8 USD (million).

In the first six months of 2011 the trade turnover has increased by 40.1%, where the

export has increased by 49.3% and import – by 38.8%.

Leading products in the Bulgarian export in 2010:

– Petroleum oils and oils of bituminous materials;

– Pharmaceuticals;

– Organic surface-active agents (different from soaps);

– Plastic transportation and packaging articles;

– Iron and plain steel rods;

– Unifilar plastic coating

Leading products in the Bulgarian import in 2010:

– Stone carbons;

– Crude petroleum oils;

– Petroleum oils and oils of bituminous materials.

– Iron and plain steel rods;

– Hot-rolled iron products.

In the export nomenclature in 2010 there are 4 groups of goods that have formed over

60%, including petroleum oils 52.1%, pharmaceuticals 8.1%, organic surface-active agents

2.8%, plastic transportation and packaging articles 2.6%, iron and plain steel rods 2.6%. The

rest of the article groups have relative share of under 2.1%.

In the first six months of 2011 this trend is kept – 53.7% of the Bulgarian export for

Ukraine is of the 4 groups of goods: petroleum oils 32.9%, pharmaceuticals 9.6%, iron and

plain steel rods 7.8%, turbojet engines 3.4%. There is harsh decrease in the export (by

1053.6%) of iron and plain steel rods.

We have the potential to offer to the Ukrainian market equipment for the food industry

and food products, electronic products, lifting and handling machinery, optical appliances and

devices, metalworking machinery, electrical engines and generators, men’s and women’s

wearing apparel, ceramic pavement and enamel coverings, ceramics equipment, etc.

86







Our import from Ukraine consists mainly of stone carbons, petroleum raw materials,

semi-manufacture iron articles.

Kazakhstan. The bilateral trade turnover between Bulgaria and Kazakhstan in the last

years is largely dependent on the volumes of the import of Kazakh petroleum and is also

influenced by the global financial economic crisis.

In 2010 the bilateral trade turnover has dropped in relation to 2009 over 3 times, but the

Bulgarian export has increased for the same period with 16.7%.

In the first semester of 2011 our country has imported significant quantities of Kazakh

petroleum that resulted in the creation of significant negative balance.

Table 34 Trade turnover between Bulgaria and Kazakhstan (thousand USD)


2006 23 554 300 807 - 277 253 324 361

2007 62 569 3 935 58 634 66 504

2008 30 443 2 913 27 529 33 356

2009 24 289 105 169 - 80 880 129 458

2010 27 611 9 658 17 953 37 269 Datasource; ITC and MEET

Leading products in the export of Bulgaria for Kazakhstan in 2010:

– Pharmaceuticals;

– Horse, asses, mule or hinnies meat, fresh, chilled or frozen.

– Medical, surgical, dental or vets instruments and devices;

– Apparatus – switches, fuses, voltage limiters,

– Cranes, container-processing (surrounding) tucks and crane trucks.

Leading products in the export of Bulgaria for Kazakhstan in 2010:

– Petroleum gas and other gaseous hydrocarbons;

– Mineral and chemical nitric fertilizers;

– Mineral and chemical fertilizers, containing nitrogen, phosphorus and

potassium; other type of fertilizers;

– Constructions and parts thereof – bridges and bridge elements, towers, piles,

stands, columns;

87







– Constructions and parts thereof – water-gates, scaffoldings, roofs, doors and

windows.

Our country has the potential to increase the export to Kazakhstan in a number of goods

and services: technology lines for fruits and vegetables processing; pre-cast units, liquid pumps,

electric batteries; trucks – lifting equipment; machinery and apparatus; calculators and

accounting machinery; lamps, construction and tourist services; pharmaceuticals, hair styling

preparations; mouth preparations; furniture; wood products; ready-made sauces; fruit juices;

frozen vegetables mixes; canned food, etc.

88







SWOT AND PESTEL ANALYSIS – SECTOR “MANUFACTURE OF

MACHINERY, EQUIPMENT AND HOME APPLIANCES”

The SWOT analysis is an instrument by which it is possible to identify the strengths,

weaknesses, opportunities and threats with regard to a certain policy or activity. This is an

acronym from the first letters of the respective words in English /Strengths, Weaknesses,

Opportunities, Threats/.

The LOED analysis is an instrument by which we can identify in what way the positive

effect of the analyzed policy can be increased and in what way the negative effects can be

countered. The word is an acronym from letters of the words in English – upgrading,

overcoming, employment, defence.

Table 35 SWOT and LOED Analyses

S.W.O.T L.O.E.D

Strengths:

1. Bulgaria is member of EU-27 and the

SMEs from the sector may use the rights

and privileges for the manufacture and

trade of machinery, equipment and home

appliances

2. The SMEs have access to specialized EU

funds for implementation of programmes

for enhancing their competitiveness

3. The SMEs from the sector have already

created infrastructure facility for

performing specific manufacture activities.

4. The sector SMEs are operating in the

condition of expanding market, having

better price/quality ratio

5. The Bulgarian SME of the sector have

traditional and sustainable market positions

6. Bulgaria has lower criminality rate in

relation to other EU members.

7. The Bulgarian legislation is constantly

Loading:

1. Popularization of the image of the SMEs

from the sector.

2. Taking advantage to a greater extent of

European funds by the sector SMEs.

3. Creation of better administrative

mechanism for serving the sector SMEs.

4. Introduction of rules and regulations for

faster integration of the sector SMEs for

entering international markets.

5. Incorporation of foreign partners for

popularization of the Bulgarian production

abroad

6. Restoration of the positions of the trade

attaches at the Bulgarian diplomatic

services and their engagement in

defending the sector SMEs interests.

7. Creation of coordinated policies for the

support of certain standards in terms of

production quality

89







being updated and the European directives

and legal regulations are being introduced.

8. Bulgaria can make use of the already

elaborated EU guidelines,

recommendations and directives, regarding

this category persons

9. The country geographic situation is

favourable for export realization

8. Creation of specialized clusters of SMEs

from the sector, that are to make and

maintain analytical and information

database and to perform information

provision.

Weaknesses:

1. Shortage of operating capital for the

Bulgarian SMEs from the sector

2. Shortage of financial resources for

modernization of the managerial processes

at company and cluster level

3. Shortage of investment capital for

investment and R&D.

4. Many of the sector companies are

deindustrialized or having lower

technology level.

5. Problems related to the age, educational

and other structure of the personnel

6. Shortage of new cadres, dominating

foreign languages and new skills and

competences.

7. Lack of unified complete system for who

is operating on the Bulgarian market and

what are the authentic production facilities

of the SMEs

8. Low level of market reaction due to lack of

fresh capital resources and long production

cycle.

9. External orders are usually having many

specialized requirements and short

execution deadlines, slowing down the

market reaction.

10. Lack of statistical report about the

commitment of the sector with other

sectors and consumer demand

11. In many cases the SME are “fighting”

for clients

12. Lack of adequate on-site surveys for

the sector SMEs integration in clusters

13. Resistance for cooperation of the SME

managers with the State authorities.

14. Low competitiveness of the

manufactured production due to the

Overcoming:

1. Structuring of programmes at state,

regional and municipal level for improving

the administrative attendance of the sector

SMEs

2. Lobby for legislative amendments to

promote innovations and the introduction

of new technologies and solutions in the

sector companies.

3. To create special centres for working with

foreign clients to the ends of promoting

the export of the sector companies.

4. The unified information portal for the

sector SMEs needs is to be regularly

updated, similar to such portals in

Germany, UK, and USA.

5. Making of information brochures/leaflets/,

etc. in different languages, as to facilitate

the access to information of foreign users

regarding the opportunities and potential

of the SMEs from the sector.

6. Start of representative national

sociological surveys in interval of about 5

years regarding the active sector SMEs.

7. Start of drafting annual report on the state

of the sector and the impact of the

implemented export-related encouraging

measures and policies

90







laborious, material consuming and energy

consuming production.

15. Predominating export of articles with

low value added.

16. Lack of experience of the SMEs in the

elaboration of export marketing strategies.

17. Lack of financial support for the

SMEs actions in defence of the intellectual

and industrial property.

Opportunities:

1. To introduce EU “good manufacturing

practices” in relation to the policies for

administrative attendance of sector SMEs

2. Usage of national and international

benchmark criteria for comparability of the

sector results.

3. Initiation of clusters for overall

performance on international markets

4. To undertake active actions for

introduction of precise criteria for

accounting the manufacture production,

the marketing and sales channels,

production cost, etc.

Employment:

1. To carry out policy for successful

negotiation of partnership with foreign

market participants (fairs, expo-centres,

call-centres, e-mails)

2. To carry out active policy for inclusion of

the SMEs in the formulation of the

encouraging measures for the sector

companies.

3. To carry out regular campaigns in relation

to the export potential and achievements of

the Bulgarian sector.

4. To carry out active communication policy

for popularization of the activity and

potential for export of the sector.

Threats:

1. Lack of adequate target axis for ensuring

financial funds and projects for upgrade of

the sector SMEs.

2. Outsourcing activities prevent the

development of own leading brands and

serve external interests

3. Division of the sector SMEs into various

“fighting” business units

4. Amortization of the inventory and aging of

the work force in the SMEs from the sector

Defence:

1. Celebration of popularizing campaigns for

the government policy in the field of

manufacture of Bulgarian machinery,

equipment and home appliances.

2. Creation of specialized funds for support

of R&D units in technology leaders in the

sector.

3. Creation of working system for

accountancy and follow-up of the

movement and economic activity of the

sector SMEs.

4. Creation of balanced initiatives for

information exchange among the

manufacturers from the sector and the

foreign partners.

The following table gives the PESTEL-analysis.

91







Table 36 PESTEL-analysis

Political factors Economic Factors

Bulgaria is a parliamentary republic

and a full-fledged member of the EU

The revenue policy is based on taxes,

charges and others and the main

division is: state and municipal

As a member of the EU, Bulgaria is

part of the structure of international

trade and an active agent of the

common European market

For the protection of consumers are in

effect various laws and are established

various committees

Political stability in the country is a

main priority of the ruling majority

Safety and competition promotion are

starting points in the encouragement

of the commercial activity

Despite the global financial instability,

Bulgaria manages to maintain levels

of sustainable development and a

positive economic growth

The interest rate is determined by the

Central bank (BNB) and has a

tendency to reduce; as of 01.11.2011 it

was 0.22%.

The state promotes employment and,

by attracting foreign investments, it

creates new jobs and unemployed

cadres prequalification programs

The income taxation is done with

"flat" rate amounting to 10%.

The Bulgarian currency is in a state of

currency board with the euro in

quotation of 1.95583 BGN per 1 euro

The financial policy implemented by

the state manages to keep the inflation

in the range of its normal values

The trust of the consumers is facing a

serious test, as the regulation and

quality management system needs a

higher effectiveness.

Social factors Technological factors

The cultural and demographic

detachment of Bulgaria involves a

variety of daily and cultural

differences between the broad

representation of ethnicities.

Nevertheless, the integration of these

ethnicities is successful

Relatively aging of the population and

a negative growth (-0.6% for 2010). A

positive growth was reported in the

period between 1960 and 1990 which

then became negative and reached its

lowest levels in 1990 and 2001 almost

reaching -2.0%. Statistics like this one

clearly reproduce the influence of the

political factors on the social and

demographic structure of society

At national level it is observed an

expressed labour mobility and a

Scientific research in Bulgaria has a

rich tradition and experience.

Industry operates and is organized by

technological activities, which

determines the need for knowing and

examining them.

Bulgaria is among the world leaders

with regard to its researchers, who

have given the world numerous

discoveries, inventions and innovative

technologies. Few of them reach the

community due to the fact that they

cannot find investors in the country.

The exchange of technology with the

rest of the world has marked its

beginning since the early years of the

last century. With the construction of

the modern state, these technologies

play a significant role in the

92







certain part of the specialists find

professional realization abroad and in

particular – within the EU. This shows

how the mechanisms of the

community work and how the labour

market creates demand and supply

outside the borders of a country.

The living standard in Bulgaria is a

social category subject to a thorough

examination and multifactor analysis.

The level of net income is relatively

low, unlike that of ownership of real

estate.

Entrepreneurship in Bulgaria is the

reason for the implementation of many

projects, including the absorption of

funds from European fund paths

The issue of education in Bulgaria is a

topic of utmost priority. The state

provides free elementary, primary and

secondary education; higher education

also being financially supported for

the most part.

construction of each unit.

The life cycle of the products, as well

as their going out of use, becomes

shorter and shorter with the opening of

markets and the invasion of newer and

more energy-efficient products.

Both in political and in purely

technical aspect, the global energy

saving policy is also applied in

Bulgaria. It includes the construction

of alternative energy sources that

should reduce the levels of harmful

emissions and generate lower levels of

cost for the end user.

Regarding to the information

technologies and the Internet, the

country is among the European leaders

in the field of their introduction, use

and development.

Environmental factors Legal environment factors

It is being worked on strategies for

wastewater treatment and construction

of incinerators for waste incineration.

Planned urbanization and cultivation

of gardens, parks and ponds.

Bulgaria is a statutory Republic and

the fundamental law is the

Constitution.

Bulgaria’s judicial system is a direct

expression of the judiciary branch and

it is divided into different levels and

instances for the purpose of being

more accessible to people.

Of all the rights, the one of private

property is the starting point for most

of the changes after the transition to a

market economy.

Bulgaria is a country with established

legal system that allows its citizens

position and protection.

93

OBJECTIVES AND STRATEGY TO PROMOTE THE EXPORT OF THE

SECTOR SMALL AND MEDIUM SIZE ENTERPRISES

Economic activity „Manufacture of machinery, equipment and home appliances” is

one of the strong segments of the Bulgarian economy under the condition that is taken into

account the available infrastructure of Bulgarian companies and their production workshops,

inherited from the past. Regarding their innovation however, this is an activity, lagging behind

in terms of many indicator from the leading European manufacturers. For example, in Germany

this is the sector, second in terms of innovation in the German economy.

The listed concrete objectives are indicative and are formulated on the basis of carried

out in-depth surveys of the economic conjuncture and interests for export-orientation of the

SMEs, engaged in this economic activity.

Concrete objectives at macro level:

1. To strictly follow the present budget cycle, the elaborated European programmes for

promoting the competitiveness of the small and medium-size enterprises in the country.

2. In the following EU programme cycle 2014-2020 to be laid down measure for easier

application for the so called “European” funds for SMEs, operating actively in this

economic activity.

3. In the following next years should be updated and modernize the introduced rules and

standards, related to the sector, as well as to created specialized structure for promotion

and introduction of the contemporary standards by the Bulgarian SMEs from the sector.

4. To organize unified system for promotion of the Bulgarian production on external

markets through common advertising campaigns, participation in international

exhibitions and promotion of the establishment of closer relations between the

Bulgarian universities and the R&D units in the sector SMEs.

94

Concrete objectives at mezzo level:

1. Short-term – within two to three years to be created a system for submission and

processing of the companies’ feedback to unified analytical centre, in charge of

promoting the export by the Bulgarian manufacturers from the sector.

2. „Mapping” of the market participants on the good will principle and their inclusion in

programmes for information exchange and market researches.

3. Creation of platform for regular organization of the market participants from the branch

(conferences, round tables, forums and alike).

Concrete measures at micro level:

1. Stopping the processes of release of the sector work force.

2. Encourage the companies to organize their own information, according to the EU

programmes for financial support and co-financing, as well as to promote the possibility

for applying under the project axis of the various programmes.

3. Keep the level of the salaries in the sector for the crisis period in order to keep the

present personnel in the sector SMEs structures.

4. Introduce organizational changes in the job descriptions and duties of the available

human resources with view to improving the labour effectiveness and the

transformation to forms of flexible employment, instead of “cutting off” the social

privileges and working places.

The specific objectives of the plan implementation are divided into three main specific

objectives.

Specific objective-1

To build and proceed to the successful functioning of information and normative base

for the promotion of export of SMEs from the sector “Manufacture of machinery, equipment

and home appliances”. This specific objective is divided into the following sub-objectives:

1. Drafting and updating of sector development strategy.

2. Updating the strategy for promotion of the export of SMEs from the sector.

3. Creating a profile of an export-oriented enterprise.

95

4. Creating an adequate database for SMEs to help the management decision making

for the sector.


To increase the qualification of the employed in the SMEs from sector “Manufacture of

machinery, equipment and home appliances”, focusing on the trade personnel and the units,

engaged in foreign trade at micro level.

1. Creation and implementation of programmes for improvement of the qualification of

export specialists in SMEs.

2. Creation and implementation of training program for participation in international

exhibitions.


To support the activities of the enterprises and their access to foreign markets and

partners.

1. Financial support for enterprise certification for quality management, environmental

management, and introduction of a modern system for safe and healthy working

conditions.

2. Increase of the weight of the evaluation for the export orientation of the enterprises in

the overall assessment for receiving of financial support.

3. Support for the creation/further development of organizations/clusters for promotion of

the export by SMEs.

4. Transmission of the services for organization of the Bulgarian participation in fairs,

exhibitions and other advertising events to the respective branch organizations, under

established clear rules for equality in the selection of the participants.

5. Creation of a mechanism for financial support for the participation of foreign partners in

local fairs and exhibitions.

96

STRATEGY FOR PROMOTING THE SECTOR SMEs EXPORT

In order to achieve the set objectives different alternatives for development are possible.

Here, two main scenarios were evaluated, in particular:

1. Keeping the present structure of the public institutions, supporting the business,

especially the existing relationship between them and the export orientated SMEs

from sector ¨Manufacture of machinery, equipment and home appliances”.

2. Change in the structure and transfer of functions for supporting the SMEs

towards units and forms, related to funding projects with EU funds and the State

budget according to the model of the Operational programmes or the Programme

for development of the rural regions.

The criteria to evaluate these scenarios are:

1. Possibility for the selected scenario to be realized within the frame of a 5-year

period.

2. Possibility to solve the issues related the supporting export orientated SMEs in

other EU countries.

3. Evaluation of the efficiency of the activities, related to supporting the business,

implemented by created to this exact end structures or by existing programmes,

granting support under the project principle.

The carried out analysis shows that:

The transition from the now existing system to a new one, on a project principle, will

require a period larger than 5 years. At the same time, now existing rules for the period

up to 2013 it is practically impossible, as the priorities and the main activities in the

operational programmes are clearly defined. For the next programme period 2014-2020

such an approach, if possible, is to be laid down in the negotiation process, but in fact

97

several years will be necessary its actual initiation, in the same way the OP in all EU

countries started for the period 2007-2013;

The selected in Bulgaria scheme through BSMEPA is preferred from the major part of

EU countries, where the success level is different in different countries, but there is no

trend of changes in the near future;

The reported difficulties in the business projects realization within operational

programmes, as for example “Competitiveness” show that the efficiency of promoting

export orientated SMEs, notwithstanding the critics at the moment due to lack of funds

and good focusing, is the relatively much better level than the results reached by the

business through project orientated measures.

Considering the above conclusions, the first alternative was chosen, namely –

drafting of Export strategy for the SMEs from sector “Manufacture of machinery,

equipment and home appliances” to be based on the understanding that al measures to be

undertaken will fall in the frame of the now existing structures within their actual

capacities.

In terms of the strategic perspective, the chosen alternative will require both general

measures for the whole system to support the SME, as for example increase of the

institutions capacity, introduction of clear and measurable indicators and criteria for

evaluation of their work efficiency and support to the business, etc. as well as specific

changes, related in particular to the “Manufacture of machinery, equipment and home

appliances”, as for example export orientated work approach. As far as this was not an object

of analysis and study of the present strategy document, it would be probably a part of the

elaboration of the institutional strategy of the corresponding public administrations.

The present Export strategy for the SMEs from sector “Manufacture of machinery,

equipment and home appliances” provides for the following principle steps, related to

improving the support of export orientated SME:

Creation of the base for adequate and professional management of the processes of

supporting the export orientated SMEs through determining their possible scope –

number and characteristics of the export orientated SME, usage of the information

98

from the drafted profile, as well as of information from the business regarding the

precise formulation of the business needs of support, and of the created to this end

institutions, as well as through other forms, as for example the project principle,

creation of a model for successful communication with business to be supported.

Elaboration of the necessary programmes, policies and measure for support the

SMEs to export into foreign markets, through measures, designed to markets where to

keep or expand the existing positions, joint work with units, disposing of direct

possibilities to support export (for example foreign trade representatives and MEET),

as well as measures, having routine nature (for example), participation in fairs,

missions, visits, etc.;

Measures, designed to certain deficits in export orientated SMEs, barriers for their

development in the field of export, as for example: support for the technology

modernisation of the SME in relation to improving their export positions, support for

creating export companies to help SMEs export; creation of State guarantees for

export insurance for SMEs, to complement and develop the now existing forms,

advertising campaigns for improving the image of the Bulgarian business, etc

Measures, designed to increasing the capacity of the SMEs, mainly through different

educational programmes.

Considering the deadlines of the Export strategy for the SMEs from sector “Manufacture

of machinery, equipment and home appliances” the foreseen steps are realistic and would lead

to real results in supporting the export.

Important precondition for the realization of the set strategy is also the presence of

political will to ensure the necessary resources for its implementation.

Due to the short-term 5-year horizon of the Strategy in the Action plan, the measures are

precisely formulated and divided into micro (enterprises), mezzo (branch organizations) and

macro (public institutions) level.

The foreseen funds are exemplary and tailored according to the actual possibility to

increase the BSMEPA budget. The prognosis for funds coming from Operational programmes

99

through the next programme period is too conditional, as there are no definitely adopted rules

by the EU. At the same time it is extremely important that BSMEPA and MEET to defend just

requirements for increasing the funds for development of the SMEs that are the backbone of

each economy.

Important precondition for the realization of the set strategy is also the presence of

political will to ensure the necessary resources for its implementation.

When drafting the present strategy the leading good European practices and the

experience of partners, organizations and institutions, having direct of indirect relations to the

development of the small and medium business, were observed.

Enclosed is a detail plan for the above described strategic development of the sector.

ACTION PLAN – SECTOR “MANUFACTURE OF MACHINERY, EQUIPMENT AND HOME APPLIANCES”

Table 37 Action Plan for Implementation of the Export Strategy of the Sector

Objectives and Measures Implementatio

n deadline

Responsible

institutions

Necessary

financial

resources

Sources of funding Expected results Performance indicators

Specific objective 1 :

Creation and successful functioning of the information and normative base for the promotion of the export of SMEs from the sector

1.1. Preparation and updating

of a sector development

strategy

2014 MEET 40 000 Operational

Programme

“Competitiveness”

Developed and adopted at the

national level Strategy and

Action Plan, in accordance

with the determined schedule

Adopted by the CM

National Sector

Development Strategy and

Action Plan to it, which is

implemented;

Provided funds for the

implementation of the plan

by years;

The set objectives are

achieved

1.1.1. Provision of the necessary

information, including

participation in sociological

research and focus groups

2013 Companies/

NSI/Branch

organizations

Created database, supporting

the development of the

strategy and the Action Plan

Developed analysis of the

sector and draft of the

Action Plan

1.1.2. Organization and

coordination of the development

and formalization process of the

strategy and the action plan, as

well as the process of their

2014 MEET Developed Strategy draft and

Action Plan, in accordance

with the determined schedule

Adopted by the CM

National Sector

Development Strategy and

Action Plan to it, which is

implemented;

101


n deadline

Responsible

institutions

Necessary

financial

resources


implementation Provided funds for the

implementation of the plan

by years; The set objectives

are achieved

1.2. Updating the strategy

for promotion of the export

of SMEs from the sector

2014 BSMEPA 20 000 Operational

Programme


Updated strategy for

promotion of the export of

SMEs from the sector and

updated Action Plan to it,

adopted at national level

Action Plan that is

implemented in

accordance with the

schedule set in the

Strategy

Available funds for the

implementation

Achievement of the

strategy objectives

1.2.1. Provision of the necessary

information, including

participation in sociological

research and focus groups

2014 Companies,

NSI, Branch

organizations

Updated database for SMEs Updated analysis of the

sector development


coordination of the updating

process of the strategy and the

action plan, as well as the

process of their implementation

2014 BSMEPA Action Plan that is

implemented in accordance

with the schedule set in the

Strategy. Achievement of

the strategy objectives.

1.3. Creating a profile of an

export-oriented enterprise

2013 BSMEPA/ME

ET

10 000 Operational

Programme


Drawn up criteria for export

orientation of SMEs

Presence of the drawn up

criteria on the page of

BSMEPA

1.3.1. Participation in the

discussion of the proposed draft

of a profile of an export-oriented

enterprise

2013 Companies Discussed and supplemented

criteria for export orientation

of SMEs

Developed version of

criteria

102


n deadline

Responsible

institutions

Necessary

financial

resources



coordination of the process of

creation of a profile of an export-

oriented enterprise

2013 BSMEPA/

MEET

Prepared final version of

criteria for export orientation

of SMEs

Developed and formalized

criteria

1.4. Creating an adequate

database for SMEs assisting

management decision

making for the sector

2014 MEET, NSI 10 000 the budget of NSI Available and appropriately

processed information for the

development of the sector

and SMEs within it

Easy and unconditional

access to the information

for the development of the

sector and SMEs within it

1.4.1. Creation of an information

database system for foreign

markets, potential foreign

partners, international fairs,

exhibitions and other advertising

events,

2014 BSMEPA/

MEET

30 000 OPC Created and operating

information system

Number of enterprises

using the information

system

1.4.2. Provision of data for the

information system

2014 Companies Created database for the

information system

Database serving the export

activity of the companies

1.4.3. Provision of data and

analyses for the information

system

2014 Branch

organizations

Created database for the

information system

Database serving the export

activity of the companies.

1.4.4. Coordination and

organization of the process of

creation of an information

database system for foreign

markets, potential foreign



events

2014 BSMEPA/

MEET

Created and operating

information system


using the information

system

1.4.5. Maintenance of the

information database system for

Permanent BSMEPA/

MEET/Compa

10 000 per

year

The budget of the

departments

Permanently operating and

updated information system


satisfied with the quality of

103


n deadline

Responsible

institutions

Necessary

financial

resources


foreign markets, potential foreign



events

nies/Branch

organizations

the information available

1.4.6. Coordination of the

process of maintenance of the

information database system for

foreign markets, potential foreign



events

Permanent BSMEPA/ME

ET

Permanently operating and

updated information system


satisfied with the quality of

the information available

1.4.7. Improving the awareness

of SMEs on the available funding

opportunities by national and

foreign financial sources

(excluding trade credits)

Permanent BSMEPA 5 000 per

year

The budget of the

department

Increase of the number of

enterprises applying for

financial support


applying for financial

support

1.4.8. Participation in organized

events for the popularization and

dissemination of information

about the available funding

opportunities by national and

foreign financial sources

Permanent companies

Number of developed and

applied projects for funding

of companies

Number of participants in

the events

1.4.9. Participation in and

dissemination of information

about organized events for the

popularization and dissemination

of information about the

available funding opportunities

by national and foreign financial

sources

Permanent Branch

organizations

Number of developed and

applied projects for funding

of companies

Number of participants in

the events

104


n deadline

Responsible

institutions

Necessary

financial

resources




information of SMEs on the

available funding opportunities

by national and foreign financial

sources (excluding trade credits)

Permanent BSMEPA Increase of the number of

enterprises applying for

financial support


applying for financial

support

1.4.11. Realization of

information activities for

popularization of the possibilities

for direct participation of the

SMEs in EU funding schemes,

different from Operational

programmes

Permanent Branch

organizations/

MEET/BSME

PA/sector

companies

Own funds, State

budget

1.4.12. Purchase and granting of

information about the identified

target markets by BSMEPA

Permanent BSMEPA Own funds,

Operational

programmes

Available and adequately

processed information about

the identified target markets

Easy and unconditional

access to information about

the identified target markets

Specific objective 2:

Increasing the qualification of the employees of SMEs within the sector, with focus on the trade cadres and the units engaged in foreign trade at the company level

2.1. Creation and

implementation of programs

for improvement of the

qualification of export

specialists in SMEs

2014 - 2020 BSMEPA,

Institutions of

Higher

Education,

Branch

organizations

50 000 per

year

Budget of

BSMEPA and

Operational

Programmes

Trained over 1000 export

specialists from SMEs for the

program period

Number of trained export

specialists.

2.1.1.Provision of information on

the needs for training and

participation in the trainings

2014 - 2020 Companies,

Branch

organizations

Number of companies that

have provided information

and participants for the

trainings


have sent their specialists

for training

2.1.2. Creation of training Branch At least one created detailed Number of trained experts

105


n deadline

Responsible

institutions

Necessary

financial

resources


programs and conduction of the

trainings

organizations,

Institutions of

Higher

Education

program for training of

foreign trade specialists from

companies

per year



creation and implementation of

programs for the increase of the

qualification of export specialists

in SMEs

2014-2020 Institutions of

Higher

Education,

MEJS,

BSMEPA


specialists from SMEs for the

program period.

Number of trained export

specialists.

2.2. Creation and

implementation of a training

program for participation in

international fairs

2017 BSMEPA 20 000 per

year

Budget of

BSMEPA

Trained experts from a

minimum of 400 SMEs.



for training.

2.2.1. Provision of information

on the needs for training and

participation in the trainings

2017 Companies Number of companies that

have provided information

and participants for the

trainings



for training

2.2.2 Participation in the

establishment of training

programs and assistance in the

conduction of the trainings

2017 Branch

organizations

At least one created detailed

program for training

Number of trained experts

per year



creation and implementation of

programs

2017 Institutions of

Higher

Education,

MEJS,

BSMEPA


specialists from SMEs.



for training

106


n deadline

Responsible

institutions

Necessary

financial

resources


Specific objective-3 Support the activities of the enterprises and their access to foreign markets and partners.

3.1. Financial support for

enterprise certification of

quality management,

environmental management,

and introduction of a

modern system for safe and

healthy working conditions

permanent MEET 500 000 OPC Increased number of the

enterprises that have received

certificates

Number of enterprises that

have received certificates

3.1.1. Development of proposals

for funding activities on the

establishment of quality

management systems and putting

the systems into operation

permanent Companies Increased number of funding

proposals

Number of proposals

received

3.1.2. Assisting the assessment of

the proposals

According to

the schedule of

MEET

Intermediate

unit or other

structure in

the EU funds

management

system

Increased number of the

approved proposals for

funding

Number of proposals

approved

3.1.3. Management of the overall

process of financial support and

monitoring of the results

According to

the schedule of

MEET

MEET Increased number of the

enterprises that have received

certificates

Number of enterprises that

have received certificates

3.2. Increase of the influence

of the assessment for the

export orientation of the

enterprises in the overall

assessment for receiving of

2014 MEET/

CM

OP for business support is

oriented towards support to

SMEs, which have export

potential.

In the criteria for

assessment of the project

proposals is expressly

specified the export

potential.

107


n deadline

Responsible

institutions

Necessary

financial

resources


financial support.

3.2.1. Active participation in the

development of the proposals for

increasing the influence of the

assessment of the export

orientation of enterprises in the

overall assessment of receiving

financial support

2014 Companies,

Branch

organizations

Accepted proposals for

change/ newly developed

program documents and rules

for their implementation

Published draft documents

3.2.2. Development of the

proposals for increasing the

influence of the assessment for

export orientation of enterprises

in the overall assessment of

receiving financial support.

2014 MEET OP for business support are

oriented towards support to

SMEs, which have export

potential..

In the criteria for

assessment of the project

proposals is expressly

specified the export

potential.

3.3. Support for the creation/

further development of

organizations/clusters for

promotion of the export

from SMEs

2017 BSMEPA, the

branch

organizations

100 000 per

year

The Operational

Programmes

Established export

organizations/ clusters to

support the export of the

enterprises.

At least 2 established

export clusters

3.3.1. Participation in export

clusters in the sector

Companies Extended opportunities for

export of the companies

Number of companies

participating in clusters

3.3.2. Participation in the

establishment and development

of export clusters.

Encouraging the participation of

SMEs in export clusters

Branch

organizations

Increased number of clusters

that support the activity of

the sector

Increased number of the

enterprises participating in

clusters

3.3.3. Assistance to the

establishment/further

development of organizations/

BSMEPA,

branch

organizations

Established export

organizations/ clusters to

support the export of the

At least 2 established

export clusters.

108


n deadline

Responsible

institutions

Necessary

financial

resources


clusters for support to the export

from SMEs

enterprises.

3.5. Creation of a mechanism

for co-financing of trade

missions

2014 - 2020 BSMEPA, the

branch

organizations

30 000 per

year

The budget of

BSMEPA; Funds

from the branch

organizations

Concluded export contracts

thanks to the participation of

foreign trading partners.

Increase in each subsequent

year of the export contracts

concluded with invited


3.5.1.Provision of information

about potential partners and

concluded contracts

Companies Concluded export contracts







3.5.2. Development of a project

for mechanism and support for

its implementation

Branch

organizations

Concluded export contracts







3.5.3. Coordination of the

process and support for its

implementation

BSMEPA Concluded export contracts







3.5.4. Development of a program

for work with the Bulgarian trade

representatives abroad in favour

of SMEs from the sector

2014 - 2020 BSMEPA/

MEET/

CM

Decision adopted at the CM

level and created and

operating program for work

of the trade representatives

Increase of the concluded

contracts for export of

products from the sector,

produced by SMEs, as a

result of the program

implementation

3.5.5. Improvement of the

mechanism of ensuring working

insurance of the export of SME

2014 BAEI 30 000 The budget of the

department, OP for

the next program

period

Increase of the number of

SMEs and the export volume

thanks to the state guarantees

Number of insured export

agreements of SME

The objectives to be implemented in the “Action plan” are divided in three panels –

short-term objective /2013/, mid-term objectives /2014/ and long-term objectives /2014-2020/,

coinciding with the following budget planning period of the EU.

Short-term objectives /2013/:

1. Update of the introduced technology norms, standards and requirements.

2. Creation of “road map” for approximation of the interests of the SMEs in the sector.

3. Introduction of organizational changes for mastering the processes of workforce release

and shortage of working positions.

4. Relieve of the regimes of operating of the bank warranties and bank crediting for the

sector

5. Correction of the market behaviour, considering the higher prices of the energy

distributors, including the price of the natural gas.

Mid-term objectives /2014/:

1. Creation and update of the decision-making system for promoting the Bulgarian

production abroad.

2. Creation of alliance for trade representation in the potentially most attractive markets

for the segment companies.

3. Creation of analytical reviews on regular basis for the sector development in the EU-27

as a whole and of other current and potential markets out of the EU, like the CIS

countries, the countries from the Arabian world, others.

4. Creation of economic clusters on the basis of certain market, trade, production or other

sign.

5. Creation of foreign language brochures for the cluster companies development.

6. Reorganization of individual information bases and assembly of the documents for

applying under EU projects from the next budget cycle.

7. Increase of the level of computerization, automation and use of IT.

8. Development of plan for attracting investors.

9. Drafting a plan for improving the operating investors attendance

10. Drafting a strategy for improving the investment marketing

110

11. Ensuring crediting for patenting the innovations abroad

Long-term measures/2014-2020/:

1. Encouraging the improvement of the level of industrialization in the sector

through encouraging the technology innovation sin the sector SMEs and

communication policy

2. Encouraging the investment in human resources

3. Introduction of relieved financial conditions for the introduction of high-tech

solutions and trainings

4. Creation and branding of industrial cluster trademarks;

5. Segmentation and definition of target export markets, according to the prognosis

for world economic development at 2020.

The action plan is to be applied gradually and in good faith, synchronously between the

public institutions, stakeholders and manufacturers of the economic activity.

The control of the plan implementation may be coordinated at branch level or at the

level of state authority in case of majority consent of the market participants. Financial support

for the companies’ certification for quality management, environment management and

introduction of contemporary system for safety and health at work.

111

MONITORING AND CONTROL SYSTEM

For each strategic document it is of great importance: first - to be elaborated according to

predetermined goals, deadlines and resources; second - to show stability over the time and to

enforce the activities and effects built into it. To this end, it is advisable to monitor

(monitoring) and evaluate the implementation of the document and to identify appropriate

actions – to remedy and improve the activities set out therein.

Monitoring can be defined as: (a) an integral part of an on-going project management

(which is considered to be the realisation of an Export strategy for sector “Manufacture of

machinery, equipment and home appliances”, aiming to achieve any change – in this case,

improving the export activity of SMEs in the sector); (b) an instrument facilitating the control

over the management and the process of decision making; (c) a description of events and

conditions within a specified period of time; (d) systematic collection of reliable, up-to-date

and relevant information on the progress, changes and consequences of all programming action

taken. These essential features of the monitoring itself define it as one of the most important

components of the management of strategic documents, programs, projects, etc.

Assessment, in turn, is a systematic review of specific management activities to provide

information about the full range of short and long term effects on consumers. Programme

evaluation may include assessment of workload, operating procedures, or personnel, but its

main purpose remains the effect and impact of programme’s implementation (strategic

document).

Monitoring should therefore establish the status and monitor the progress in

implementing various components and subcomponents and thus - the Strategy as a whole.

Monitoring should also identify arising problems, the factors determining these problems and

suggest possible measures and solutions to these problems. The information obtained is

expected to be timely made available to the responsible authority (primarily MEET and

BSMEPA). The meaning of this is to enable those authorities and other relevant government

agencies, at their discretion, to take timely "corrective actions" to facilitate achieving the

strategy objectives.

112

It should be noted that while monitoring focuses on monitoring the: (a) actions taken

and resources expended, (b) results achieved, (c) process progress over the time, (d)

achievement of the effects, the assessment aims at identifying the extent to which the general

and specific objectives of the document are achieved, and also includes a systematic review of

specific management operations to provide information about the full range of short and long

term effects.

The main points that should be observed in connection with the implementation of this

strategy are:

- Adhering to the pre-set schedule of activities;

- Volume, rate and extend to which resources have been used;

- Results achieved;

- Achievement of objectives and strategic document impact.

When to monitor? - The goal of the current monitoring is to record the effects and the

deviations from the planned figures early enough so as to allow their correction before the

consequences of these effects become so serious that they can not be overcome. What should

not be forgotten is the need for monitoring to be performed frequently enough in order the

deviations from the set plan to be adjusted.

Based on this methodology, the monitoring and assessment, necessary for the fulfilment

of this Strategy, suggest the following succession of activities:

1. Selection of criteria and indicators for monitoring and assessment;

2. Monitoring the implementation;

3. Comparing results with the target state;

4. Proposing and taking corrective actions.

According to the adopted goals and measures set forth in the strategy, we propose the

following main indicators for monitoring and assessment:

Published criteria the SME and their production for initiating export are to

comply with;

Created accessible database for export orientated companies, where the

presence of given company into the database is included as a criteria when

113

making an assessment for granting funds to promote the export and the

competitiveness;

Number of entrances into specialized rubrics of the BSMEPA website and

received feedbacks;

Availability of update strategy for development of sector “Manufacture of

machinery, equipment and home appliances” and implementation of the

measures, included therein;

Created export unit in BSMEPA to support the sector SMEs in their export

activity;

Granting 5 additional points for export orientated enterprises when assessing

projects under OP “Competitiveness”;

Number of SME, having introduced systems for quality management, working

conditions and environment management (ISO 9001, ISO 14001 and others);

Number of patented articles by SMEs from the sector;

Number of companies exporters, using the guarantees for export insurance;

Number of participation by sector SMEs in international and national fairs and

exhibitions;

Created at least 3 clusters;

Increase in any following year of the signed export contracts with the invited

foreign trade partners;

Number of trained specialists in the sector;

At least 5 presentations per year in different countries – target markets, 1

information internet portal, 5 paid publications in foreign media per year;

100 specialist from the sector SMEs yearly have undergo a training on

participation in specialized exhibitions in the country and abroad;

Drafted 1 guide for promoting the export of the SMEs, reflecting the

possibilities for export and the condition of the market conjuncture, updated

once per year;

114

Monthly brochure with information on international markets and two semi-

annual reports, containing in-depth market analysis, are to be presented to the

sector export orientated SMEs;

At least 2 seminars per year should be organized for presenting the specific

requirements for the defined key markets in and outside EU;

1 internet database with contact details of at least 200 potential partners from

all over the world, information about prices on international markets, trade

barriers, trends, etc.

Progress surveillance and monitoring shall be carried out by BSMEPA, which is the

“owner” of the Strategy, and it shall appoint an official, from its administration, which shall be

responsible for collecting information in order to facilitate the monitoring of the

implementation of measures and who shall report on an annual basis to the Executive Director

of the Agency.

The annual reports shall serve as interim evaluations of the fulfilment of the Strategy.

At the end of year 2020 it shall be prepared a final report covering the entire period of the

Strategy.

These reports are public. The results shall be disclosed to the public

115

SOURCES

1. Council for administrative reform at the CM of the R. Bulgaria, 2010, Methodology for

strategic planning

2. Export policy of the Republic of Bulgaria /2008 – 2013/

3. National strategy for SMEs promotion /2007-2013/

4. Memoranda on investigation and technologies in Bulgaria /2010, Federation of NTU in

Bulgaria /September, 2010/

5. Strategy and Action plan for competitiveness of Bulgaria for the markets of global

information and communication technologies /2004/

6. Innovation strategy of Bulgaria /2004/

7. Statistical data of NSI, various years

8. Report of BSMEPA, 2011, „ Analysis of the state and factors for the development of

SMEs – Bulgarian SMEs in the times of crisis”, Bulgarian Small and Medium-Size

Enterprises Promotion Agency

9. Bulgarian branch chamber – Machine building, 2007, Strategy for development of the

machine building in Bulgaria, BBCMB and MEE

10. Reports and Data Available from the Bulgarian Branch chamber-Machine Building

11. On-site survey of Bulgarian SMEs from the sector: 31.10 – 28.11.2011

12. Classification of the economic activities, 2008

116

13. Regulation (EC) 842/2006

14. Regulation (EC) 303/2008 (refrigerator manufacture company and operators)

15. Regulation (EC) 307/2008 (operators, extracting fluorinated greenhouse gases from

automotive air conditioning)

16. Air Quality Act, SG, No. 45 of 28.05.1996

17. CMD 336/23.12.2008 and the Ordinance establishing the measures for implementation

of Regulation (EC) 842/2006

18. World Bank data – World development indicators, current as at 02.11.2011; the

information was extracted and processed by Google – Public Data Explorer on

16.11.2011

19. UniCredit CEE Strategic Analysis, Sectoral Analyses – Outlook 2011;

20. OECD-FAO Agricultural Outlook – 2010 – 2019;

21. US Household Appliance Industry Outlook 2006;

22. The Machinery and Equipment Industry in Germany, Issue 2011/2012;;

23. Porter M., 1986, Competition in Global Industries, HBS Press;

24. Ghoshal S., 1987, Global Strategy: An Organizing Framework, Strategic Management

Journal, vol. 8, стр. 425-440;

25. Ohmae K., 1990, The Borderless World, London: Collins;

26. Sinclair St., 1993, A Guide to Global Pricing, Journal of Business Strategy, May-June

1993;

117

27. Pavlinek P, Smith A., 1998, Internationalization and Embeddedness in East-Central

European Transition, Regional Studies;

28. Craig C., Douglas S., 1999, International Marketing Research: Concepts and Methods,

New York, Wiley;

29. Kotler Ph., 1999, Kotler on Marketing: How to Create, Win, and Dominate Markets,

Boston: Free Press;

30. Jeannet, Jean-Pierre, 2000, Managing with a Global Mindset, London, Financial

Times/Prentice Hall;

31. Bereck T. and Others, 2010, Wither Growth in Central and Eastern Europe? Policy

Lessons for an Integrated Europe, Bruegel Blueprint Series, Volume XI, стр. 4;

32. Fidrmuc J., Martin R., 2010, Capital Inflows, Exports, and Growth in the CESEE

Region, Oesterreichische Nationalbank, The European Central Bank;

33. Swiss Import Promotion Program, SIPPO.

Export Strategy MANUFACTURE OF MACHINERY, EQUIPMENT...

Documents

Transcript of Export Strategy MANUFACTURE OF MACHINERY, EQUIPMENT...