government.bg...This project is co-financed by the European fund for Regional Development through...

This project is co-financed by the European fund for Regional Development through Operational programme “ Development of the competitiveness of the

Bulgarian economy” 2007-2013

Annex to the

EXPORT STRATEGY

for industrial sector

„Manufacturing of medical,

precision and optical

apparatus and instruments”

Executive agency for promotion of small and

medium enterprises

2012

Operational programme “ Development of the

competitiveness of the Bulgarian economy” 2007-2013,

Priority axis 4.2. “Promoting the internationalisation of the

Bulgarian enterprises” Project № BG161РО003 – 4.2.01-

0001 “Promotion Of The Internationalization Of The

Bulgarian Enterprises”

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This document was developed under project № BG161РО003 – 4.2.01-0001

“PROMOTION OF THE INTERNATIONALIZATION OF THE BULGARIAN

ENTERPRISES”.

Beneficiary: Executive agency for promotion of small and medium enterprises

This document was developed with the financial support of Operational

programme “ Development of the competitiveness of the Bulgarian economy”

2007-2013 co-financed by the European fund for Regional Development. The

overall responsibility of the document’s content lies with the Executive agency for

promotion of small and medium enterprises and under no circumstances it can be

accepted that this document reflects the official statement of the European Union

and the Contract authority.

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Contents

SITUATIONAL ANALYSIS AND DEVELOPMENTS WITHIN THE INDUSTRIAL

SECTOR IN BULGARIA ............................................................................................................... 10

EXPORT ORIENTATION OF THE SECTOR ............................................................................ 27

GOODS AND MARKETS WITH AN EXPORT POTENTIAL ................................................. 35

COMPETITIVENESS OF PRODUCTS AND SERVICES FROM THE SECTOR WHEN

EXPORTED ON INTERNATIONAL MARKETS. ..................................................................... 40

MACROECONOMIC CHARACTERISTICS OF PRIORITY BULGARIAN EXPORT

MARKETS. BILATERAL TRADE RELATIONS ...................................................................... 54

SUMMARISED RESULTS FROM THE ANALYSES (SWOT, PESTEL) ............................... 76

BARRIERS TO THE INTERNATIONALISATION OF ENTERPRISES FROM THE

SECTOR ........................................................................................................................................... 88

FINANCIAL ANALYSIS .............................................................................................................. 105

RESULTS FROM THE SOCIOLOGICAL SURVEYS AND PUBLIC DISCUSSIONS ....... 113

BIBLIOGRAPHY AND STATISTICAL SOURCES: ............................................................... 137

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List of Tables Included:

Table 1 Value added in the manufacturing industry (%) ................................................................... 11

Table 2. High-technological exports (intra ЕU-27), % of total exports by Member States ............... 12

Table 3. High-technological exports (outside of ЕU-27), % of total exports by Member States ..... 13

Table 4. Investment in industrial sector „Manufacturing of medical, optical and other precision

equipment” in the years of economic growth .................................................................................... 15

Table 5. Employees by industrial sector and activity (for all sizes of enterprises, by the IV quarter

of the corresponding year) – number ................................................................................................. 16

Table 6. Industrial production indexes – seasonally adjusted (by the month of December of the

corresponding year) 2005 =100 ......................................................................................................... 17

Table 7. Main economic performance indicators for the manufacturing industry in the timeframe

2008 - 2010 ........................................................................................................................................ 18

Table 8. Productivity, value added and employment provided by SMEs in sector С26 (2008 - 2009)

............................................................................................................................................................ 19

Table 9. Turnover indexes of domestic (Bulgarian) industrial sales 2000 – 2011 (by the month of

December of the corresponding year) 2005 = 100 ............................................................................. 19

Table 10. General price indexes reported by manufacturers (by December of the respective year),

2005=100 ........................................................................................................................................... 20

Table 11. Main economic performance indicators for SMEs in sector С26 for 2009 ....................... 21

Table 12. Main economic performance indicators for SMEs in sector С26 for 2010 ....................... 21

Table 13 Number of SMEs in sector C26 by regions ........................................................................ 25

Table 14 Employment by regions in SMEs within sector C26 .......................................................... 26

Table 15 Total export of the Bulgarian manufacturing industry ($ million, at current prices). ........ 27

Table 16 Table 16. General data, foreign trade in sector С26 in the period 2000 - 2011 .................. 27

Table 17 Turnover indexes of export industrial sales 2000 – 2011 (by the month of December of the

corresponding year) 2005 = 100 ........................................................................................................ 28

Table 18 Bulgarian exports – Medical, precision and optical apparatus and instruments 2001 - 2010

............................................................................................................................................................ 29

Table 19 Share of the medical, precision and optical exports in the total industrial export for 2001 -

2010 .................................................................................................................................................... 29

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Table 20 Value of exported medical, precision and optical apparatus for the period 2001 - 2010 ... 30

Table 21 Number of Bulgarian micro enterprises exporting computer, electronic, optical and

precision products (С26) .................................................................................................................... 30

Table 22 Number of Bulgarian small enterprises exporting computer, electronic, optical and


Table 23 Number of Bulgarian medium enterprises exporting computer, electronic, optical and


Table 24 SME export of specific product groups within „medical, precision and optical” .............. 31

Table 25 A list of Bulgarian export markets for product group “Optical, photo, technical, medical,

etc. apparatus” (code: 90 by ITC, Geneva) – thousand Euro ............................................................. 32

Table 26 Index of exported values for product group “Optical, photo, technical, medical, etc.

apparatus” (code: 90 by ITC, Geneva) – thousand Euro ................................................................... 33

Table 27 Product groups – manufacturing and sales for 2010 ........................................................... 35

Table 28 A list of significant Bulgarian export markets reporting growth for the period 2008-2010

for product group “Optical, photo, technical, medical, etc. apparatus” (code: 90) ............................ 37

Table 29 Leading export markets (top 30) for medical, precision and optical apparatus (ITC code

90) with an accentuated growth in 2007 - 2010 ................................................................................. 38

Table 30 Coefficient of specialisation of the Bulgarian industry in the sector Optical, medical and

precision apparatus (ITC code 90) .................................................................................................... 41

Table 31 Specialisation coefficients (revealed comparative advantage) in industrial sectors in EU

and World’s largest economies for 2009 ........................................................................................... 42

Table 32 Belgium: growth of imports from principal trade partners for product group “Optical,

photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................................ 46

Table 33 Germany: growth of imports from principal trade partners for product group “Optical,

photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................................ 47

Table 34 Italy: growth of imports from principal trade partners for product group “Optical, photo,

medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ........................................................... 48

Table 35 Russian Federation: growth of imports from principal trade partners for product group

“Optical, photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ................................ 49

Table 36 USA: growth of imports from principal trade partners for product group “Optical, photo,

medical, etc. apparatus” (ITC code 90) between 2006 - 2010 ........................................................... 50

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Table 37 Leading export markets for product groups and a share of the total global imports .......... 52

Table 38 Leading export markets and the position of Bulgaria (medical and other instruments) ..... 52

Table 39 Leading export markets and the position of Bulgaria (precision measuring equipment) ... 52

Table 40 Leading export markets and the position of Bulgaria (apparatus for auto tuning and

control) ............................................................................................................................................... 53

Table 41 GDP per capita at market prices, expressed in PPS (euro). ................................................ 56

Table 42 Main economic indicators for Germany and its bilateral trade relations with Bulgaria ..... 57

Table 43 Price levels of some products in product group 90, imported by Germany ....................... 58

Table 44 Main economic indicators for Belgium and its bilateral trade relations with Bulgaria ...... 59

Table 45 Price levels of some products in product group 90, imported by Belgium......................... 60

Table 46 Main economic indicators for France and its bilateral trade relations with Bulgaria ......... 61

Table 47 Price levels of some products in product group 90, imported by France ........................... 62

Table 48. Main economic indicators for Italy and its bilateral trade relations with Bulgaria ........... 63

Table 49 Price levels of some products in product group 90, imported by Italy ............................... 64

Table 50 Main economic indicators for Austria and its bilateral trade relations with Bulgaria ........ 65

Table 51. Price levels of some products in product group 90, imported by Austria.......................... 66

Table 52 Main economic indicators for Turkey and its bilateral trade relations with Bulgaria ........ 69

Table 53 Main economic indicators for the USA and its bilateral trade relations with Bulgaria ...... 70

Table 54 Main economic indicators for China and its bilateral trade relations with Bulgaria .......... 71

Table 55 Main economic indicators for Russia and its bilateral trade relations with Bulgaria ......... 73

Table 56 Main economic indicators for Japan and its bilateral trade relations with Bulgaria ........... 75

Table 57 SWOT analysis ................................................................................................................... 78

Table 58 Output data: financial analysis of 11 SMEs from the sector “Manufacturing of medical,

precision and optical apparatus and instruments”, (BGN thousand) ............................................... 105

Table 59 Net profit margin coefficient ............................................................................................ 106

Table 60. Return on Equity (ROE) ratio .......................................................................................... 107

Table 61 Return on Assets (ROA) ratio ........................................................................................... 108

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Table 62 Efficiency ratio indicator .................................................................................................. 108

Table 63 Financial autonomy ratio .................................................................................................. 109

Table 64 Indebtedness ratio ............................................................................................................. 110

Table 65 Liquidity radios ................................................................................................................. 111

Table 66. Location of the SMEs in the sociological survey ............................................................ 116

Table 67. Distribution of the surveyed enterprises according to the number of employees in 2011

.......................................................................................................................................................... 116

Table 68 Annual turnover of the surveyed enterprises .................................................................... 116

Table 69 Priority measures for promoting SMEs in the sector ........................................................ 117

Table 70 Assessment of the abilities and knowledge of employees in the surveyed SMEs ............ 121

Table 71 Changes in turnover of SMEs for the period 2008 – 2011 (basis 2007 = 100 %) ............ 121

Table 72 Number of SMEs according to the share of self-sustained exports for 2007 – 2011 ....... 123

Table 73 Table 73. Evaluation of the importance of barriers (obstacles) to SME and overall sectoral

export efforts for 2007 – 2011 (in %) .............................................................................................. 124

Table 74 Evaluations of the respondents to the degree of importance of factors tied to export

success (in %)................................................................................................................................... 126

Table 75 Potential markets, according to the managers of the surveyed SMEs .............................. 129

Table 76. Changes in export performance of the enterprise in the next 5 years (in %) ................... 131

Table 77 Frequence of use of some information sources (in %) ..................................................... 131

Table 78 Evaluation of the effect on the SME export performance of the services provided by the

BSMEPA (in %)............................................................................................................................... 132

Table 79 Share of exports carried out via web-sites (in %) ............................................................. 134

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List of Graphs Included:

Figure 1 Production indexes in sector С26: Manufacturing of electrical and optical equipment

(before 2008) ...................................................................................................................................... 17

Figure 2 Production indexes of medical, precision and optical equipment (before 2008) ................ 18

Figure 3 Leading 5 importers of Bulgarian manufacturing production from sector 90 by STC of ITC

(optical, photo, technical, medical etc. apparatus) for the period 2001 - 2010 .................................. 34

Figure 4 General graphic outlook of growth trends in exported values in production group „Optical,

photo, technical, medical, etc. apparatus” (ITC code 90) .................................................................. 44

Figure 5 Indexed GDP per capita in PPS for leading export markets (EU-27=100) ......................... 55

Figure 6 Indexed comparative price levels for the leading export markets ....................................... 56

Figure 7 Average change in turnover within the surveyed companies by years (in %) .................. 122

Figure 8. Export markets for SMEs in the survey............................................................................ 127

Figure 9. Percentile distribution of exports according to the number of export markets ................ 128

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Abbreviations used:

BAEI Bulgarian Agency for Export Insurance

BCCI Bulgarian Chamber of Commerce and Industry

BIA Bulgarian Industrial Chamber

BICM Bulgarian Industrial Chamber of Machine-building

BSMEPA Bulgarian Small and Medium Enterprise Promotion Agency

EC European Commission

EU (EU-27) European Union (EU’s 27 Member States)

GDP Gross Domestic Product

ITC International Trade Centre (Genève), a joint agency of the UN

MEET Ministry of Economics, Energy and Tourism

MEYS Ministry of Education, Youth and Science

MLSP Ministry of Labour and Social Policy

NAVET National Agency for Vocational Education and Training

NGO Non-governmental organisation

NSI National Statistical Institute

OP Operational Programme

OPC Operational Programme Competitiveness

OP HRD Operational Programme Human Resource Development

OPRD Operational Programme Regional Development

PESTEL Political, economic, social, technological, ecological and legal macro analysis

SME Small and medium enterprises

SP Sectoral Programme

STC Standard Trade Classification

SWOT Strengths, weaknesses, opportunities, threats analysis

UN United Nations

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SITUATIONAL ANALYSIS AND DEVELOPMENTS WITHIN THE

INDUSTRIAL SECTOR IN BULGARIA

According to current data small and medium enterprises in Bulgaria represent 99.7% of all

the active enterprises in the non-financial sector (with a similar 99.8% among Member States of the

EU). Perceivably a frequent emphasised priority for the executive and legislative authorities on a

national and European level, traditional economic analysis and policy in their support are marked

with a clear shift in the tone, recommendations and overall intensity in the last three years. The

underlying reason is comprehensible: the global financial – and consequently almost ubiquitous

economic – crisis that has unfolded.

It is quite natural that the new range of industrial and market indicators required imminent

short-term corrective measures. Just as it is necessary to plan accordingly for mid- and long-term

perspectives.

Not infrequently we have heard the opinion of leading experts that the crisis could represent

a chance for Bulgaria. In order to stand a chance for a long-term growth of the entire industry a

specific national comparative advantage needs to be located. And in the absence of one (or an

insufficiently pronounced one) what could be done is to invest in the programmed development of a

comparative advantage of production which could stimulate the overall competiveness of the

Bulgarian economy. A large portion of its growth could be built around the identified spheres and

industrial branches. With an appropriately developed legislative, political and institutional

framework the creation of new and promotion of existing enterprises in the priority manufacturing

sectors could improve significantly the position of small and medium enterprises on the

international markets. Such a policy of stimulated competitiveness needs to stand out especially in

the industrial sectors with higher added value of production and labour productivity, with high-

technological branches of the manufacturing industry being among the most suitable.

Since the very beginning we turn out attention to the manufacturing industry, not only

because it (and a specific branch of it!) is the subject of our analysis, but also because the basis of

the export potential of the country – which in turn statistically represents the true driving force

behind national GDP creation – is formed namely by the manufacturing industry. It corresponds on

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an average annual level to about 60% of the entire production volume in Bulgaria and about 18% of

the added value.

However, available data shows that this productivity still represents one of the lowest

percentages within the EU. Even compared to the newer Member States.

Table 1 Value added in the manufacturing industry (%)

2000 2001 2002 2003 2004 2005 2006 2007 2008

EU-27 25.5 25.0 / 25.5 28.53 27.95 27.19 26.88 /

Bulgaria / 18.4 18.4 19.5 19.7 19.9 / 20.8 17.9

Data source: Eurostat

The subject of our in-depth analysis – sector C26 of the STC-2008, “Manufacturing of

computer and communication equipment, electronic and optical products” and its subsector in

particular, “Manufacturing of medical, precision and optical apparatus and instruments” – are

emphatically high-technological in their nature, depending essentially on a knowledge-based

economy, research and technological know-how, investments in contemporary equipment and

innovative development.

We should start by pointing out that in none of the 28 administrative districts of the country

sector C26 falls within the leading five economic activities, irrespective of the number and size of

the enterprises. And as a whole the Bulgarian manufacturing industry is characterised by a

relatively low rates of added value of production and it falls behind in its technological support and

modernisation of the manufacturing processes.

Even as the share of high-technological exports of the Bulgarian industry has shown a

considerable rate of growth in the last 15 years, the following data sets show that it still stays near

the bottom end of the rankings among EU-27 countries – both in its export within the EU and

towards third countries – with such percentages that are only comparable to those of Latvia and

Lithuania (and only recently with some of the countries most severely affected by the crisis such as

Portugal and Spain).

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Table 2. High-technological exports (intra ЕU-27), % of total exports by Member States

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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

Bulgaria n/a 2,9 2,7 2,2 1,9 1,6 1,5 2,3 2,5 2,2 3,1 4 3,7 3,6 4,1

Czech Rep. 4,6 5,3 6,4 7,3 6,9 6,5 8,4 11,3 11,5 12,9 10,7 11,9 13,2 13,4 14,3

Denmark 8,1 9,1 9,9 11 12,8 12,2 11,9 13,4 11,6 11,2 12,9 10,6 9,5 8,3 9,1

Germany 10,8 10,8 11,9 12,8 13,3 15,2 14,4 14,2 13,5 14,1 13,4 13 11,8 11,4 12,9

Estonia 4 7,2 7,9 10 11,4 28 19,3 11,1 10,5 10,8 11,7 8,1 9,4 8,8 7,8

Ireland 32 37,4 35,6 34 40,2 42,8 43 36,1 29,9 27,9 27 27 23,8 21,1 18,4

Greece 3,4 3,4 3,4 4,2 5,3 7,4 6,8 6,2 7,6 8,7 7,3 7,2 5,4 5,2 5,5

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

France 10,6 11,6 12,7 13,3 18,4 21,1 21,2 18,3 17,1 16 12,6 14,2 12,2 13,1 16

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

Cyprus 2,5 2,4 2,6 2,5 2,7 2,8 3,4 3 3,8 14,1 36,4 23,5 16,4 23,8 23,5

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

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

Luxembourg n/a n/a n/a n/a 16,2 21,8 29,7 25,7 31,1 31,9 40,7 42,8 34 36,8 42,5

Hungary 4,8 4,1 16,1 16,5 17,4 21,5 20,7 21,3 21,8 20,6 17,2 17 17,3 15,9 18,7

Malta 56,6 41 39 41,7 36,6 34 41,4 35,1 35,9 38,4 35,4 41,7 33,1 28,3 28,4

Netherlands 13,5 15 19,9 19,1 21,4 22,7 21,8 18,3 18,2 18,7 20 17,8 17,8 15,9 18,2

Austria 7,4 7,4 9,1 9,4 10,1 12,2 13 13,9 14,2 13,8 10,7 10,1 9,9 9,4 10

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

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

Romania 1,1 1,1 0,8 1,4 3,1 5,7 5,7 3,3 2,9 3,1 3,4 4,2 3,7 5,8 8,2

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

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

Finland 12,1 13,1 15,6 19,2 19,7 22,3 18,5 19,1 16,4 12 14,6 13,8 14,2 16,2 13,5

Sweden 9,7 11,4 12 13,2 14,8 14,3 9,4 9 9,3 10,2 10,5 10,5 10,2 8,8 10,6

UK 21,1 20,8 19,7 23,5 26,8 28 29,7 30 23,5 20,9 20,2 28,9 13,7 12,6 14,5

Data source Eurostat

Last update 30.09.2011

Explanation Percentages given represent share of high-technological production out of the total national exports. High-tech

products hereby include (except sector C26) product groups such as space apparatus, chemical and nonelectric

machines, military equipment.

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Table 3. High-technological exports (outside of ЕU-27), % of total exports by Member States

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

EU-27 15,7 15,7 16,5 18,1 20,4 21,4 21,2 18,9 18,6 18,5 18,7 16,6 16,1 15,4 16,9

Belgium 6 6 6,2 7,3 7,9 9 9,8 7,8 7,7 7,1 7,5 8,1 8,7 8,9 11,7

Bulgaria n/a 1,9 1,9 1,5 1,5 1,7 2,2 3 3,7 3,2 2,6 2,3 3,2 3,5 5,5

Czech Rep. 7,2 12,9 11,1 10,7 14,6 15,3 13,4 18,3 18,3 18,5 17,3 17,8 19,7 18,1 20,5

Denmark 11,9 11,6 14,7 13,6 16,6 19,7 18,7 18,7 17,9 18,3 19,5 18 16,8 16,3 18,9

Germany 13,2 13,3 13,6 14 15,8 17,6 18,3 16,8 17,1 17,7 17,3 16 15,2 14,2 15,9

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

Ireland 35,3 40 41,7 44,2 37,7 36,5 36,8 33,9 29,9 31,1 34 32,5 29,1 29,7 27,8

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

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

France 23,9 21,8 25,2 27,9 34,4 33,5 33,5 28,5 27,9 27,9 30,4 24,9 25,2 25,6 26

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

Cyprus 9,2 8,7 2,6 3,6 5,9 3,4 4,8 4 4,8 19,6 18,5 16,3 10,2 8,5 13,2

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

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

Luxembour

g

n/a n/a n/a n/a 7,3 12,7 14,2 17,1 17,2 6,9 14,5 22,9 20,6 23,7 37

Hungary 4,7 4,2 5,7 18,5 30,3 31,4 20,3 22,3 25,1 28,2 30,2 33,1 36,7 35,9 35,4

Malta 57,5 70,1 62,3 72 74,1 80 76,6 75,9 74,1 71,1 62,2 66,8 62,1 58,9 56,9

Netherlands 19,7 22,6 18,1 27,2 24 23,2 24,3 20,5 21,4 20,7 21,1 20,2 20 17,2 19,1

Austria 9,2 9,1 11,4 11,5 17,5 19,6 19,6 21,2 18,9 17,3 18,3 14 14,4 14,5 16

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

Portugal 6,9 9,2 7,8 6,9 6 14 15,8 16 20,6 21,7 22,1 21 21,1 17,2 6,8

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

Slovenia 5,6 7,8 6,6 7,1 6,1 7,2 8,9 8,7 11,4 9 7,6 8,1 8,6 8,2 8,3

Slovakia 7,8 8,7 6 6,6 5 4,9 4,9 3,9 3,7 4,8 8 6,9 6 5,4 5,9

Finland 12,8 14,5 16,7 18,5 22,5 25,5 25,1 23,8 26,9 25,8 30,2 23,9 21,9 18,7 14,4

Sweden 18,1 18,9 20,7 21,4 23 25,3 21,2 20,4 18,6 19,7 19,5 17,8 19 20,2 20,7

UK 24,4 24,5 26,7 26,1 28,2 30,2 30 26,4 25,8 25,6 24,8 22,3 20,8 18,5 22,7

Data source Eurostat

Last update 30.09.2011

Explanation Percentages given represent share of high-technological production out of the total national exports. High-tech

products hereby include (except sector C26) product groups such as space apparatus, chemical and nonelectric

machines, military equipment.

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Again according to Eurostat data in the rankings of most specialised countries (by

value added) in different sectors of the manufacturing industry, Bulgaria stands out as the second

most specialised in textile, leather and shoe manufacturing (after Romania). While in the sector

“Electrical equipment, optical and precision apparatus” the leading in such specialisation are

countries such as Finland and Hungary, and volume-wise the rankings are topped by Germany and

France. In Bulgaria the most significant industries in terms of value added and specialisation ratings

are construction and media/communications (volume-wise, and as we can see – not even

manufacture related), and at the same time our specialisation falls on textile and leather industries,

as well as network supply of energy. The second one also not manufacture related. We can clearly

outline the lack of priority development in high-technological sectors.

Crucial in such a set of circumstances is the retardation in this respect of SMEs (although

this regards a general trend in apparent differences with larger enterprises within the EU-27). C26 is

the third most important European manufacturing sector in terms of value added (after basic metals

and metallic products, followed by petroleum and chemical products) but the Electric, electronic,

precision and optical equipment is characterised by relatively large enterprises that achieve a

higher-than-average productivity. Datasets validate this trend before the crisis, just as they do

nowadays.

In Bulgaria during the years of continuous and stable growth, before the crisis – with 2005

being a peak year among most of the industries – we notice that C26 is among the sectors that fall

behind in their growth prospects. To be more specific, the data for the manufacturing of “medical,

precision and optical apparatus and instruments” according to the NSI corresponds to 0,6% of

overall manufacturing industrial output, creating 0.9% of the value added and providing 1,0% of all

employment in the non-financial sector. The gap from the main EU competitors is considerable –

just as a comparison, the average value of the 27 countries points to a share of 2,1% of the

manufacturing industry.

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Table 4. Investment in industrial sector „Manufacturing of medical, optical and other precision equipment”

in the years of economic growth

All types of enterprises

2003 2004 2005 ЕС27 (2005)

Share of exports in overall sales (%) 13.7 29.2 42.4

Share of added value of production (%) 25.5 26.8 30.6 43.2

Gross investment in durable assets (million euro) 7.1 6.9 7.0

Gross investment in machinery and equipment (million euro) 5.8 4.4 4.3

Investment coefficient (gross investment/value added, %) 38.9 28.3 24.5 7.2

R&D expenditures (million euro) 0.1 0.4 0.4

Profit rate (%) 8.6 10.4 13.3 13.4

Share of gross operating excess in value added (%) 36.7 43.2 46.8 33.2

Data source: NSI

The above table illustrates the efforts of owners and upper management of the

enterprises to make up for the perceivable disparity in the creation of added value which is among

the dominant characteristics of high-technological production. Any decent indicators of investment

intentions (with an emphasis on the inverse relation with the increasing added value) are limited

primarily on durable assets, such as machinery and equipment. A policy which would have effect

on said differences in the immediate production processes, technology support and peripheral

activities. On the other hand to influence the potential and perspectives for a sustainable growth in

competitiveness undoubtedly one needs investment in R&D, namely where committing any

resources is thought apparently not so pressing and/or impossible at the moment in time. Existing

alternatives – license purchase, royalty payments, sub-contracting functions with leading

technological developers – are all valid strategical solutions for raising the general competitiveness

and the key importance of innovative development that is characteristic of the sector in question.

In order to gain an insight into some numerical outlines of the general state of sector

C26 “Manufacturing of computer and communication equipment, electronic and optical products”,

the more narrowly defined economic activity “Manufacturing of medical, precision and optical

apparatus and instruments” and their development trends in the last decade, we will present some

dynamic time series of publicly available statistics that will be analysed and will render an account

of the principal and most influential recent tendencies.

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Table 5. Employees by industrial sector and activity (for all sizes of enterprises, by the IV quarter of the corresponding year) – number

Data source: NSI

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

IV IV IV IV IV IV IV IV IV IV IV III*

Industry – overall 643196 645125 663646 679574 688588 695998 714024 690367 671191 598506 577821 570720

Manufacturing industry 546711 552903 572683 590329 601798 611713 631383 608842 592591 521642 502047 496418

Manufacturing of computer

technologies, electronic and

optical products

12846 11797 11326 11273 11485 11981 12727 11432 10725 9407 9248 7976

Structure (%)

Industry – overall 100 100 100 100 100 100 100 100 100 100 100 100

Manufacturing industry 85 85,7 86,29 86,87 87,4 87,89 88,43 88,19 88,29 87,16 86,89 86,988



optical products

2,00 1,83 1,71 1,66 1,67 1,72 1,78 1,66 1,60 1,57 1,60 1,40

Manufacturing industry 100 100 100 100 100 100 100 100 100 100 100 100



optical products

2,35 2,13 1,98 1,91 1,91 1,96 2,02 1,88 1,81 1,80 1,84 1,61

17 | P a g e







Table 6. Industrial production indexes – seasonally adjusted (by the month of December of the

corresponding year) 2005 =100

year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

by month XII XII XII XII XII XII XII XII XII XII XII X*

Industry – overall 83,2 81,3 83,9 95,7 110,1 117,6 117,7 124,7 114,1 100,2 106,9 105,8

Manufacturing industry 70,6 66,2 74,6 89 106,2 115,6 123,2 122,3 109,8 93,9 103 106,3


technologies, electronic and optical

products

79,5 104,8 154,3 111,8 102,6 190,6 103,4 113,8 108,2 137,2 155,9 120,1

Data source: NSI

Figure 1 Production indexes in sector С26: Manufacturing of electrical and optical equipment

(before 2008)


Such trends are easily comparable to the data about the growth in production in our specific

area of interest “Manufacturing of medical, precision and optical apparatus and instruments”:

18 | P a g e







Figure 2 Production indexes of medical, precision and optical equipment (before 2008)


As we can observe in the presented tables and graphs, regardless of the phases of current

economic development the analysis of the data shows a relatively stable (even if gradual and not

always consistent) and lasting increase in the production indexes, with the main tendency being that

fewer and fewer employees prove sufficient to maintain and even expand current levels of industrial

production in the sector.

One logical explanation of the presented statistics could be found in the increased average

labour productivity per employee, as well as the overall manufacturing productivity in the sector.

And indeed, the data confirms trends which speak of growing average productivity – with generally

all manufacturing enterprises presenting figures that relate proportionally to those of the SMEs

alone.

Table 7. Main economic performance indicators for the manufacturing industry in the timeframe

2008 - 2010

Class 2008 2009 2010

Number of enterprises – total 30 288 32 177 30 709

Out of which: SME 29 943 31 860 30 409

Turnover – BGN thousands 50 101 369 38 575 825 43 088 856

Out of which: SME 21 062 250 17 444 821 17 754 591

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Value added (according to factored costs)

BGN thousands

8 366 976 7 595 046 8 053 188

Out of which: SME 4 843 129 4 235 655 4 196 679

Employees – number 639 060 577 450 538 435

Out of which: SME 433 924 397 161 367 468

Labour productivity – BGN thousands 13,1 13,2 15,0

Out of which: SME 11,2 13,2 15,0

Data sources – NSI and Eurostat

For small and medium enterprises in sector C26 “Manufacturing of computer and

communication equipment, electronic and optical products” and accorgindly in the segmented

economic activity “Manufacturing of medical, precision and optical apparatus and instruments”,

after all, the change in the above discussed indicators appears to have been even less positive during

the crisis years.

According to Eurostat data:

Table 8. Productivity, value added and employment provided by SMEs in sector С26 (2008 - 2009)

2008 2009

Number of SMEs in sector С26 391 383

Labour productivity (€, thousands) 9,4 8,8

Value added as a share of manufacturing industry (%) 2,2 1,9

Share of employment provided by the manufacturing industry 1,6 1,5

Data sources –Eurostat

Taking note of the practically inconsiderable differences with the data provided by the NSI

for the same period, the trend that has confirmed itself is one of stagnation and lowered general

productivity in SMEs in the sector. At least until 2010 when amidst the continually falling

employment numbers we begin to notice an increase in value added, with the corresponding higher

average labour productivity in those same SMEs. If they continue to report lower export volumes

but higher total turnover for the sector, only a stabilised internal market demand could contribute to

offsetting the negative trends in export performances.

Table 9. Turnover indexes of domestic (Bulgarian) industrial sales 2000 – 2011 (by the month of

December of the corresponding year) 2005 = 100

year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Industry – overall 83,6 87,7 104,7 94,8 114,9 126,7 142,7 168,9 178,1 150,0 161,4 155,5

Manufacturing industry 75,7 75,6 82,5 88,8 110,0 122,4 144,0 155,7 157,4 135,6 136,9 139,5

20 | P a g e








and communication

equipment, electronic and

optical products

82,3 105,9 154,7 130,2 108,5 219,9 120,5 124,7 116,5 108,9 143,0 71,1

Data source: NSI

Domestic market turnover figures confirm the peak 2005 in relation to the overall

growth that is characteristic of the decade, with the considerable decrease in 2008 and 2009 and the

relative “recovery” in 2010. What really stands out within the datasets is the difference with the

general industrial turnover indexes – lower values almost throughout and especially after 2005

when it is even more pronounced in comparison with the average numbers of the manufacturing

industry as a whole. We can find confirmation of the recovery trends in domestic market turnover

for 2010 but that can be attributed to a number of factors, amongst which we can also cite the

average price indexes reported by the manufacturers:

Table 10. General price indexes reported by manufacturers (by December of the respective year),

2005=100

year 2004 2005 2006 2007 2008 2009 2010 2011

by month XII XII XII XII XII XII XII XI*

Industry – overall 93,9 105,2 114,2 125,9 126,2 127,3 142,8 149,5

Manufacturing industry 93,9 104,8 112,2 123,3 117,6 121,5 135,9 142,9

Manufacturing of computer equipment,

electronic and optical products

95,1 104,8 106,9 105,1 106,5 103,8 110,5 110,8

Data source: NSI

Given the higher average production value (which hers does not show a leading role

typically attributed to a high-technological segment and lags behind in its growth compared to the

manufacturing industry as a whole) we cannot be sure whether this is due to the rise in the quality

of produced goods, or merely to the higher raw material, energy and overall production prices.

What we can me more tempted to affirm, however, is that if we aim at achieving a strategic

and long term development and growth of a high-technological manufacturing sector with

aspirations to global competitiveness, then domestic consumption can merely represent a temporary

and short-lived “remedy”. Objectively speaking, expectations of a sustainable growth of the

industrial sector in question are related mostly to improved indicators in the exported production

21 | P a g e







and ever higher added value, both of which should be able to assure conditions for growth and

development of the enterprises in the sector.

Table 11. Main economic performance indicators for SMEs in sector С26 for 2009

Trade sector

(STC-code)

Enterprises Turnover

Value added

(according to

factored costs)

Employees Exports Labour

productivity

BGN thousand Number BGN thousand BGN thousand

26 389 321139 99235 5467 240243 18,2

26.1 104 102265 18545 1366 113535

26.11 69 90415 12064 858 82050

26.12 35 11850 6481 508 31485

26.2 34 19881 5717 308 6819

26.3 82 44166 18524 994 18064

26.30 82 44166 18524 994 18064

26.4 16 6792 confidential 272 confidential

26.5 109 99853 34672 1820 60722

26.51 105 96433 33271 1776 60722

26.52 4 3420 1401 44 none

26.6 12 confidential confidential 102 confidential

26.7 23 13809 6878 570 6643


Table 12. Main economic performance indicators for SMEs in sector С26 for 2010

Trade sector

(STC-code)

Enterprises Turnover

Value added

(according to

factored costs)

Employees Exports Labour

productivity

BGN thousand Number BGN thousand BGN thousand

26 363 452104 143744 5254 159772 27,4

26.1 96 158629 37085 1418 55488

26.11 60 142610 28822 799 25084

26.12 36 16019 8263 619 30404

26.2 35 25875 7860 385 4518

26.3 67 92716 35875 1170 16663

26.30 67 92716 35875 1170 16663

26.4 21 9906 4256 317 confidential

26.5 104 97258 35485 1276 35598

26.51 98 94245 34232 1220 confidential

26.52 6 3013 1253 56 confidential

26.6 6 confidential 18446 140 confidential

26.7 29 20997 3150 524 8302


The data is elaborated according to Structural Business Statistics methods – NSI

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The above tables show specific data for the analysed industrial sector

“Manufacturing of medical, precision and optical apparatus and instruments”. It encompasses codes

26.5 “Manufacturing of devices and apparatus for measuring, testing and navigation; manufacturing

of watches/clocks”, 26.6 „Manufacturing of emitting electromedical and therapeutic apparatus”,

26.7 „Manufacturing of optical devices and elements, and photographic equipment” and 26.8

„Manufacturing of magnetic and optical storage media, non-recorded” (according to STC-2008).

The total number of small and medium enterprises decreases from 153 to 144. This holds true also

for the number of employees (from 2527 to 1964).

In the sectors where we have access to all relevant information regarding turnovers,

exports and value added we can see that the previously defined trends confirm the conclusions

made about the overall state of sector C26 “Manufacturing of computer and communication

equipment, electronic and optical products” – maintaining stable turnovers and value added (given

she decrease in employment provided) with a relative reduction in export values for 2010.

Data for the sector development in the last decade on the other hand also describes another

stable trend for the period in question – an almost uninterrupted increase in the share of exported

production out of the total volumes manufactured: from barely 13,7% in 2003 to 42,4% in 2005, to

the considerable 74,8% in 2009. This undoubtedly emphasises the dominant export orientation of

most enterprises in the sector. (Given the fact that Bulgaria’s main trade partners for this type of

production are Euro-zone countries we can comprehend the net drop in overall exported value by

33,5% in 2010). After what we perceive has been an essential re-orientation in the trade strategies

of the enterprises in the sector, nowadays the share of exports (out of the total sales) has exceeded

the average percentage that is reported by the manufacturing industry and as such we can definitely

count this orientation not as a trend but as a characteristic trait of the sector. In the subsector within

sector C26 “Manufacturing of computer and communication equipment, electronic and optical

products” that is the subject of our more narrow analysis (medical, optical, precision) the enterprises

with micro and small sizes are the more frequently reported ones. General economic and market

changes affect more profoundly their stability and the precarious demand of the recent years on the

global markets, as well as the difficulties in entering and re-positioning, are a more than expected

consequence and proof of their vulnerability. All of this stresses the importance and need of a long-

term strategic orientation of the sector to sustainable models of development and an accent on the

innovative character of this type of production.

23 | P a g e







A more in-depth analysis of the structure, trends and the product groups included in the

exported production is available further down in the present Annexes.

In the above-described definitive “re-orientation” to the export markets (and the inevitably

increased quality requirements) Bulgarian SMEs from the sector report a slow but stable growth in

the share of produced added value. Reaching 30,6% in 2005, this percentage is considerably higher

than the average one produced by the Bulgarian manufacturing industry. And after a period of

relative stagnation we record values of 30,9% in 2009 and 31,8% in 2010. Thus, however, we

confirm the previously mentioned gap with EU manufacturing performances by roughly 10% on all

average yearly indicators during the decade. The necessary stable improvement in the ratio value

added to production manufactured could position more successfully Bulgarian enterprises on the

global markets; but for that to happen we need a lasting and systematic improvement of the

technological, but above all of the innovative and R&D support of the manufacturing process.

With view to achieving this technological and ideological development of the sector, the

enterprises need to plan for certain investment expenditures. Despite some hardship in finding

specific investment data for the subsector in question, general data for sector C26 “Manufacturing

of computer and communication equipment, electronic and optical products” reveals investments

(both in fixed assets and R&D) that peak in 2007, a significant decrease in 2008 and 2009, with a

slight stabilisation in 2010. When funds and resources are insufficient within the enterprises

themselves of course, partnering with foreign companies and attracting direct foreign investment in

the necessary areas are both valid and inviting scenarios for small and medium enterprises. (The

capabilities of the SMEs themselves in investing in fixed assets alone are manyfold smaller.) Here

also we have NSI data that shows for the entire sector “Manufacturing of computer and

communication equipment, precision and optical products” a considerable stagnation in direct

foreign investment in the enterprises: € 62,13 million for 2008; € 60,92 million for 2009 and €

68,48 million for 2010 – compared to levels of € 193,67 million for the same category of

manufacturing according to data for 2007.

The intensity of investment in the industrial sector in question may be lower than the

average reported by the manufacturing industry in general due to the absence of heavy machinery

and extensive production facilities; what is relied upon is labour-intensive activities and the related

advantages deriving from lower labour costs. Undeniably however, the trend that speaks of lower

24 | P a g e







shares of expenditures in acquiring equipment – and especially the extremely low investment in any

type of intellectual and innovative technological developments – is among the serious problems that

enterprises have to solve in terms of their mid- and long-term prospects of development and

competitiveness improvements. At the present such a comparative advantage (based purely on

labour-intensiveness and occasional import of contemporary equipment that may cover basic

existing criteria) could have its role and weight in forming the present export positions of the SMEs

in the sector. But with the continuous growth of labour costs – when factoring in all social security

allowances and deductions, tax-related and other perceivable negative fiscal burdens (especially

having in mind the overall European state of public debt) – such manufacturing needs to become

more capital-intensive in order to survive.

This leads us to the impending need to define and access alternative sources of financing,

flexible financial engineering and strategic participation in joint partnerships and projects that share

expenditures leading to growth and investment in the necessary areas, and that ultimately give

access to diversified outside sources of financial support. In this case we mean principally the

European Operational and Structural Programmes, the Framework Programmes for science and

cooperation and innovation; but also various forms of production cooperation, as well as purely

financial instruments offered by specialised funds and European financial consortia such as the

apposite JEREMIE instrument, created in support of small and medium enterprises and functioning

since the end of 2011 in Bulgaria.

Increasing the presently set 2% that is appropriated for R&D-related financing in all of the

Bulgarian Operational Programmes combined would also represent a noticeable advance.

And as far as indicators for profitability (returns, profit, operating excess, etc.) there is an

applicable separate section on financial analysis of SMEs manufacturing medical, precision and

optical products.

Let us now turn our attention to some of the data for the regional distribution and

development of enterprises in the sector on a (both SMEs and large ones). According to MEET data

for 2011 the industrial sector manufacturing computer technology, electronic, optical and precision

products (C26) encompasses about 1,2% of the total industrial manufacturing in the country and

created roughly 1,4% of the added value in the industry. The salary levels in the sector are

considered average compared to national distributions: average monthly remuneration by the end of

25 | P a g e







2010 amounted to BGN 697 and the sector provided about 1,8% of the employment in the


Actively producing companies in the sector are thought to be around 1200, with 363 of

them considered SMEs by the end of 2010. Almost half of all the enterprises are situated on the

territory of the South-West and South-Central planning region (NUTS II level). As we mentioned

earlier, the total number of SMEs for the specifically defined and analysed sector of interest is 144

by the end of 2010; however we do not have data for the regional distribution of these enterprises.

Human resource development for the sector is supported as a result of the functioning 20

higher education institutions ,121 professional secondary-school institutions and 7 private colleges.

For micro, small and medium enterprises manufacturing computer, electronic, optical and

precision products (coinciding with sector C26 according to STC-2008) we have the following data

by Eurostat on their regional distribution:

Table 13 Number of SMEs in sector C26 by regions

2008 2009

Bulgaria (total) 391 383

North-West 23 21

North-Central 39 37

North-East 33 31

South-East 17 19

South-West 198 202

South-Central 81 73

Not overlooking the marginal differences in the data provided by Eurostat and the national

statistic sources (3 SME, most likely due to differences in statistical calculation methods), we can

clearly find confirmation in two of the anticipated trends.

The first one is that in the most-developed region in the country, the South-West, we have

the strongest presence – and accordingly the conditions – for development of a high-technology

manufacturing activity such as the one in question. The necessary human resources, material,

infrastructural and overall conditions and requirements for development of the enterprises reflects

26 | P a g e







on the extremely low sectoral activity and presence in the least developed Bulgarian (and according

to Eurostat data, in the entire EU) region: the North-West.

The other easily perceivable trend is that out of the 391 total SMEs in the sector at the

beginning of the crisis (2008) we have a drop to 383 in 2009, and according to NSI even 363 in

2010. Besides the overall decrease in the number of enterprises, we also have a sharp reduction in

the total employment provided by them:

Table 14 Employment by regions in SMEs within sector C26

Share of the sector in the total manufacturing employment Change in the number of

employees (%)

2008 2009 2008 - 2009

Bulgaria (total) 1,6 1,5 -16,5

North-West 0,5 0,6 -10,1

North-Central 1,1 1 -22,3

North-East 0,9 0,9 -14

South-East 0,2 0,2 -7,3

South-West 2,9 2,7 -15

South-Central 2,1 1,8 -18,6


Separate data for the SMEs divided according to their regional productivity, added value and

indexes of production and sales we do not have at our disposal, and we thing it highly likely that the

overall SME data from the sector will find their direct proportional statistical reflection in the

regional distribution of the same trends as well.

27 | P a g e







EXPORT ORIENTATION OF THE SECTOR

We now turn our attention to the export orientation of the Bulgarian manufacturing industry,

sector C26 “Manufacturing of computer and communication equipment, electronic and optical

products” and the medical, optical and precision production in particular.

A starting point will be some general data tracing the volume of exported goods and services

by the manufacturing industry in the last few years which are thought to confirm the analysis made

so far – a decrease in 2008 with a slight recovery in 2010:

Table 15 Total export of the Bulgarian manufacturing industry ($ million, at current prices).

Source: WTO

The stable growth in the exports of sector C26 “Manufacturing of computer and

communication equipment, electronic and optical products” goes along the same yearly trends, with

the last decade showing a decrease in the exported volumes at the end of 2008 and entire 2009. The

partial recovery concerns 2010, while in 2011 the Bulgarian manufacturing industry from the sector

has the opportunity to finally approach a zero trade balance, having in mind the increase in the

exported production compared to the lack of improvement in the domestic consumption of this

category of goods.

Table 16 Table 16. General data, foreign trade in sector С26 in the period 2000 - 2011

year Export FOB Import CIF Balance Trade volume

+/- % €

thousands

%share +/- % €

thousands

%share +/- % €

thousands

+/- % €

thousands

%share

2000 / 29 701 0,6 / 109 897 1,6 / -80 196 / 139 598 1,1

2001 17,9 35 023 0,6 38,0 151 654 1,9 -45,4 -116 630 33,7 186 677 1,3

2002 24,4 43 583 0,7 -1,9 148 813 1,8 9,8 -105 230 3,1 192 396 1,3

2003 22,5 53 371 0,8 5,6 157 113 1,6 1,4 -103 743 9,4 210 484 1,3

2004 19,4 63 748 0,8 25,8 197 705 1,7 -29,1 -133 957 24,2 261 453 1,3

2005 34,1 85 465 0,9 -0,9 195 903 1,3 17,6 -110 438 7,6 281 367 1,2

2006 60,0 136 740 1,1 20,9 236 834 1,3 9,4 -100 094 32,8 373 574 1,2

2007 30,7 178 672 1,3 9,1 258 287 1,2 20,5 -79 615 17,0 436 959 1,2

2008 10,0 196 507 1,3 24,6 321 716 1,3 -57,3 -125 209 18,6 518 223 1,3

For the year: 2006 2007 2008 2009 2010

Total global exports ($ million, at then current prices) 8039 10385 11587 8694 10369

28 | P a g e







2009 -9,1 178 586 1,5 -17,5 265 379 1,6 30,7 -86 793 -14,3 443 965 1,6

2010 28,5 229 453 1,5 -8,3 243 229 1,3 84,1 -13 776 6,5 472 682 1,4

2011* **33,0 217 860 1,5 **11,6 195 087 1,2 **304,9 22 773 **21,9 412 947 1,3

* data until September 2011 ** Compared to September 2010

Data sources: NSI and MEET

Similarly to the domestic consumption for the sector, we have a series of indexed data for

the turnover of exported production on the foreign markets by the industry as a whole, as well as the

sector in particular:

Table 17 Turnover indexes of export industrial sales 2000 – 2011 (by the month of December of the

corresponding year) 2005 = 100

year 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


Industry (total) 64,2 55,0 73,5 69,3 91,5 112,2 120,6 139,3 97,0 110,3 176,9 203,2

Manufacturing industry 60,4 53,7 73,0 68,5 91,9 110,1 119,8 140,0 98,3 113,8 180,0 205,7


and communication

technology, electronic and

optical products

77,8 83,7 114,0 64,1 94,9 111,0 124,0 127,5 121,4 155,6 335,6 238,0

Data source: NSI

A comparison of the domestic and export performance shows that consumption of such

high-technology goods ultimately has contracted more nationally and the enterprises in the sector

cannot maintain high turnovers merely by domestic sales. And while 2010 is marking a general

increase (for both domestic and exported volumes), recovery for the levels of sales on the global

markets is quite pronounced and reports exceptional indexed improvements according to Bulgarian

national statistics: from 155,6 during the crisis 2009 (naturally compared to the traditionally peak

industrial 2005); passing through turnover index values of 335,6 for 2010 (again at 2005=100); and

only in the first ten months of 2011 we record turnover indexes of 238. This data – given the not so

exceptional production and demand indexes globally – speak of a considerably improved

positioning of our enterprises that form the sector’s industrial activity.

Narrowing the present analysis to the exported Bulgarian medical, precision and optical

apparatus and instruments we notice the expected similar trends of growth until 2008, stagnation

(with a slight decrease) in 2009 and recovery in 2010.

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Table 18 Bulgarian exports – Medical, precision and optical apparatus and instruments 2001 - 2010

year amounts

(BGN thousands)

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

68484,0 114332,5 153731,1 150824,0 205425,3 303755,3 359473,4 395080,3 392529,1 479543,1

Data source: ITC, Genève

* Data for total sectoral exports does not include services

Despite improved turnovers and overall better performance of the enterprises in the analysed

industrial sector, the share of such a high-technological export within the Bulgarian manufacturing

industry remains at a secondary rate of importance – in the total manufacturing export for the period

2001-2010 the sub-sectoral share is under 1,5%. Compare it to basic manufacturing productions

such as fuel, chemical and distillation products, as well as the immediately following primary

copper and copper product manufacturing – we the two sectors combined report a share of over

23% of the total industrial export of Bulgaria in 2010. Such data allot high-technology production

sectors quite a low position in the priority rankings of the Bulgarian manufacturing industry.

Table 19 Share of the medical, precision and optical exports in the total industrial export for 2001 - 2010

Product category Share of total industrial export values, %, for:

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total industrial export, % 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

For comparison:

Fuels, oils, distillation

products

8.97 6.01 5.81 7.99 10.38 13.28 14.71 16.06 12.59 13.29

For comparison:

Copper and copper items

5.88 5.56 6.05 7.33 8.84 12.74 10.02 10.51 8.82 9.98

Optical, photographic,

technical,

medical and precision

equipment

0.56 0.64 0.73 0.76 0.88 1.12 1.3 1.27 1.52 1.44

Data source: UN, ITC

Regarding specific values of the analysed export categories, according to the International

Trace Centre in Geneva (a joint cross-institutional UN agency) the data points to quite a modest

total value, keeping in mind that the following numbers include all categories of Bulgarian

30 | P a g e







enterprises that export “Optical, photo, technical, medical, etc. apparatus” – or, alternatively, code

90 under the nomenclature of the same institute.

Table 20 Value of exported medical, precision and optical apparatus for the period 2001 - 2010

Code/Sector Export values by years, € thousand

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Total

industrial

export

5,703,749 6,077,625 6,660,502 7,983,158 9,426,235 12,021,319 13,551,132 15,282,366 11,832,901 15,519,394

'90. Optical,

photo,

technical,

medical etc.

apparatus

31,943 39,144 48,679 60,540 82,636 134,134 176,321 194,615 179,330 223,905

Data source: ITC (UN)

The latest data for 2011 is reported to be 278,420 (278 million) euro.

Going back to the precisely defined subject of this analysis – SMEs in the sector – it appears

that not many enterprises from this category export their production. Eurostat data, divided into

micro, small and medium Bulgarian enterprises which export their products and services (in turn

divided into intra and extra EU-27 exports) relates the overall situation in the sector.

Table 21 Number of Bulgarian micro enterprises exporting computer, electronic, optical and precision

products (С26)

year Within EU, number of enterprises Value

(Euro thousand) Outside of EU, number of

enterprises

Value

(Euro

thousand)

2008 22 1150 37 2065 2009 37 910 36 963


Table 22 Number of Bulgarian small enterprises exporting computer, electronic, optical and precision

products (С26)


(Euro thousand) Outside of EU, number of

enterprises

Value

(Euro

thousand)

2008 42 32449 39 10589 2009 46 12291 37 7290


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Table 23 Number of Bulgarian medium enterprises exporting computer, electronic, optical and precision

products (С26)


(Euro thousand)

Outside of EU, number of

enterprises

Value

(Euro

thousand)

2008 33 76715 32 60034

2009 25 50345 20 43544


Such statistics confirms our observations so far that outline a general decrease in the

exported production of SMEs from the sector in 2009 compared to 2008. And in two thirds of the

cases (exception made for newly created micro enterprises) the trend points to a loss in relative

competiveness and consequent closing of some small and medium exporting companies.

As a verification of the above-mentioned conclusions we shall present data from the NSI as

well for two specific product sub-groups; their total average decrease in value exported on the

international markets merely corroborates the difficulties that SMEs from the sector are

experiencing:

Table 24 SME export of specific product groups within „medical, precision and optical”

STC

code

section

number Product groups

SME

export,

2009,

(BGN

thousand)

SME export,

2010, (BGN

thousand)

Share of SME in the

total export of the

industrial sector,

2009, %

Share of SME in the

total export of the

industrial sector, 2010,

%

26.5 9,1 Meters, testing and navigation

apparatus; manufacture of clocks 60 722 35 598 15,47 9,07

26.7 9,4 Optical devices and elements and

photo- equipment 6 643 8 302 1,69 2,12

Data source: NSI

Below we present tables of dynamic data series for reported values of the most significant

Bulgarian export markets for industrial sector “Optical, photo, technical, medical etc. apparatus”

(ITC code 90).

32 | P a g e







Table 25 A list of Bulgarian export markets for product group “Optical, photo, technical, medical, etc.

apparatus” (code: 90 by ITC, Geneva) – thousand Euro

Importers Exported

value in

2001

Exported

value in

2002

Exported

value in

2003

Exported

value in

2004

Exported

value in

2005

Exported

value in

2006

Exported

value in

2007

Exported

value in

2008

Exported

value in

2009

Exported

value in

2010

World 31,942.51 39,143.52 48,679.49 60,540 82,636.03 134,133.83 176,321.08 194,614.84 179,329.99 223,904.56

Belgium 1,723.22 1,725.33 3,566.89 4,880.79 22,548.78 56,292.55 80,130.23 83,315.39 65,727.1 85,001.95

Germany 7,469.5 7,662.51 9,941.89 15,320.11 15,119.77 18,772.94 22,125.22 30,193.63 26,244.95 34,228.81

Italy 3,512.24 4,278.45 4,988.17 4,777.08 5,445.69 5,954.36 7,098.34 7,550.28 7,216.97 15,749.08

USA 1,737.72 3,102.85 2,526.33 2,789.71 6,240.62 9,821.5 12,978.36 8,250.32 7,004.72 9,356.97

Russian Federation 448.37 307.64 323.3 485.59 830.26 745.09 1,156.31 1,762.34 9,072.66 7,902.03

Austria 1,806.87 3,145.14 3,019.23 4,534.29 4,384.17 5,112.15 7,333.98 8,994.54 8,427.32 7,336.47

Switzerland 528.68 949.36 1,101.51 1,137.59 2,734.09 4,073.32 3,902.26 6,439.04 5,303.2 4,762.45

Czech Republic 74.73 97.26 191.68 303.09 328.41 574.74 2,536.58 2,005.66 3,268.97 3,865.54

Poland 99.27 142.72 552.97 631.91 146.14 729.97 1,928.88 4,205.02 3,724.28 3,761.61

United Kingdom 1,638.45 1,180.88 2,150.03 2,219.71 2,233.04 5,305.59 897.32 1,794.29 2,393.47 3,662.96

Romania 194.07 205.09 1,260.51 348.11 397.47 636.03 3,158.14 3,666.05 3,580.16 3,211.12

Hong Kong, China 17.85 158.58 256.17 156.77 96.36 121.79 172.17 140.01 137.67 3,205.84

Turkey 324.57 458.82 575.05 721.14 950.71 1,019.72 1,405.81 1,480.29 1,726.62 3,065.77

Netherlands 1,777.87 3,418.95 4,078.34 3,900.78 3,604.5 4,444.27 5,380.29 4,100.35 1,953.21 2,944.53

Sweden 3,168.71 3,205.4 3,358.42 3,776.97 4,244.46 4,468.95 4,652.95 3,602.85 1,755.3 2,802.95

India 12.27 60.26 68.9 133.46 224.83 671.86 698.89 1,603.98 1,705.83 2,424.9

China 1,029.47 971.56 695.18 790.28 1,173.93 1,930.39 2,403.8 2,255.09 1,277.04 2,421.14

France 1,093.04 573 709.31 1,314.46 1,583.44 2,149.3 2,870.7 1,636.61 1,661.37 2,280.31

Greece 88.11 120.52 187.27 108.53 199.94 375.73 592.38 535.57 4,456.38 1,759.19

Hungary 65.81 218.84 128.97 823.25 101.98 858.13 598.94 1,561.17 2,146.09 1,743.37

Spain 530.91 235.75 384.25 883.54 554.85 855.74 1,348.17 1,483.68 1,136.5 1,592.76

Slovakia 1.12 16.92 72.43 78.79 18.47 458.52 794.46 958.99 975.89 1,535.52

FYROMacedonia 286.64 208.27 223.48 317.56 448.05 600.21 1,529.83 3,114.85 2,260.1 1,425.57

Denmark 163.96 695.63 488.48 276.56 537.18 1,004.6 607.7 517.22 1,480.68 1,229.02

Kazakhstan 90.34 150.12 29.15 28.94 33.72 28.66 37.94 91.07 1,247.64 994.06

Canada 42.38 189.24 186.38 324.8 516.3 550.86 311.51 396.24 691.94 988.79

Serbia 0 0 0 0 0 641.61 739.74 1,280.47 1,000.98 921.77

Ukraine 761.78 158.58 595.37 752.5 635.95 682.2 1,509.4 1,115.99 638.88 847.96

Portugal 2.23 6.34 5.3 23.31 12.85 390.85 381.54 534.89 496.91 776.42

Israel 155.03 205.09 110.42 76.38 226.44 382.1 256.79 961.71 624.54 654.42

Jordan 5.58 6.34 0.88 0 7.23 5.57 104.32 25.15 65.97 630.32

Iran (Islamic Rep.) 78.07 12.69 2.65 256.46 32.92 203.79 153.2 108.74 276.06 572.34

Mexico 52.42 37 17.67 7.24 22.48 9.55 299.84 95.15 163.48 515.86

Japan 8.92 68.72 168.72 234.75 186.29 334.34 559.55 409.15 479.7 513.6

Saudi Arabia 6.69 1.06 14.13 24.12 17.67 3.18 78.79 300.41 180.69 463.14

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Table 26 Index of exported values for product group “Optical, photo, technical, medical, etc. apparatus”

(code: 90 by ITC, Geneva) – thousand Euro

Importers Index of exported values for: (2009=100) Exported value

for 2010 (Euro thousand) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

World 18 22 27 34 46 75 98 109 100 125 223,904.56

Belgium 3 3 5 7 34 86 122 127 100 129 85,001.95

Germany 28 29 38 58 58 72 84 115 100 130 34,228.81

Italy 49 59 69 66 75 83 98 105 100 218 15,749.08

USA 25 44 36 40 89 140 185 118 100 134 9,356.97

Russian Federation 5 3 4 5 9 8 13 19 100 87 7,902.03

Austria 21 37 36 54 52 61 87 107 100 87 7,336.47

Switzerland 10 18 21 21 52 77 74 121 100 90 4,762.45

Czech Republic 2 3 6 9 10 18 78 61 100 118 3,865.54

Poland 3 4 15 17 4 20 52 113 100 101 3,761.61

United Kingdom 68 49 90 93 93 222 37 75 100 153 3,662.96

Romania 5 6 35 10 11 18 88 102 100 90 3,211.12

Hong Kong, China 13 115 186 114 70 88 125 102 100 2,329 3,205.84

Turkey 19 27 33 42 55 59 81 86 100 178 3,065.77

Netherlands 91 175 209 200 185 228 275 210 100 151 2,944.53

Sweden 181 183 191 215 242 255 265 205 100 160 2,802.95

India 1 4 4 8 13 39 41 94 100 142 2,424.9

China 81 76 54 62 92 151 188 177 100 190 2,421.14

France 66 34 43 79 95 129 173 99 100 137 2,280.31

Greece 2 3 4 2 4 8 13 12 100 39 1,759.19

Hungary 3 10 6 38 5 40 28 73 100 81 1,743.37

Spain 47 21 34 78 49 75 119 131 100 140 1,592.76

Slovakia 0 2 7 8 2 47 81 98 100 157 1,535.52

FYROMacedonia 13 9 10 14 20 27 68 138 100 63 1,425.57

Denmark 11 47 33 19 36 68 41 35 100 83 1,229.02

Kazakhstan 7 12 2 2 3 2 3 7 100 80 994.06

Canada 6 27 27 47 75 80 45 57 100 143 988.79

Serbia 0 0 0 0 0 64 74 128 100 92 921.77

Ukraine 119 25 93 118 100 107 236 175 100 133 847.96

Portugal 0 1 1 5 3 79 77 108 100 156 776.42

Israel 25 33 18 12 36 61 41 154 100 105 654.42

Jordan 8 10 1 0 11 8 158 38 100 956 630.32

Iran (Islamic Rep.) 28 5 1 93 12 74 55 39 100 207 572.34

Mexico 32 23 11 4 14 6 183 58 100 316 515.86

Japan 2 14 35 49 39 70 117 85 100 107 513.6

Saudi Arabia 4 1 8 13 10 2 44 166 100 256 463.14

Data source: ITC

After a review of the above tables we can define Bulgaria’s largest export market for the

delineated sector 90 of trade activity (optical, photo, technical, medical, etc. products). Among the

first ten are Belgium, Germany, Italy, USA, the Russian Federation, Austria, Switzerland, the Czech

Republic, Poland and the UK. We can clearly see that 7 out of the 10 leading markets are EU

34 | P a g e







Member States, while Switzerland is an EFTA member, and the remaining two countries are among

the World’s largest economies and traditionally pursued markets.

Herewith we present also the graphical expression of the biggest Bulgarian export markets

for product sector “90”. We can observe that Belgium has shown a remarkable increase as a trade

partner and importer for the sector, especially after 2004. Germany, on the other side, remains

currently second placed but continues to maintain a stable growth over the last decade.

Figure 3 Leading 5 importers of Bulgarian manufacturing production from sector 90 by STC of ITC (optical,

photo, technical, medical etc. apparatus) for the period 2001 - 2010

Data source: ITC

After the definition of the strongest and most stable traditional importers of Bulgarian

production from sector “Manufacturing of medical, precision and optical apparatus and

instruments”, the present analysis shall focus on the products (or services) with an export potential

and advantages, as well as the identification of possible export destinations for Bulgarian SMEs

from the sector.

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GOODS AND MARKETS WITH AN EXPORT POTENTIAL

An initial list of the product groups within sector C26 “Manufacturing of computer and

communication equipment, electronic and optical products” reveals that it encompasses four major

production groups: electrical equipment, medical technology, office and computing equipment, as

well as radio and television equipment. Because of this more widely outlined manufacturing sector

we can cite specific products included such as electronic elements and printed (circuit) boards,

computer technology, radio-, tv-, and telecommunication equipment, even some consumer

electronics.

But the production lines which are of our specifically defined interest within the sub-sector

to be analysed are: meters, testing and navigation apparatus; manufacture of clocks (and parts

thereof); electro-medical, emitting and therapeutic apparatus; optical instruments, elements and

photographic equipment; magnetic and optical storage media (or codes 26.5, 26.6, 26.7 and 26.8

according to КИД-2008, as they were identified above in these annexes).

Table 27 Product groups – manufacturing and sales for 2010

Name of position

NCEA-

2008

code

Manufactured Total sales

Quantity

(number)

Quantity

(number)

Value, BGN

thousand (no

VAT or excise

taxes added)

Compasses, incl. for navigationl other

navigation devices/apparatus

26.51.11 2 366 2 160 549

Telemeters, theodolites and

tachymeters; other devices and

apparatus for geodesy, hudrography,

oceanography, hydrology, meteorology

and geophysics

26.51.12 Confidential

information

Confidential

information

3 335

Radiolocation and radio-probing

devices, radio-navigation apparatus and

devices for radio remote control


information

Confidential

information

22 104

Instruments for measuring of electric

variables without a registering device

26.51.43 1 438 1 438 363

Devices and apparatug for measuring

and verification of other electric

parameters, not elsewhere defined

26.51.45 3 926 3 986 7 454

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Densimeters, areometers, hydrometers,

thermometers (without medical ones),

pyrometers, barometers, hygrometers

and psychrometers

26.51.51 3 914 876 3 908 643 66 120

Instruments and apparatus for physical

and chemical analyses, not elsewhere

defined

26.51.53 15 100 15 061 7 464

Gas, liquid or electricity counters 26.51.63 394 363 261 221 13 457

Cycle or production counters,

taximeters; speedometers and

tachometers; stroboscopes

26.51.64 N/A 111 N/A

Thermostats, manostats and other

devices and apparatus for automatic

control and checkup

26.51.70 158 733 168 781 N/A

Parte for devices and apparatus for

automatic control and checkup and for

instruments and measuring machinery

n.e.d.


information

Confidential

information

2 612

Instruments and apparatus for

measuring, registering and reporting of

time; clock switches and other devices,

allowing the activation of a mechanism

at a specific time, provided with a

clockwork or with synchronous motor


information

Confidential

information

4 451

Liquid chrystal devices; lasers, without

laser diodes; other optical devices and

elements, n.e.d.

26.70.23 179 154 178 936 6 341

Dentistry instruments and apparatus 32.50.11 2 434 2 435 844

Syringes, needles, catheters, tubes and

similar instruments; ophtalmological

and other instruments and apparatus,

n.e.d.

32.50.13 109 773 956 Confidential

information

57 583

Data source: NSI

These product groups are marked by a change in demand that follows the world and local

trends of economic and social development. What we have to be able to point out – and what should

receive its due attention when planning mid-term measures within the present strategy – are the

countries which have reported considerable growth in their demand for products from the analysed

groups.

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Table 28 A list of significant Bulgarian export markets reporting growth for the period 2008-2010 for

product group “Optical, photo, technical, medical, etc. apparatus” (code: 90)

Importers Exported growth in value

between 2008-2009, %

Exported growth in value

between 2009-2010, %

Exported value in

2010, Euro thousand

World -7.9 24.9 223,904.56

Hong Kong, China -1.7 2,228.6 3,205.84

Norway 46.8 1,078.3 270.35

Uzbekistan 1,693.5 907 122.75

Jordan 162.3 855.5 630.32

South Africa -52.5 789.4 204.08

Luxembourg 448.6 663.5 142.33

Lebanon 92.1 388.2 248.52

Lithuania -50.9 273.3 198.06

Cyprus 111 253.2 258.31

Mexico 71.8 215.5 515.86

Saudi Arabia -39.9 156.3 463.14

Italy -4.4 118.2 15,749.08

Azerbaijan -19 116.5 302.74

Latvia 18.2 112.3 141.58

Iran (Islamic Republic of) 153.9 107.3 572.34

China -43.4 89.6 2,421.14

Singapore 35.2 86 454.86

Turkey 16.6 77.6 3,065.77

Chinese Taipei 41.8 70.4 420.22

Republic of Korea 2 68.8 314.79

Sweden -51.3 59.7 2,802.95

Slovakia 1.8 57.3 1,535.52

Portugal -7.1 56.3 776.42

United Kingdom 33.4 53 3,662.96

Netherlands -52.4 50.8 2,944.53

Canada 74.6 42.9 988.79

India 6.3 42.2 2,424.9

Spain -23.4 40.1 1,592.76

France 1.5 37.3 2,280.31

United States of America -15.1 33.6 9,356.97

Ukraine -42.8 32.7 847.96

Germany -13.1 30.4 34,228.81

Belgium -21.1 29.3 85,001.95

Finland -31.8 27.6 361.48

Czech Republic 63 18.2 3,865.54

Japan 17.2 7.1 513.6

Israel -35.1 4.8 654.42

Poland -11.4 1 3,761.61

Data source: МТЦ

38 | P a g e







The conclusions we can draw from the above numbers is that besides our traditional and

principal trade partners for the analysed product group (most of the leaders in the trade rankings

continue to report growth, amongst which Italy and the UK) in a strategical perspective worth

noting are the trends in successful positioning and occupying ever wider shares (corresponding to

increased demand) on markets such as the Czech Republic, France, Slovakia among the European

ones; but climbing the rankings and requiring attention are trade relations with China (Hong Kong

quoted separately but just as important), India, Iran, Uzbekistan and Jordan among the Asian

partners; as well as the increasing importance of trade exchanges with Turkey and Canada.

Last subject of topical attention – but likely to be just as important – are the export markets

which present themselves as the largest in global terms (leading 20-30 countries); and those

amongst them that report significant net growth in demand over the last few years (in this case data

for the period 2007-2010) and where Bulgarian enterprises currently do not have strong enough

export positions.

Table 29 Leading export markets (top 30) for medical, precision and optical apparatus (ITC code 90) with

an accentuated growth in 2007 - 2010

Importers Growth in imports

2007 - 2008, %

Growth in imports

2007 - 2008, %

Growth in imports

2007 - 2008, %

Total imported value,

2010, Euro thousand

World N/A N/A N/A 347,100,646

China 4 -9 41 67,716,119

USA -1 -8 24 45,040,262

Germany 3 0 16 23,281,585

Japan -4 -11 30 16,936,568

France 5 -4 15 13,767,563

Netherlands 9 -9 22 12,389,997

Republic of Korea -2 -12 51 11,358,263

United Kingdom -5 -10 11 11,170,472

Hong Kong 1 -6 30 10,388,678

Italy 2 -5 10 8,635,898

Canada -1 -5 19 8,451,962

Chinese Taipei -23 -29 56 7,862,056

Mexico -9 -27 25 7,683,979

Belgium 12 3 8 7,336,258

Singapore -6 -8 33 6,344,563

Spain -2 -8 7 5,081,630

Australia 7 -1 20 4,938,264

Switzerland 10 -5 15 4,749,597

Brazil 22 -14 30 4,560,024

Russian Federation 26 -36 30 4,521,010

Poland 29 -7 22 4,126,398

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Malaysia 10 -14 39 3,610,705

Thailand 12 -6 43 3,164,651

Sweden -1 -12 17 3,147,091

India 13 5 -6 3,095,269

Austria -1 -8 14 2,764,33

Turkey 7 -13 27 2,588,858

Czech Republic 26 -4 11 2,276,396

Denmark -2 -7 6 1,956,378

Saudi Arabia -92 -55 4,009 1,841,458

Data source: ITC

After classifying all export markets in groups of largest at present and traditional (for

Bulgaria); those with the largest considerable growth rates among the above; as well those in a

global perspective (especially reporting increased demands!), on which Bulgarian enterprises are

not well positioned, we can infer and combine said export markets in a list that represents a priority

ranking for Bulgarian companies from the analysed sector:

Belgium, Germany, Italy, China (+Hong Kong), Turkey, Japan, Republic of Korea,

Canada, Taiwan, USA, Russian Federation, Austria, Switzerland, Singapore, Mexico, France,

India, Czech Republic, Poland, the United Kingdom, Australia, Brazil, Malaysia, Thailand,

Sweden, Saudi Arabia, Slovakia, Canada, Jordan, Iran.

Undoubtedly, it is necessary to seek comparative production and market advantages which

may position permanently the Bulgarian enterprises from the sector on those same markets that

undergo a positive economic development and currently increase their demand in this category of

high-technological product groups.

40 | P a g e







COMPETITIVENESS OF PRODUCTS AND SERVICES FROM THE SECTOR WHEN EXPORTED ON

INTERNATIONAL MARKETS.

What is widely known in economics and market studies as a “comparative advantage” (usually of production) is a principle that affirms

the superior position of a given country or an enterprise when manufacturing a specific product (or in a wider definition, offering a service). This

advantage exists as a result of a better resource combination – material, human resource, technological support or any other type of factor that

conditions the better final price efficiency of the country of enterprise which is said to have the “comparative advantage”.

For Bulgarian manufacturing we have factored in among the comparative advantages of production mainly the low labour costs; and we

also have in place some logistic (basically geographic), energy and other minimal resource advantages. The entire “picture” of competitiveness

and specialisation according to comparative advantages could be emphasised by standardised coefficients – such as the popular Balassa one.

41 | P a g e







Table 30 Coefficient of specialisation of the Bulgarian industry in the sector Optical, medical and precision apparatus (ITC code 90)

Specialisation and

industrial productiveness

Export

(€ thousand)

Share of

total

export (%)

Increase in

export value

(%)

Increase

in export

volume

(%)

World

increase in

export value

(%)

World

increase in

export

volume

(%)

Number

of

exported

products

Share of

top 3

products

(%)

Share of top

3 export

markets (%)

Net trade

balance

(€ thousand)

Balassa index

(comparative

advantage

coefficient)

Sp

ecia

lisa

tio

n,

Ind

ex L

afa

y

yea

r

Total

manufacturing industry

11 513 121 100,00 4 -4 3 544 17,6 29,9 -4 770 748

20

09

90 Optical, medical,

precision apparatus

173 755 1,51 19 18 0 1 120 57,8 56,3 -63 351 0.5 0

Total manufacturing

industry

15 952 853 100,00 17 1 3 571 21,7 27,8 -10 308

654

20

08

90 Opt/med/prec. apparatus 202 229 1,27 32 33 4 5 122 58,3 62,9 -103 099 0.5 0

Total manufacturing

industry

12 620 879 100,00 13 8 3 527 20,1 31,9 -7 819 521

20

07

90 Opt/med/prec. apparatus 164 096 1,30 37 48 -1 5 125 62,2 65,4 -57 903 0.4 0

Total manufacturing

industry

11 448 261 100,00 15 16 3 528 24,2 31,4 -6 191 562

20

06

90 Opt/med/prec. apparatus 127 823 1,12 47 57 2 6 128 57,0 63,3 -89 433 0.4 0

Total manufacturing

industry

9 913 593 100,00 3 496 20,0 32,2 -5 424 724

20

05

90 Opt/med/prec. apparatus 86 953 0,88 129 48,0 53,2 -110 116 0.3 0

Source: ITC

42 | P a g e







Table 31 Specialisation coefficients (revealed comparative advantage) in industrial sectors in EU and World’s largest economies for 2009

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Careful analysis of the above table reveals that Bulgarian industry reports higher comparative advantages in more labour-intensive

sectors or those that rely on large industrial complexes and basic processing of resources. High-technological sectors cede in the

specialisation rankings to almost all EU-27 countries and are comparable only with those of India, Brazil and Russia.

In our efforts to evaluate various perspectives in the development of markets for the sector in question, as well as to outline

strategic goals and measures for the SMEs in the branch to follow, we need to position Bulgarian exporters in the overall trend regarding

growth of production, exports and competiveness for the economic activity analysed.

44 | P a g e







Figure 4 General graphic outlook of growth trends in exported values in production group „Optical, photo, technical, medical, etc.

apparatus” (ITC code 90)

45 | P a g e







Colour coding facilitates outlining some of the general tendencies, such as the

exceptional growth in total exported values that has marked the development of some

African and almost all Asian countries, along with exporters from Central and South

America. A substantial increase is noted in most Central and Eastern-European countries.

Good indicators receive the export placement of industries in the same sector from the USA,

Canada, Australia and most of South America and Western Europe. In this line of thought

we should point out the apparent commitment of the mentioned regions and countries in

investing and programming their development and competitive positioning on the markets

for “Medical, precision and optical apparatus and instruments”. Thus representing ever more

effectively direct competitors for the Bulgarian SMEs from the sector on the already

dynamic global markets.

Maintaining and expanding current market positions in the sector could be

preferentially achieved through a systematic and planned strategical development, following

a precise Action Plan and abiding by a set of categorised and quantifiable indicators for its

implementation and frequent evaluation.

Before attempting to expand to new market positions, however (listed above as

perspective and potential markets), the sustainable development of the enterprises in the

sector requires maintaining present traditional partners and the good working relations in

place. That is why it is essential to pay the necessary attention to the direct competitors not

only generally present on the global markets for the sector’s product groups but also to those

that are particularly exporting such production to Bulgaria’s leading priority markets.

Hence, dynamic progressions of percentage changes in the values of imported production

for sector 90 (ITC code) will be presented for the leading five Bulgarian export markets:

Belgium, Germany, Italy, USA and the Russian Federation.

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Table 32 Belgium: growth of imports from principal trade partners for product group “Optical,

photo, medical, etc. apparatus” (ITC code 90) between 2006 - 2010

Exporters

Imported

growth in

value between

2006-2007, %

Imported

growth in

value between

2007-2008, %

Imported

growth in

value between

2008-2009, %

Imported

growth in

value between

2009-2010, %

Imported

value in 2010,

Euro

thousand

World 7.5 11.6 2.8 7.8 7,336,257.79

United States of America 14.5 18.4 7 -2 1,743,086.28

Germany 8.6 0.8 -10.7 8.9 951,492.7

Netherlands -17.8 16.6 -11.1 9.7 657,222.98

France 23.8 9.1 -3.3 -6.8 534,601.87

United Kingdom 18.8 23.5 -3 13.9 493,820.55

Luxembourg 0.9 41.9 859.2 46.8 417,440.57

Ireland 0.7 18.9 57 6.6 346,460.14

Switzerland 35.3 -3.4 3.1 21.4 319,866.02

Japan -9.8 2.2 7.6 10 292,802.73

China -39.8 8 -4.9 37.7 200,049.37

Spain 5.3 -8.4 -3.9 0 160,719.22

Italy 12.8 -3.9 -4.1 7 140,362.82

Mexico 154.4 84.5 -23.5 -9 122,677.59

Israel -1.7 13.7 38.2 48 93,919.87

Denmark 24.2 15 -11.4 -4.8 91,446.77

Bulgaria 57.3 6.7 -20.6 25.2 90,999.44

Singapore 16.3 19.7 -2.2 2.3 76,217.32

Sweden 5.5 -12.1 -24.9 41.8 72,335.21

Hungary 106.8 41.5 -34.6 23.3 48,596.75

Canada -12.4 2.8 14 40.5 44,370.48

Czech Republic -13.7 11.3 -8.8 25.2 43,002.15

Poland 6.3 12 -10.9 37.4 34,774.04

Slovakia 75.1 45.4 -34.9 47.5 29,731.44

Austria 100.7 14.9 -46.1 2 27,947.4

Finland -22.7 47.3 -23.9 20 24,797.29

Philippines -27.2 -11.1 -21.9 -12.5 23,256.49

Malaysia 2.8 0 37.8 46.2 22,145.71

Dominican Republic 27.6 -28 59.3 -49.4 21,219.42

Republic of Korea -62.5 -3.6 30.5 19.9 20,412.12

Portugal 36.4 -17.7 -19.1 28.8 20,063.45

Brazil 21.2 -5.3 10 9.1 19,497.89

Thailand -20.9 109.7 -13.1 8.5 18,689.84

Costa Rica 191.9 7.2 595.6 38.9 15,732.51

Romania 30.9 98.6 195 29.9 15,616.54

Tunisia 38.5 256.3 123.8 1.2 11,780.37

Source: ITC

47 | P a g e







Table 33 Germany: growth of imports from principal trade partners for product group “Optical,


Exporters

Imported

growth in value

between 2006-

2007, %

Imported

growth in value

between 2007-

2008, %

Imported

growth in

value between

2008-2009, %

Imported

growth in

value between

2009-2010, %

Imported

value in

2010, Euro

thousand

World -6.3 2.5 -0.4 16 23,281,584.77

United States of

America

-2.7 -3.7 -5.1 17 4,720,155.36

Japan -4.5 8 -10.7 30.7 2,576,794.88

Switzerland 8.9 9.2 -9.4 7.8 2,412,944.37

China -40.6 8.1 -3.2 30.9 1,552,034.66

France -1.8 0 -4.4 11.4 1,427,626.51

Netherlands -46.4 16.4 37.9 0.8 1,116,059.39

United Kingdom -8.1 -0.7 4.1 13.3 1,002,174.71

Hungary 13.8 -11.2 5.8 21.4 930,174.62

Italy -9.1 16 8.2 12 816,711.68

Austria -10.9 22.4 28.3 18.9 608,180.41

Belgium 0.8 3.2 43.6 9.2 516,260.71

Czech Republic -9.3 9.9 59.2 -3.9 491,949.16

Ireland -10.5 -6.2 6.8 28 440,193.26

Denmark -1.9 -1.2 15.4 16.4 408,651.42

Poland 7.1 20.5 4.1 21.6 316,191.76

Malaysia -6.6 6.7 -4 25.7 310,076.78

Mexico 43 12.5 41.4 15.9 307,551.72

Singapore 62.1 -40.4 -10.8 56.9 280,013.99

Republic of Korea -4.6 -13.7 13.5 14.9 277,580.05

Sweden 7.1 -15 -2.8 8 171,601.17

Spain -9.3 15.8 -5 5.9 159,417.91

Thailand -5.7 0.3 10.5 12.8 143,966.29

Canada -3.3 -6.8 -20.4 21.6 136,687.81

Chinese Taipei 23.7 -15.5 -30 5 133,222.91

Philippines 19.6 31.1 28.4 33.4 133,213.87

Israel 0.3 38.4 1.3 24.9 123,325.98

Slovakia -32.4 34.2 86 -4.4 106,927

Finland -10.6 0 -4.8 43.8 92,425.77

Romania -6.2 -7.7 -10.1 23.4 91,246.45

Hong Kong, China 25.5 33.9 7.9 16.2 88,185.2

Portugal 2 -5.9 3.4 27 67,991.47

Indonesia 7.7 -0.7 -0.5 17.9 65,908.46

Russian Federation 15.7 17.3 -28.1 34.3 51,477.26

Bulgaria -6.1 8.8 0.6 10.3 45,787.77

Brazil 2.7 -17.2 -6.5 58.6 37,131.17

Source: ITC

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Table 34 Italy: growth of imports from principal trade partners for product group “Optical, photo, medical,

etc. apparatus” (ITC code 90) between 2006 - 2010

Exporters

Imported

growth in

value between

2006-2007, %

Imported

growth in

value between

2007-2008, %

Imported

growth in

value between

2008-2009, %

Imported

growth in

value between

2009-2010, %

Imported

value in 2010,

Euro

thousand

World -7.1 2 -4.8 10.4 8,635,897.52

Germany -2.2 -1.6 -12 16.1 2,045,709.11

Netherlands -25 0.4 11.3 3.8 1,098,591.79

United States of America -9.2 1.2 -10.1 7.4 989,553.16

France -0.2 1 6.6 1.7 799,709.48

China -5.9 6.4 -11.4 28.1 750,895.09

Belgium -9.9 11.6 5.3 -11.9 458,997.56

United Kingdom -2.5 -2.9 -21.9 13.4 392,434.68

Switzerland 3.6 3.9 -2.3 4.9 241,119.87

Ireland 1 -9.8 16 18.6 201,508.83

Japan -18.8 2.7 -15.3 -4.2 171,915.95

Sweden 8.2 -10 -7.7 101.7 154,822.64

Spain -2 9.2 -26.6 54.8 137,362.57

Denmark 5.8 2.4 -10.9 13.9 125,360.8

Czech Republic 16.8 19.5 13.8 13.7 99,927.91

Austria 6.2 11.1 -12.7 16.3 94,803.23

Slovenia 7.1 17.2 -15.9 -1.9 93,851.34

Hungary -48.8 104.7 -16.4 39.7 63,612.33

Mexico 61.8 56.5 297 -18.5 63,214.71

Canada 7.3 -15 -5.4 10.6 56,320.29

Republic of Korea 3 -8.7 -14.8 52.7 50,091.6

Finland 12.4 -8.3 -5.7 25.1 39,153.17

Poland 39 66.5 40.9 5.3 38,992.77

Thailand -21.3 8.3 -1.8 21.5 38,976.2

Israel 11.1 22.8 -8.3 -34.1 38,594.39

Romania -7.9 -0.4 12.7 24.8 38,540.92

Chinese Taipei 3.8 -6 -15 4.3 36,387.88

Slovakia 9.9 11.7 13.3 128.4 30,806.08

Singapore -15.8 24.1 -13.8 -9.5 30,693.87

Malta 35.8 -11.7 25.7 5.4 19,948.23

Malaysia 4.7 -18.3 -12.4 73.3 19,722.31

Luxembourg 30.1 -13.6 -36.3 1.8 17,454.04

Brazil -5.9 -1.7 -15.5 9.3 16,307.86

India 15.7 18.7 -6.4 9.7 14,209.79

Bulgaria 5.2 -13.1 27.2 99.5 14,078

Norway -1 35.9 -8.1 -19.4 14,068.21

Source: ITC

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Table 35 Russian Federation: growth of imports from principal trade partners for product group “Optical,


Exporters

Imported

growth in

value between

2006-2007, %

Imported

growth in

value between

2007-2008, %

Imported

growth in

value between

2008-2009, %

Imported

growth in

value between

2009-2010, %

Imported

value in 2010,

Euro

thousand

World 38.5 25.6 -35.7 29.9 4,521,009.68

Germany 48.9 14.1 -32.6 35.8 1,067,081.58

USA 37.3 28 -26.3 19.7 821,739.96

China 38.9 37.4 -44.1 68.3 526,943.09

Japan 37.7 29.3 -39.4 7.7 373,945.91

France 15.7 50.6 -38.6 62.7 255,764.19

Italy 35.4 -25.7 -29.1 50.6 176,036.03

United Kingdom 54.9 36.4 -11.2 19.4 172,275.92

Switzerland 52 26 -1.6 -12.6 128,805.37

Republic of Korea 26.8 86.6 -73 45.7 118,241.22

Ukraine 14.2 17.8 -13.3 22.9 81,064.11

Ireland 44.2 49.9 15 28.2 62,573.08

Austria 51.4 30.8 -40.4 49.8 54,412

Denmark 30 29.2 -44.8 19.8 46,089.76

Canada 152.9 -14.9 -40.3 113.1 44,811.03

Israel 117.7 4.7 -46.2 31.6 42,503.61

Finland 9.7 15.3 -30.7 27.3 35,485.69

Poland 31.9 96.3 -53.4 35.2 27,736.54

Slovakia 40 7.9 -33.3 33.6 26,729.68

Chinese Taipei 1,047.6 122.9 -94.4 78.8 25,051.83

Czech Republic -17.1 -8 -21.1 52.3 24,843.22

Spain -31.2 -20.7 -32.3 38.1 22,827.99

Belgium -20 39.4 -16.9 75.3 22,275.24

Mexico -16.6 -4.3 -8.2 56.4 21,135.08

Thailand -2.2 61.4 -9.4 54.3 20,595.12

Singapore 7 27.5 -16.3 66.7 17,350.12

Australia 140.8 -20.8 23.1 21.3 14,137.5

Hungary -17 -75.5 105.7 -26.7 13,979.35

India -42.7 -50.6 -32.5 62.4 10,387.93

Lithuania 39.1 -36.5 -38.2 107.7 9,535.45

Uzbekistan 567.6 -79.8 1,297.3 79.8 7,206.94

Portugal -35.3 130.2 -40.7 275.2 7,096.24

Slovenia -18.3 -18.5 60.4 51 6,494.53

Romania 60.5 67.9 -68.4 54.6 6,482.48

Bulgaria 10.6 93.4 265.4 -3.2 6,241.49

Turkey 82.7 32 -63.2 64.4 5,896.59

Source: ITC

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Table 36 USA: growth of imports from principal trade partners for product group “Optical, photo, medical,

etc. apparatus” (ITC code 90) between 2006 - 2010

Exporters

Imported

growth in

value between

2006-2007, %

Imported

growth in value

between 2007-

2008, %

Imported

growth in value

between 2008-

2009, %

Imported

growth in value

between 2009-

2010, %

Imported

value in 2010,

Euro thousand

World -2.3 -0.8 -8 23.6 45,040,262.35

Mexico 2.1 -7.1 2 26.8 6,655,145.73

Germany 2.4 -6.9 -10.7 19.6 5,566,596.97

China 6.1 3.1 -5 32.4 5,481,271.2

Japan -14.9 -5.6 -20.7 33.1 4,694,539.48

Ireland -6.9 22 -5.7 15.8 3,838,097.02

United Kingdom 1.9 -4.6 -12.1 14.4 2,089,703.81

Canada -4.1 -0.1 -13.1 20.3 1,949,185.86

Switzerland 0.9 11.2 1 21 1,798,058.57

France 8.1 -0.1 -3.3 22 1,628,181.19

Malaysia 14.1 10.8 -12.4 54.4 1,064,228.18

Singapore 16.7 -16 -10.1 27.8 950,794.6

Netherlands -53.6 -6.1 -16.5 27.8 736,465.4

Chinese Taipei -5.6 -6.2 -6.8 33.6 692,335.9

Costa Rica 0.6 14.2 4.4 16.7 670,267.76

Australia 11.9 3 -4.9 23.3 579,101.14

Denmark -1.1 3.7 2.5 11 502,008.75

Sweden 14.7 -9.2 -9.6 23.7 496,173.16

Dominican Republic -7.8 6.8 11.2 16.6 448,838.57

Thailand 17.7 -10 -12.4 36.7 409,293.04

Austria 9.1 1 -12 13.3 289,420.66

Philippines 34 -16.5 -10.5 35.5 228,221.19

India 0.9 25.2 -11.5 27.9 212,117.41

Hungary 10.8 -27 -32.9 79.1 136,252.53

Spain 2.1 4 -22.9 76.9 134,673.33

Poland -28.4 59.7 8.8 22.7 126,613.16

New Zealand 4 1.8 1 7 101,717.98

Viet nam 226.3 111.9 10.6 32.1 67,445.49

Romania 44 29.4 61.7 39.1 35,199.53

South Africa 6.8 -9 15.9 8.8 21,184.03

Turkey 7.7 88.1 53.4 57.5 20,438.48

Slovakia -47.7 19.3 -12.3 109.3 14,689.5

Lithuania -4.7 23.9 6.7 41.8 13,005.62

Estonia 13.2 -4.2 34.8 34.7 12,305.26

Bulgaria 74.8 -37.5 -30.4 84.7 11,061.18

Slovenia -14.9 20.2 -27.9 57.2 9,768.15

Source: ITC

After careful consideration of the above presented data on the percentage changes of

exported production by the sector “Medical, precision and optical apparatus and instruments” we

can infer the clearly outlined trend that certain countries (which in overall trade volumes and

concerned importing partners qualify as direct competitors for Bulgarian enterprises in the sector)

51 | P a g e







are experiencing a successful change of positioning and having ever larger market shares, as well as

bigger volumes of exported production. This is especially the case of Central and Eastern-European

countries, some Latin American countries, and Central and Eastern-Asian ones.

Considering the fact that the analysed markets are among the leading importers on the

market – and no less Bulgarian traditional and largest partners – the need to implement systematic

investment and structural measures is obvious, in order to recover from the present delay in re-

positioning wherever specific enterprises consider that there may be one. Even with generally

positive trends in the percentage changes which Bulgarian companies experience in their exported

production, a development of a mid- and long-term approach is among the priorities of the sector.

And as for our direct European competitors, we can safely regard some bench marketing analysis to

be able to lead us to the adoption and use of the best practices in the business, and as such is

practically indispensable.

What facilitates to a great extent the elaboration of such measures is the overall policy and

priorities of the European community. As we may see further in the herewith applied chapters on

the strategic approach and planning, it follows to a great extent the economic principles of

sustainable development of European SMEs that have at their basis a knowledge-based economy,

investments in innovations and scientific developments, technological updates and human resource

VET programmes – all of which should raise the general European competitiveness and

perspectives for a long-term upward economic development. In the last decade the Bulgarian

national authorities have repeatedly emphasised their commitment to prioritise various forms of

support to such development, with the ultimate goal of the present strategy being namely defining

concrete measures and steps in that direction.

Given the available information from national sources we can interpret how the Bulgarian

enterprises are positioned at the high-technology global markets and to deduce the necessary

conclusions: which areas and in what way could we plan to stimulate the sector and its enterprises.

According to MEET data we have information on the leading export markets on a global

scale for some product groups from the analysed sector. Leading global markets frequently coincide

with the leading Bulgarian export partners. Percentage shares out of the total global import are

52 | P a g e







noted within the product groups, and there is data on how much of that is satisfied by Bulgarian

exports.

Table 37 Leading export markets for product groups and a share of the total global imports

Position 1 2 3 4 5

Medical, surgical, dental

and other instruments Germany 27,4% Italy 7,6% Poland 7,4% Switzerland 5,5% Turkey 4,5%

Densimeters, hydro-, thermo-,

pyro-, barometers Belgium 88.3% USA 5,0% Germany 3,3% Spain 0,8% Czech

Rep.

0,3%

Instruments and apparatus for

tuning and control UK 15,1% Russia 13,5% Sweden 12,1% Germany 8,8% Italy 7,8%

Data sources: UN and MEET, 2011

Market shares that the Bulgarian manufacturing industry from the sector occupies are the

following:

Among the first five positions of the leading export markets for “medical, surgical, dental

and other instruments” (combining for 52,4% of the total imports globally) Bulgaria has a markedly

low share –

Table 38 Leading export markets and the position of Bulgaria (medical and other instruments)

Export markets Germany Italy Poland Switzerland Turkey

BG position and % 52 / 0,0% 36 / 0,1% 22 / 0,6% 25 / 0,2% 38 / 0,1%


Among the first five positions of the leading export markets for precision measuring

apparatus (densimeters, hydrometers, thermometers, pyrometers, etc.), combining for 97,7% of the

total imports globally (with Belgium only responsible for 88,3% of the World’s imports) Bulgarian

industry has reported much better indicators –

Table 39 Leading export markets and the position of Bulgaria (precision measuring equipment)

Export markets Belgium USA Germany Spain Czech Rep.

BG position and % 1 / 54,5% 13 / 1,2% 6 / 5,5% 31 / 0,0% 19 / 0,4%


Among the leading export markets for “instruments and apparatus for automatic tuning and

control” (with a total share of 57,2%) the Bulgarian manufacturing industry has its share but again,

not very high –

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Table 40 Leading export markets and the position of Bulgaria (apparatus for auto tuning and control)

Export markets UK Russia Sweden Germany Italy

BG position and % 27 / 0,3% 21 / 0,8% 23 / 0,7% 38 / 0,1% 26 / 0,5%


In conclusion we need to emphasize the three main groups of target markets which may

provide conditions for a sustainable development and growth for the Bulgarian small and medium

(as well as large) enterprises in the sector.

First and foremost attention has to be given to the main and traditional trade partners –

especially the leading ten – with view of maintaining a considerable base for the export volumes.

Following are the markets that globally represent leading importers for the sector and on which the

Bulgarian enterprises are not currently well represented (with a priority, again, falling on the

leading dozen). Out of these two groups naturally a big portion of the countries are overlapping, a

fact that only stresses their importance. The third group is made up of the export markets that over

the past few years (three could be considered sufficient) have reported a stable rise in demand and

respective imports of foreign production from the sector; which is a sign of lasting trends in the

increase of potential volume of imported production. Leading countries in this ranking also merit

strategic attention and systematic trade placement efforts.

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MACROECONOMIC CHARACTERISTICS OF PRIORITY BULGARIAN

EXPORT MARKETS. BILATERAL TRADE RELATIONS

In order to achieve a clearer understanding of the overall economic state and particular traits

of the export markets that we have come to define as priority ones for the examined Bulgarian

industrial sector, hereby we present an overview of the leading countries in this ranking – five that

are Member States of the EU, as well as five that are outside its borders.

The most significant markets presenting themselves with a larger increase in the export

shares of Bulgarian SME of the sector “Manufacturing of medical, precision and optical apparatus

and instruments” are:

Within the EU: Belgium, Germany, France, Italy, Austria;

Outside the EU: China, Turkey, the Russian Federation, the USA and Japan.

Current data and characteristics for most of the studied markets could be found at the

National Export Portal maintained by the BSMEPA.

The figure that follows presents graphically the indexed GDPs at Purchasing Power Parity

(or Standard) per capita of the leading export markets as per data for December 2011.

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Figure 5 Indexed GDP per capita in PPS for leading export markets (EU-27=100)


Relevant for the understanding of these markets are also the comparative price levels of

consumption, indexed and compared to the average price level within the EU:

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Figure 6 Indexed comparative price levels for the leading export markets


As for the leading European markets, their purchasing power per capita is presented

numerically with GDP levels at market prices:

Table 41 GDP per capita at market prices, expressed in PPS (euro).

Year 2008 2009 2010

EU-27 25 000 23 500 24 400

Eurozone (ЕU-17) 27 200 25 500 26 400

Belgium 28 900 27 700 29 000

Bulgaria 10 900 10 300 10 700

Germany 29 000 27 200 28 800

France 26 700 25 400 26 300

Italy 26 100 24 400 24 600

Austria 31 100 29 300 30 800


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GERMANY

Germany is a leading trade partner for Bulgaria, a principal supplier of investment goods,

high technology equipment and transportation means.

The Treaty on Friendly Cooperation and Partnership in Europe between Bulgaria and

Germany entered into force on November 5, 1992, and acts as a juridical basis for the relations

between the two countries. Up until January 1, 2007, as a Member State of the EU Germany applies

in its economic relations with Bulgaria the Europe Agreement, in force since February 1, 1993. All

trade and a significant part of other forms of economic relations are regulated by the Convention on

Trade, Business and Economic Relations signed on May 8, 1990.

Table 42 Main economic indicators for Germany and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 35 700

GDP growth (%), 2010 3,5%

Inflation (%), 2010 1.1%

Export volume 2010 $ 1,337 trillion

Rank as a world exporter (2010) 3

Main trade partners of exports

(2009)

France 10,1%, USA 6,7%, UK 6,6%,

Netherlands 6,6%, Italy 6.3%, Austria 5.7%,

Belgium 5.2%, China 4,7%, Switzerland 4,5%

Main exports (2009) machines, transportation vehicles, chemicals,

metals and metal goods, foods, textile

Main trade partners of imports (2009)

Netherlands 13%, France 8,2%, Belgium

7.2%, China 6,8%, Italy 5.6%, UK 4,7%,

Austria 4.4%, USA 4,2%, Switzerland 4.1%

Main imports (2009) machines, transportation vehicles, chemicals,

foods, textile, metals

Volume of Bulgarian exports

(euro million, 2010)

1 658

Share (%) out of total Bulgarian exports,

in euro, 2010

10.64%

Main Bulgarian exports in 2010 Textile and clothing, machines, electronics,

base metals and metallic goods, etc.

Volume of Bulgarian imports,


2 235

Share (%) out of total Bulgarian imports,

in euro, 2010

11.67%

Main Bulgarian imports in 2010 Machines and apparatus, textile goods and

clothing, electronics, transportation vehicles

and equipment, chemical and pharmaceutical

products

Data sources: ITC and MEET

58 | P a g e







Germany remains a leading foreign investor in Bulgaria. According to the governmental

InvestBulgaria Agency total German investment for the period 1996-2010 have amounted to 2548

million euro which rank Germany as fifth among the leading foreign investors. In 2010 only

German investment in the Bulgarian manufacturing industry amount to 68,9 million euro. In 2011

the trade exchange with Germany reaches 4976 million euro. Bulgarian exports for Germany

amount to 2412 mil. Euro while imports from Germany add up to 2564 mil. Euro.

For 2011 Bulgarian exports for Germany makes up for 11.93% of the total national exports

(1st place), while German imports have a share of 10.99% out of all imports (2

nd only to the Russian

imports).

German companies have shown interest in investing mostly in transportation infrastructure

and the energy sector. Nevertheless a plausible consideration is given to an increased German

presence in the machine-building, electronics and electro-technical sectors.

Below is a table with price levels of certain product within group 90, according to the

classification of the ITC:

Table 43 Price levels of some products in product group 90, imported by Germany

Code Product

2008 2009 2010 Imported

amount,

2010,

€ thousand

Imported

quantity,

2010,

tons

Importing

price,

euro/ton

Importing

price,

euro/ton

Importing

price,

euro/ton

'9018 Electro-medical apparatus (ECG, infra-

red ray app. and similar) 49,467 49,695 51,669 5,198,807.45 100,617

'9027 Instruments for physical/chemical analysis;

instruments for viscosity, heat, etc. 136,514 144,912 151,436 2,604,846.21 17,201

'9032 Automatic regulating or controlling

instruments and apparatus 53,386 51,576 50,183 1,845,341.2 36,772

'9031 Measuring or checking machines, not

elsewhere specified 98,363 98,624 91,226 1,666,153.54 18,264

'9026 Instruments for measuring/checking the

level/flow/pressure of liquids/gases 78,850 85,120 72,726 1,132,337.88 15,570

'9022 Apparatus based on the use of X-rays/of

alpha/beta/gamma radiations 87,657 97,370 94,882 904,221.37 9,530

Source: ITC

BELGIUM

The Kingdom of Belgium has a well regulated and developed contractual and legal basis for

the active development of bilateral trade relations with Bulgaria.

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Since 1981 there is an Agreement for a wider economic, industrial and technological

cooperation between SMEs of the two countries, while in 1994 a Treaty between the Republic of

Bulgaria and the Belgian-Luxembourg Economic Union enters into force to protect and mutually

promote investments. After 2000 a few framework agreements and programmes have been defined

to regulate cooperation separately with the federal regions of Flanders and Wallonia.

Belgium is one of the important trade and economic partners of Bulgaria. In 2009 Belgium

is the fourth most significant destination of Bulgarian exports among the EU Member States, after

Germany, Italy and Romania.

Table 44 Main economic indicators for Belgium and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 37,800

GDP growth (%), 2010 2%

Inflation (%), 2010 2,3%

Export volume 2009 $ 279,2 млрд.



(2009)

Germany 19,6%, France 17,7%, Netherlands

11.8%, UK 7,2%, USA 5,4%, Italy 4.8%

Main exports (2009) Machinery and equipment, chemicals,

finished diamonds, metals and metallic

articles, foods


Netherlands 17,9%, Germany 17,1%, France

11,7%, Ireland 6.3%, USA 5,7%, UK 5,1%,

China 4.1% (2009)

Main imports (2009) prime resources, machinery and equipment,

chemicals, raw diamonds, pharmaceutical

products, foods, transportation equipment,

petroleum products



587.3


in euro, 2010

3,77%

Main Bulgarian exports in 2010 Non-refined copper - 23% out of the total

Bulgarian exports, precious metal residue

(16%), rape seeds (11%), densimeters (14%),

raw tobacco (6.9%), electrical car batteries

(2.8%), poultry (3%), socks (1.5%), ladies’

suits (1%).



364.3


in euro, 2010

1,9%

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Main Bulgarian imports in 2010 Copper ore - 7% out of the total imports are

Belgian, medicines (7%), passenger vehicles

(3.5%), pork meat (4.3%), tractors (5.4%),

human blood; animal blood for therapeutic,

prophylactic or diagnostic purposes (3.3%),

agricultural machines (1.8%), automobile

parts (2.3%).


Table 45 Price levels of some products in product group 90, imported by Belgium

Code Product

2008 2009 2010 Imported

amount,

2010,

€ thousand

Imported

quantity,

2010,

tons

Importing

price,

euro/ton

Importing

price,

euro/ton

Importing

price,

euro/ton

'9018 Electro-medical apparatus (ECG, infra-

red ray app. and similar)

32,326 35,601 35,654 3,172,750.61 88,987

'9021 Orthopaedic appliance (crutches/surgical

belts & trusses)

275,320 272,658 301,293 1,372,691.87 4,556


instruments for viscosity, heat, etc.

124,396 134,604 127,691 606,022.1 4,746


instruments and apparatus

63,395 57,863 74,390 322,036.38 4,329


elsewhere specified

50,367 47,013 54,460 250,297.61 4,596

'9019 Mechano-therapy appliance (artificial

respiration, massage app., ozone/oxygen)

17,311 20,017 19,590 198,412.18 10,128

Source: ITC

In 2010 the attracted Belgian investments have amounted to 124.2 million euro.

In 2005 the biggest Belgian investment was made at “Epic Electronic Assembly” EOOD in

the electronics sector.

FRANCE

France has always been a significant factor in the foreign economic relations of Bulgaria.

This cooperation has acquired even more meaning after the accession of Bulgaria to NATO in 2004

and the European Union on January 1, 2007. Relations between the two countries within the

framework of the EU have been developed by applying certain reforms required by the European

central institutions, as well as the common policies on energy, foreign relations, safety and defense.

61 | P a g e







Both countries strive for an effective Union in all economic, social and political aspects that is able

to respond adequately to the expectations and needs of its citizens.

With view of expanding the French investment presence in Bulgaria a Bulgarian-French

Chamber of Commerce has been created as an heir to the Business Club France-Bulgaria. This

organisation facilitates direct business contacts between Bulgarian and French companies.

Table 46 Main economic indicators for France and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 33.1 thousand

GDP growth (%), 2010 1.1 %

Inflation (%), 2010 1,5%

Export volume 2010 $ 508,7 billion



(2009)

Germany 15,9%, Italy 8.2%, Spain 7.8%,

Belgium 7.4%, UK 7%, USA 5.7%

Main exports (2009) Machines and transportation equipment,

airplanes, plastics, chemicals, pharmaceutical

products, iron and steel, beverages


Germany 19,4%, Belgium 11,6%, Italy 8%,

Netherlands 7,1%, Spain 6,7%, UK 4,9%,

USA 4,7%, China 4.4%

Main imports (2009) Machines and equipment, transportation

means, raw petroleum, airplanes, plastics,

chemicals



628,4


in euro, 2010

4,03 %

Main Bulgarian exports in 2010 Suits, clothing ensembles; Fresh cooled or

frozen meats;

Wires, cables, other electrical conductors;

toiled seats and bowls, kitchen sinks; other

engines and circuit control apparatus; spare

fixtures and accessories



629,4


in euro, 2010

3,28 %

Main Bulgarian imports in 2010 Passenger automobiles and other automotive

vehicles; assembled industrial installations;

automotive means for goods transportation;

pharmaceutical products; circuit breaking and

control apparatus; electrical apparatus for wire

telephony (incl. videophones).


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Table 47 Price levels of some products in product group 90, imported by France

Code Product

2009 2010 2011 Imported

amount,

2011,

€ thousand

Imported

quantity,

2011,

tons

Importing

price,

euro/ton

Importing

price,

euro/ton

Importing

price,

euro/ton

'9018 Electro-medical apparatus (ECG, infra-red

ray app. and similar)

41,643 43,336 40,776 3,031,176.14 74,337


belts & trusses)

407,933 322,789 2,829,567.23 8,766


instruments and apparatus.

48,179 44,082 39,142 967,935.01 24,729


instruments for viscosity, heat, etc

149,353 161,523 154,873 948,284.44 6,123

'9022 Apparatus based on the use of X-rays/of

alpha/beta/gamma radiations

87,297 86,985 817,486.49 9,398


elsewhere specified

83,459 75,382 77,237 649,720.06 8,412

Source: ITC

In 2011 the trade exchange with France amounted to 1615.7 million euro. Exports from

Bulgaria to France were worth 857.3 million euro, while French imports reached 758.4 million

euro.

For 2011 the reported growth in the trade exchange on an annual basis is calculated to be

28.42% with a positive balance for Bulgaria in the amount of 98.9 million euro.

Potential investments in Bulgaria by French companies were made in areas such as: energy

management, water and waste treatment, infrastructure development, but primarily in industrial

subcontracts in mechanical engineering, food industry, wine industry, pharmaceuticals and

informatics. The largest share of French investments is in the manufacturing – 58%.

The French Agency for International development of enterprises (Ubifrance) with its

representation in Sofia aims to assist French companies in finding Bulgarian partners in sectors of

mutual interest.

ITALY

Trade and economic relations between Bulgaria and the Republic of Italy are based on

formal contracts and agreements of more than five decades with the more recent ones including a

Cooperation Agreement between the BIC and the Italian Confederation of Industrialists

(Confindustria) since 1998; the Cooperation Agreement between BCIC and the Italian Foreign

63 | P a g e







Trade Institute (ICE) based in Rome, as well as the Commercial Chambers in Vicenza, Trieste,

Udine, Gorizia and the Association of Young Entrepreneurs (ACCO-44); a Cooperation

Memorandum between the BSMEPA and the Italian Foreign Trade Institute since 2007 and a

similar document between the InvestBulgaria Agency and the Italian Foreign Trade Institute.

Italy remains one of the leading foreign trade partners of Bulgaria, the main destination of

the Bulgarian consumer goods in the EU market. In 2010, following Russia and Germany, Italy

ranks third among foreign trade partners of Bulgaria and the data indicates: an increase of 38.2

percent in export to Italy from 2009, increase of 8.9 percent in imports and growth of 18.4 percent

in trade.

Table 48. Main economic indicators for Italy and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 30,500

GDP growth (%), 2010 1,3 %

Inflation (%), 2010 1,4%




(2009)

Germany 12,6%, France 11,6%, USA 5,9%,

Spain с 5.7%, UK 5,1%, Switzerland 4,7%

(2009)

Main exports (2009) Engineering products, textile and clothing,

general machinery, motor vehivles,

transportation equilment, chemicals, foods and

beverages, tobacco products, minerals and

non-ferrous metals


Germany 16,7%, France 8,9%, China 6,5%,

Netherlands 5.7%, Spain 4.4%, Russia - 4,1%,

Belgium 4% (2009)

Main imports (2009) Engineering products, chemicals,

transportation equipment, energy supply,

minerals and non-ferrous metals, textile and

clothing, foods and beverages, tobacco

products



1.509,9


in euro, 2010

9,69 %

Main Bulgarian exports in 2010 Textile and clothing; fur, leather and

footwear manufacturing, chemical, machine

building and metallurgy industrial outputs

Volume of Bulgarian imports, 1.417,6

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in euro, 2010

7,4 %

Main Bulgarian imports in 2010 Ready-made products in energy supply,

technological and electrical machinery,

apparatus; textile and clothing, footwear,

leather, fur and skin articles; chemical

products, transportation means; furniture and

lighting fixtures

Sources: ITC and MEET

Table 49 Price levels of some products in product group 90, imported by Italy

Code Product

2008 2009 2010 Imported

amount,

2010,

€ thousand

Imported

quantity,

2010,

tons

Importing

price,

euro/ton

Importing

price,

euro/ton

Importing

price,

euro/ton



38,537 38,948 39,219 2,269,541.38 57,868


belts & trusses)

342,303 422,049 419,852 1,364,520.24 3,250



114,719 135,495 139,469 648,529.47 4,650


elsewhere specified

57,547 60,521 54,044 579,897.14 10,730



35,790 38,095 40,756 561,086.8 13,767

'9003 Frames and mountings for spectacles,

goggles

146,983 138,723 149,631 365,848.09 2,445

Source: ITC

Italy is among the seven most developed industrialized countries in the world and forth most

powerful economy in Europe. Much of the raw materials and 75% of the energy resources are

imported. Italy is facing the serious challenges of the global financial and economic crisis. Due to

the high degree of interconnectedness of the Italian economy with the leading industrial countries

and the elevated dependency on the imports of basic raw materials and resources, in a short- and

mid-term plan it can feel the negative effect of these factors on its growth. Despite all that, in the

conditions of a global crisis the government managed to maintain overall stability of the financial

system not to allow bankruptcies of large companies. The present expert government has developed

a rehabilitation plan for the public finances, which will strengthen the position of Italian economy.

For the period 1996-2010 Italian investment in Bulgaria amounts to 1198,6 million euro, and

Italy is placed 10th

in the ranking of leading investors in the country. Sectors in which Italian

investors are most interested into are energy, tourism, banking and insurance services, transport and

65 | P a g e







agriculture. Light industry where even small businesses are interested in investing is often in low-

tech sectors.

In 2011 the trade exchange with Italy amounts to 3387.8 million euro. Exports from

Bulgaria to Italy add up to 1 720.7 million euro (with a growth of 13.9% compared to 2010), while

imports from Italy have reached a total 1 667.1 million euro (representing a growth of 15.7%

compared to levels of 2010).

Italy is still one of the most important trade partners among the EU Member States where

Bulgarian enterprises sell a large share of consumer goods and supply a wide range of high-

technology goods and transportation means. Bulgarian exports for Italy also include a number of

articles with a higher degree of processing, and there are still perceivable possibilities of increasing

Bulgarian exports in that direction, including electrical equipment and spare parts.

Bulgarian companies can expand their exports to Italy to participate as subcontractors for

Italian companies with established positions on the international trade/market. In order for them to

achieve this, they have to improve their marketing strategy. Export potential has also bio foods,

textiles and clothing, electronics components and software.

AUSTRIA

Bilateral relations with Bulgaria have overall been traditionally friendly – for almost a

century official diplomatic relations have been established, and for the past few decades trade

relations also regulated officially between the two countries.

A Treaty between the Republic of Bulgaria and the Austrian Republic for a mutual

promotion and protection of investment exists since 1997.

Table 50 Main economic indicators for Austria and its bilateral trade relations with Bulgaria

GDP (per capita, 2009) $ 40 400

Growth in the GDP (%, 2010 ) 2 %

Inflation (%, 2009 ) 1,9%

Amount of the export ( billion $ 2010 ) $ 157,4 billion.

Rang as a world exporter (2010) 29

Major trade partners for export (2009 ) Germany 31%, Italy - 8,2%, Switzerland 5%

66 | P a g e







(2009 )

Main export positions (2009) machinery and equipment, motor vehicles and

parts, paper and paperboard, metal goods,

chemicals, iron and steel, textile, food

Major trade partners for import (2009) Germany 45.1%, Switzerland 6,8%, Italy-

6,7%, The Netherlands4% (2009 )

Main import positions (2009) machinery and equipment, motor vehicles,

chemicals, metal products, petrol and petrol

products, food

Of exports of Bulgaria (million euro, 2010) 293.8

Export share (%) in the total export of

Bulgaria, calculated in euro, 2010)

1,89 %

Main positions in the Bulgarian’s export for

2010

engines, machines, air conditioning, facilities

for physical education, athletics, sports,

swimming pools, television receivers, video

monitors and video projectors; crude zinc,

chocolate, sunflower seeds, insulated electric

conductors, optical fiber cables.

Amount of the import of Bulgaria (billion

euro, 2010)

666.9

Import share (%) in the total import of

Bulgaria, calculated in euro, 2010)

3,48 %

Main positions in the Bulgarian’s import for

2010

Electrical apparatus for line telephony and

videophones, medication, passenger cars,

automatic machines for data processing;

magnetic or optical readers, machines for air

conditioning, tractors, printing machinery,

petroleum oils, meat, consoles and desks for

management or electrical distribution.


Table 51. Price levels of some products in product group 90, imported by Austria

Code Product

2008 2009 2010 Imported

amount,

2010,

€

thousand

Imported

quantity,

2010,

tons

Importing

price,

euro/ton

Importing

price,

euro/ton

Importing

price,

euro/ton



76,482 72,041 75,056 684,964.04 9,126

'9021 Orthopaedic appliance (crutches/surgical belts

& trusses)

415,958 412,690 487,423 307,076.53 630



57,075 56,725 55,473 244,858.9 4,414


elsewhere specified

61,926 60,423 63,348 236,223.37 3,729



102,072 99,720 128,103 231,610.03 1,808

'9026 Instruments for measuring/checking the

level/flow/pressure of liquids/gases

69,513 77,454 70,673 150,886.31 2,135

Source: ITC

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Austria is a well-developed and industrialised country with a high standard of living. Among

the largest branches of the Austrian industry we find the manufacture of automobiles, metallic

goods, machine-building, manufacture and processing of metals, foods, chemical industry, radio-

television and telecommunication equipment, manufacture of electrical energy.

Among its main trade partners are Germany, Italy, USA, Switzerland and France. Austria

exports mainly finished or semi-finished industrial goods, and imports mostly parts, agricultural and

food production, as well as natural resources.

According to the Bulgarian National Bank for the period 1996-2010 Austria has ranked at

second place among the leading investors in the Bulgarian economy (after the Netherlands) with the

total amount estimated at 5,2 billion euro or 13,1% of all foreign direct investment in the country

for the period in question (which amount to 39.5 billion euro). Again according to the BNB for

2010 the net payments flow towards Austria add up to 684 million euro – led by the manufacturing

industry with 630.5 million euro, followed by trade and repair services (66 mil. euro) and

transportation, warehousing and communications with 40.2 million euro.

The more significant areas of direct investment made by Austrian entities in 2010 are

construction (29.8 million euro) and agriculture, hunting and the forest sector (4.0 mil. euro).

Austrian companies dominate the top 100 of the largest foreign investors in Bulgaria. They operate

in the telecommunications, construction and financial sectors, among others (data sources: the

BNB, published on the InvestBulgaria Agency website).

Under the Investment Promotion Law there have been four big projects certified with

Austrian participation. Austrian investment in Bulgaria includes almost all sectors: power

distribution, telecommunications, energy, finance, trade. Almost 10% of the largest foreign

investors in Bulgaria are Austrian companies. In 2011 the trade exchange between the two countries

has reached 1173.1 million euro. Bulgarian exports for Austria amounted to 389.3 million euro

(which is an increase of 32.6% compared to the year before), while the imports from Austria

reached 783.3 million euro (an increase of 17.4% since 2010).

Among the most significant markets outside the borders of the European Union we should

include China, Turkey, the USA and Japan. Considering especially the proximity and the close

traditional ties with Turkey, as well as the size of the rest of the markets in this group, we will

68 | P a g e







present some brief information for the respective macroeconomic and trade dimensions of these

export destinations.

TURKEY

Turkey is a natural regional trading partner, a country with large population and growing

economy, an important trade factor in the region.

In the recent past contractually we could emphasize the Cooperation Agreement in the

spheres of trade and economics, industry and technology; the Agreement on mutual protection and

promotion of investment; the Cooperation Agreement for mutual assistance in the sphere of

customs services; Cooperation Agreements in the energy and infrastructure sectors, tourism. The

Treaty on Friendly Cooperation and Partnership, Neighbourhood, Safety and Collaboration since

1992 has been one of the most significant constituents of the contemporary contractual basis of the

bilateral relations. The Summit Declaration on Black Sea Economic Cooperation of the same year,

as well as the Yalta Declaration of 1998 further delineate the mutual ambitions in developing trade

relations between the two countries. In the past two years memorandums and principle agreements

in the energy sector have also been signed.

Trade and economic relations between Bulgaria and Turkey in the recent years show a

steady upward trend despite the economic crisis and the marked slight decrease. Turkey ranks sixth

in trade for Bulgaria (after Germany, Russia, Italy, Greece and Romania), as in year 2010 exports to

Turkey reached up to 1.32 billion EUR and imports - up to 1.03 billion EUR. The increase in

exports to the Republic of Turkey is 53% on an annual basis, mainly due to the continuously

improving condition of the Turkish economy.

Trade exchange between the two countries is balanced and numerically positive for the

Bulgarian side, with the exception of 2008 and 2009. A chief position among Bulgarian exports is

occupied by articles and prime resources of the ferrous and non-ferrous metallurgy, chemicals and

raw materials, petroleum industry products, grains and cereals, wood processing industry products,

etc. Turkish imports for Bulgaria is dominated by agricultural products, construction materials and

cement, ferrous and non-ferrous metals, passenger and freight vehicles, household consumer

electronics, textile products, etc.

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According to BNB data the aggregate total volume of Turkish investment in Bulgaria for the

period 1992-2008 amounts to 476.1 USD which places Turkey 18th

among foreign investors in

Bulgaria. The largest Turkish investment has been the “Trakia Glass Bulgaria” glass factory in

Targovishte, owned by the “Shishedjam” company. And the first Bulgarian investor that has set foot

on the Turkish market is the “Prista Oil” company (from Russe) that has built a motor oil factory in

Izmir worth 6 million USD. Opportunities for further bilateral cooperation could be found among

the areas of tourism, energy, participation of Turkish companies in major infrastructure and

construction projects and the outlook for development of joint ventures in various sectors.

Turkey is among the main foreign trade partners of Bulgaria, currently ranked 5th

as an

export destination and 6th

as an importer. Among the countries in the Balkan region, Turkey is the

second biggest trading partner in importance after Romania.

In 2011 the trade exchange with Turkey has amounted to 3 936.2 million USD. Bulgarian

exports for Turkey were calculated at 2 391.5 million USD while Turkish imports added up to

1 544.7 million USD.

Table 52 Main economic indicators for Turkey and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 12,300

GDP growth (%), 2010 8,2 %

Inflation (%), 2010 8,7%

Import volume, 2010 $ 185 billion

Export volume, 2010 $ 114 billion

Main trade partners for exports Germany, France, Italy, UK, Iraq

Bulgarian exports for Turkey, 2010 $ 1,75 bill.


2010

5,83%

Main Bulgarian exports in 2010 Copper and copper articles, iron and steel,

mineral fuels and distillation products, tobacco

goods, wood, electrical and electronic equipment

Bulgarian imports from Turkey, 2010 $ 1,37 bill.


2010

5,41%

Main Bulgarian imports in 2010 Ores and prime earth materials, plastics and

plastic goods, electrical and electronic

equipment, aluminum articles, machines, foods


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USA

The role of the USA as a trade partner for most countries globally is essential. For the

Bulgarian exports this “translates” mostly into goods with low level of processing on one hand; but

in the other there are many scientific and research products being exported such as IT and software

programs. This is often mediated with the assistance of domestically registered foreign legal

entities, thus frequently such transactions are not reflected in the balance payments for services and

goods. In 2011 trade exchange with the USA amounts to 642.9 million USD. Bulgarian exports for

the US are calculated to have been 366.0 million USD, while American imports are reported as

276.9 million USD.

Certain macro characteristics of the US economy are presented for 2010 in the following

table:

Table 53 Main economic indicators for the USA and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 47,600

GDP growth (%), 2010 3,8%

Inflation (%), 2010 1,5%

Import volume, 2010 $ 1 966 billion (~2 trillion)

Export volume, 2010 $ 1 277 bill.

Main trade partners for exports Canada, Mexico, China, Japan, UK, Germany, Rep.

Korea, Brazil

Bulgarian exports for USA, 2010 $ 282 mil.


2010

1,37%

Main Bulgarian exports in 2010 Live animals, mollusks, butter and milk fats,,

cheeses, honey, animal and plant products

Bulgarian imports from USA, 2010 $ 177 mil.


2010

6,94%

Main Bulgarian imports in 2010 Shoes, suits, antiques, collectors’ items, pictures,

mannequins


CHINA

China is the largest trade partner for Bulgaria in Asia. The global financial and economic

crisis in 2009 ceased the trend that saw Bulgarian exports for China (and overall trade in general)

71 | P a g e







grow. In 2009 trade exchange with China dropped 40% and equaled 765.2 million USD, out of

which Bulgarian exports 136.8 million USD (a 13% decrease) and Chinese imports worth 628.4

million USD (a 43% decrease). In 2009 China ranked 22nd

as a Bulgarian export market and 13th

as

an importer.

Trade relations between the two countries are regulated by certain agreements and treaties

such as the Agreement on economic cooperation of 2006, the Treaty on mutual promotion and

protection of investments of 1989 (and the following protocols attached as of 2007); some

memoranda for promotion of trade and economic cooperation between MEET and the Government

of the PRC, between InvestBulgaria Agency and the Shanghai Board for Foreign Investment

Promotion, as well as between the BSMEPA and Directorate “Trade Development” at the Chinese

Ministry of Trade. There is also an Agreement on cooperation between the Bulgarian Export

Insurance Agency and the respective Chinese partner organisation SINOSURE, dated 2006.

In 2010 again there has been a growth of 18% reported in the trade exchange between the

two countries but the lower basis for comparison (2009) has to be taken into consideration. The

mentioned growth is due mainly to the increase in Bulgarian exports with 84%. This significant

increment in turn is owed to the increased export of refined copper and copper alloys. Imports also

grow by 4%. This trend is maintained also for the first quarter of 2011. Once again a leading share

in the Bulgarian exports for China is occupied by refined copper and its alloys (77.8% of all exports

for China).

Table 54 Main economic indicators for China and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 7 700 (PPP)

GDP growth (%), 2010 10,3 %

Inflation (%), 2010 3,2%

Import volume, 2010 $ 1 396 billion

Export volume, 2010 $ 1 578 billion

Main trade partners for exports USA, Hong Kong, Japan, Rep. Korea, Germany,

the Netherlands, India, UK

Bulgarian exports for USA, 2010 $ 250 million


2010

1,2 %

Main Bulgarian exports in 2010 Refined copper and copper alloys, copper scrap,

unrefined lead, aluminum scrap; , необработено

олово, отпадъци от алуминий; panels,

consoles, control and power distribution panels

72 | P a g e







Bulgarian imports from USA, 2010 $ 653 million


2010

2,57 %

Main Bulgarian imports in 2010 Electric apparatus for wired telephony,

transportation vehicle parts, air conditioning

machines, toys, el. boilers, electric boilers, water

and air heaters

Source: ITC and MEET

According to Bulgarian National Bank data for the time period 1996 – 2010 the attracted

Chinese investment equaled 17.6 euro. Investment was primarily channeled towards

telecommunications, renewable energy sources and automobile construction sectors.

In October 2009 a Loan Contract has been signed between the Chinese Development Bank

and the Bulgarian Development Bank worth 5 million euro for direct crediting of small and medium

enterprises. In 2011 trade exchange with China reached 1345.8 million USD (+49% compared to

2010). Bulgarian exports for China amounted to 402.6 million USD (+61%) and Chinese imports

were worth 943.2 million USD (+44%).

RUSSIA

Official diplomatic relations with Russia have been established on July 7, 1879. With some

interruptions and following global historical events, the flow of official relations continues just as

the trade ones do.

On January 13 1992 the Russian Federation announces that it shall continue to enforce the

rights and observe the obligations stemming from international agreements entered on behalf of the

ex-USSR.

Russia remains one of the most important and traditional foreign trade partners of Bulgaria.

After the accession of Bulgaria to the EU the relations between the two have acquired new and

more intensive dynamics. A confirmation of this is the growth recorded (96%) in 2007 compared to

the volume of Bulgarian exports for Russia in 2006, of Russian investment in Bulgaria with 73.8%,

of the tourist flow from Russia with 14%, as well as the signed agreements on important energy

projects.

73 | P a g e







On average for the time period it is reported that 640 Bulgarian companies export to the

Russian market, with 41 of them accountable for 75% of the exports; while Russian imports in

Bulgaria are done by an average of 844 companies out of which 2 record 75% of the total worth

(because of the energy resources involved). Bulgaria takes up about 1% of the trade exchange of

Russia.

Table 55 Main economic indicators for Russia and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 15,900

GDP growth (%), 2010 4 %

Inflation (%), 2010 6,7%




(2009)

The Netherlands 12,2%, Italy 9%, Germany 6,9% ,

Turkey 5,9%, Ukraine 5%, China 4,5%, Poland

4,3%

Main exports (2009) Petrol and petroleum products, natural gas, wood

and wooden goods, metals, chemicals, machines

and spare parts


China 12,9%, Germany 12,6%, Japan 6,9%,

Ukraine 6%, USA 5,1%, Italy 4,1%

Main imports (2009) Transportation means, machines and equipment,

plastics, cast iron, steel and metallic semi-

processed articles, consumer goods, foods.



415,8


in euro, 2010

2,5 %

Main Bulgarian exports for Russia (2009) Medicines, wines, aircraft, fittings, spare parts,

refrigerators, freezers, cables, beverages, cosmetics


During the period 2000 – 2008 the development of Russian economy is characterised by a

stable growth, with rates around 7%. For the year 2008 the rate of Russian GDP growth is 5.6%

given a forecast 7.5–8%. The negative trends since the end of 2008 as a result of the global financial

crisis are still in effect. Crisis events spread to the entire Russian economy. According to data of the

Ministry of Economic Development of the Russian Federation the drop for 2009 is 8.5%, tied

mostly to the decrease of investment interest in Russia. Investment in base capital in 2009 decreased

by 17%.

74 | P a g e







According to estimations of the Russian Government the country has already passed the

most acute phase of the financial and economic crisis, and is recording a slow growth in the past

few years. In the framework of the Anti-crisis Programme the Government of the RF took actions

aimed at stabilising the real estate market and the construction sector.

Official data of the Ministry of Economic Development of the RF reports inflation for 2009

as 8.8%, and unemployment – 8.4%, which is 2 percent higher than the data for 2008. For 2010

inflation has gone down a couple of points, as we see from the above table.

The main task for the Russian economy is its diversification towards less reliance on the

prime and raw materials sector, and the development of infrastructure and manufacturing industry.

Russia is one of the biggest global producers and exporters of energy resources. It possesses an

estimated 50 trillion cubic meters natural gas, which is 35% of the world’s stock, with 12% of the

oil reserves and 16% of all coal reserves. Crude oil and gas exports produce about 45% of all

foreign currency revenue in the national budget. A quarter of all gas and oil supply for the EU

comes from Russia. Annually Russia exports about 130-135 billion cubic meters of natural gas for

Western and Eastern Europe.

The new Russian energy strategy foresees in 2030 the oil yield to grow a maximum of 9.7%,

and that of gas – with 41.5%.

Bulgarian exports for Russia are highly diversified, with the shares of medicines, fittings,

automobile and car parts, cooling equipment, car batteries, aircraft and cosmetics representing about

half of all the exports. An increase in the volumes of supply of these and other product groups will

allow the largely negative trade balance – due to energy and fuel imports – to decrease. In 2011

according to ITC trade exchange with the Russian Federation amounts to 2 334.7 million USD.

Bulgarian exports for the Russian Federation are worth 716.4 million USD, while the imports are

reported as 5 618.3 million USD.

The Russian Federation is one of the main foreign trade partners of the Republic of

Bulgaria. In 2011 the Russian market accounts for 2.6% of all Bulgarian exports (ranked 10th

) and

17.7% of the imports (placed 1st).

75 | P a g e







JAPAN

Despite the lack of tradition in trade relations historically between Bulgaria and Japan, the

volume of the Japanese market itself, its dynamics and the importance of the country in the

development of high-technological industrial sectors are all reasons good enough for defining it a

market with good perspectives, to give it weight as a trade partner, just as well as it is a direct

competitor in some sectors.

In 2011 trade exchange between Bulgaria and Japan amounted to 127.0 million USD.

Bulgarian exports were reported as 32.1 million USD while imports from Japan added up to 94.9

million euro.

Table 56 Main economic indicators for Japan and its bilateral trade relations with Bulgaria

GDP (per capita, 2010) $ 34 600

GDP growth (%), 2010 4%

Inflation (%), 2010 – 0,7%

Import volume, 2011 $ 855,2 billion

Export volume, 2011 $ 823,6 billion

Main trade partners for exports China, USA, Rep. Korea, Taiwan, Hong Kong,

Thailand, Singapore, Germany, Malaysia, the

Netherlands

Bulgarian exports for Japan, 2010 $ 21,8 million

Share (%) out of total Bulgarian exports, 2010 0,1%

Main Bulgarian exports in 2010 Electrical and electronic equipment; oils, perfumes

and cosmetics; fish and seafood; clothing; organic

chemicals; optical and precision apparatus

Bulgarian imports from Japan, 2010 $ 92,3 million

Share (%) out of total Bulgarian imports, 2010 0,36 %

Main Bulgarian imports in 2010 Machines, transportation vehicles (without railway

ones), electrical and electronic equipment, dyes and

pigments, iron and plastic articles


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SUMMARISED RESULTS FROM THE ANALYSES (SWOT, PESTEL)

In elaborating the sectoral SWOT analysis we have been governed by commonly accepted

principles of such a marketing examination. The study aims to define the specific internal strong

and weak traits, as well as the external opportunities and threats for the enterprises in the field that

is part of the respective sector of the economy. The analysis is a means of achieving a summary, a

systematisation and a rationalisation of the trends in progress. As a result of the study the

advantages and deficiencies of the Bulgarian manufacturing enterprises will be clearly outlined

along with the state of the markets. Thus we will justify the choice of strategic approach in reaching

the most effective path of development for the organisations. The essence of this method is in

pointing both the opportunities and threats from the external environment that each one of the

organisations may have to face in operating in the sector, as well as the strengths and weaknesses

that define their businesses.

The strengths of the organisation encompass all the characteristics and factors that the

company has excelled in or any such particular trait that may further on lead to additional

possibilities. The strengths of a company may be represented by its internal customs and practices,

essential experience, valuable organisational resources and competitive potential, better products,

perfected technology, better customer service or brand recognition.

The weaknesses of an enterprise may be defined as deficiencies of an important component

necessary for the functioning of the company or any function that it cannot perform compared to

other, or leaves it in a disadvantageous position. Weaknesses, depending on their grade of

importance in the strife for competitiveness, may further make the company vulnerable to a certain

extent.

The internal strengths of the company are determined as competitive assets while its

inherent weaknesses are competitive liabilities. With regard to shaping a strategy the organisational

strengths are essential since they can be effectively used as a basis for achieving a competitive

advantage. In cases when the strengths are insufficient to successfully form a strategy the

management of the organisation should promptly create a basis for one. At the same time, a

successful strategy should be aimed towards eliminating the weaknesses which make the company

vulnerable and represent barriers to its business activities. As a result of such an analysis decisions

are taken that should combine different examined factors: guidelines for possible actions in

77 | P a g e







matching the strengths with the opportunities to reach economic growth, while weaknesses and

threats of the environment are to be taken notice of and neutralised in a timely manner in order to

limit their negative influence on the effectiveness of business activities.

The definition of opportunities and threats will be essentially based on the profound analysis

of the external environment of the enterprises. An opportunity shall be defined out of a favourable

trend which creates conditions (with an adequate reaction) for a subsequent increase in turnover and

profit or for improving the market positioning of the company, effectively raising its

competitiveness or the grade of its internationalisation. Potential opportunities for the company

resulting from the environment are a widened product line for greater scope of customer

satisfaction; ability to exploit habits, customs and technological know-how for new production

opportunities; increasing diversity between interconnected products; addition of new accompanying

products; vertical integration; acceleration of market share growth; emergence of new technology,

etc. Threats, on the other hand, represent unfavourable trends which – when lacking timely reaction

and opposition – may lead to reduction of the company’s sales and profit. Potential external threats

may be sought among increased sales of a substitute product; slow growth of market demand; high

dependency on low demand as the product (or even business) nears final phases of its life cycle;

heightened exigence of buyers and suppliers; unfavourable demographic changes, etc.

The SWOT analysis results for economic sector “Manufacturing of medical, precision and

optical apparatus and instruments” find confirmation of their validity on one hand in the

sociological surveys carried out with upper management and owners of SMEs in the sector as well

as in expert focus groups. On the other hand they are a reflection of a substantial analysis of

dynamic time series of statistics from the publicly available industrial reports and data and

underline the underlying characteristics of SMEs and the economic branch in question.

Systematised conclusions from the SWOT analysis are to be found in the table below (and

presented in a summarized manned in the main strategic document as well) with the inherent

strengths and weaknesses – as well as most threats – are derived from the abovementioned sources.

The opportunities themselves are to a large extent defined as potential strategic interventions,

typical and innovative policies for promoting the branch’s export potential, with a number of those

borrowed from foreign good practices that have shown actual potential for export development for

the manufacturing sector being analysed here. Those same possibilities are to lead us to the

formulation of concretely applicable proposals for policies and specific measures for promoting the

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export potential, grouped in several main categories. The elaborated measures are divided into

micro, meso and macro levels and to be found in the Action Plan included in the main strategic

document.

Table 57 SWOT analysis

Strengths Weaknesses

1. Bulgaria is part of the EU single market;

2. Fixed currency exchange rate, a stable

financial and trade basis;

3. Key geographical location, at a crossroads

of resources and markets;

4. Subcontracting and outsourcing for

established international companies

from the sector;

5. Competitive labour costs, low taxes and

social security expenditures;

6. High-technological production with an

added value above the average in the

Bulgarian manufacturing industry;

7. Primarily export oriented SMEs in the

sector, restricted domestic markets;

8. Expanding market positions and good trade

relations with EU, US and Russian

partners;

9. Good basic human resource provided to

support the production processes;

10. Competent industrial branch associations

(BIA, BCCI, BICM);

11. Relatively good level of certification of

production and process management;

12. Adequate current technological

manufacturing equipment in most

enterprises;

13. Good working relations with most

international partners;

14. Quality of exports;

15. Growing price indexes in a global

1. Limited investment in contemporary scientific

developments and technologies, generating

export potential and sustainable growth;

2. Lack of resources for R&D, innovation and

own technological developments;

3. Absence of strong traditional positions on the

markets for medical, precision and optical

equipment;

4. Insufficient number of experts with an

experience in foreign trade;

5. Limited company experience in preparing

export marketing strategies;

6. Insufficient experience in participating at

national and international expositions;

7. Low liquidity, limited resources for developing

export practices;

8. Unsatisfactory infrastructure;

9. Low industrial energy efficiency;

10. Lack of frequently updated, systematised and

centralised information on foreign markets,

easily accessible by the enterprises;

11. Limited domestic prime material and resource

production;

12. Necessity to align manufacturing entities to

EU and world standards and barriers;

13. Small number of companies with a registered

own trade mark or protected intellectual

production;

14. Complicated SME access to financing of

projects by the European structural funds;

15. Lack of long-term sector vision and strategy

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perspective;

16. Existence of all principal logistic

possibilities to conduce to export practices.

for entry into perspective and growing markets

(BRIC countries, etc.);

16. Low elasticity of production and ability for

reaction to market demands;

17. Difficulty of access to flexible financial

engineering in the present financial

environment;

18. Low grade of vertical integration leads to sale

of components, lower added value of the final

production.

Opportunities Threats

1. Possibilities for financing of projects under

EU Structural Funds in Bulgaria;

2. Export-oriented sector according to the

vision of the Bulgarian Government;

3. Anticipated expert assistance by BSMEPA

for promotion of exports;

4. Stimuli envisaged for grouping into

branch, vertical and export-oriented

clusters;

5. Financial stability and improved credit

ratings for Bulgaria are premises for

intensification of foreign trade contacts;

6. Access to new markets under preferential

and frame agreements signed by the EU;

7. Increased participations in domestic and

international consortia with export

orientation;

8. Improvement of Bulgarian image and

positioning on the target markets for the

sector: Belgium, USA, Germany, Italy,

Russia, Austria, etc.;

9. Capturing of the positive trends in the

development and demands of promising

markets in Asia, Western Europe and

America;

10. Infrastructure improvement in Bulgaria;

11. Higher protection for designs, trademarks

and developments; the currently elaborated

common EU patent policy gives assurances

1. Possible deepening of the crisis in the Euro-

zone and/or contraction in the global

consumption as a result of a ‘second wave’;

2. Low thresholds for market entry and open

competition lead to strong pressures and

(some) exceptionally dynamic markets;

3. Increasing barriers for entry into target markets

outside EU (e.g. introducing different regimes)

by global competitors and agreements;

4. Strong dependency on foreign raw materials

and increase in energy prices lead to possible

increase of total cost levels of production, with

an increase of resource prices on international

markets;

5. Ineffective export insurance policy, absence of

products focused on SMEs;

6. Lack of sufficiently reliable information and

divergence in the main statistics sources

impedes managerial decisions and SME

exports;

7. Worsened educational system;

8. Decrease in number and effectiveness of

Bulgarian trade representations abroad and, in

particular, on the target markets;

9. Deficiencies in administrative capacity and

complicated procedures for accessing EU

funds.

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for the R&D of own products;

12. Improvement of levels of professional

education, training and competence of

Bulgarian experts in export marketing;

13. Europe 2020 sets priorities for promoting

high-technology and innovative (as well as

resource-efficient) manufacturers of the

future

14. Increased presence at industrial

expositions;

15. Systematic improvement of human capital

through education and training;

16. EU initiatives in support of SMEs

(by DG Enterprise and Industry mostly):

- European SME Week

- Transatlantic IPR portal

- „Enterprise Europe” network

- Competitiveness and Innovations

Programme (CIP)

- direct grants for supply of products

and services by SMEs to the EC

- SME support offices (especially

from newer MS), e.g. in China etc.

- Official opening of the financial

instrument JEREMIE in Bulgaria.

Political factors

Political factors in the Bulgarian environment have shown certain stability throughout the

last decade. Despite the apparent common change in management philosophy, this factor is

considered to be evaluated primarily according to government interventions in the actual economy

of the country. It could be claimed that several recent governments have executed to a large degree

a liberal economic policy, regardless of their contradicting interventions in other national (e.g.

social) aspects of development. The field in which – according to managers, owners and other

stakeholders directly affected by the functions of industrial SMEs – there is a need of significant

improvement is the one mainly in the area of administrative services.

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Among the priorities of national and European executive authorities lie for fairly long period

electronic services and e-government platform as one of the first steps to facilitate the business. It is

no less expected, along with the digitalization and decentralized access, simplification of

administrative requirements and procedures. Those are rather the expectations of SMEs towards

governments (as for instance the introduction of silent consent principle), than real support and

subsidies from national authorities.

Overall, however, the Bulgarian political system, as it was already mentioned, has provided

stability and predictability in long term, which itself is essential for investors and prospective

business partners. It is in this line with this stability and predictability that Bulgaria was admitted as

a full member of organization like NATO and European Union. Undeniably, this membership has

positively influenced in general the conditions for development of Bulgarian exports and the

prospects for realization of SMEs in international markets. Confidence in overall policy framework

in Bulgaria has led to long term contracts, framework agreements for subcontracting and export and

to improvement of the image and positioning of its industry – effects that individual SMEs and even

industry associations could not achieve on its own.

However, it is appropriate to mention the absence of tangible long-term policy vision and

coherence of reforms affecting the educational system. Vital areas such as formation of skilled

workers find their base in the overall scientific and educational framework. To extend that absolute

production capacities could be provided with adequate and relatively well-trained personnel,

development of high-tech and innovative sectors such as C26 (Manufacturing of computer and

communications equipment, electronic and optical products) requires preparation of prospective and

leading engineers who could determine growth and development of enterprises in the industry.

Ambitions for own developments will lead to increased export potential. Improvements and

innovations in the production cycle will provide a comparable competitive advantage of the


Last but not least, we would like to mention the need of significant improvement in the

condition of the infrastructure in the country. As one country which has potentially all the available

methods for logistic diversified export, growth of quantitative and qualitative investment towards

improvement of the infrastructure will provide additional export potential of enterprises, will reduce

their production costs and will reposition in positive direction out image as reliable and accredited

trade partner.

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Economic factors

Considering purely economic factors, it is of major importance in the beginning to touch

financial parameters such as interest rates, tax rates, inflation and GDP indices and exchange rates.

Those which provide stability and a relatively long planning horizon of growth are (currently) tax

rates and exchange rates. Over the past four years the flat income tax is in force in Bulgaria, which

provides certain competitive advantages for its producers. Furthermore, Bulgarian monetary system

is practically bound by all the positive and negative trends in the Euro zone and its currency due to

its fixed exchange rate towards it (throughout the last 15 years, first to the German mark and to the

Euro – after the official introduction of the euro currency). This, of course, could bring both

advantages and disadvantages – a strong euro lowers competitiveness and hampers export, but

provides cheap raw materials and energy in global markets – and certainly can provide a stable

long-term planning framework for branch specialists.

Considerations for national and pan-European trends in economic growth and inflation are

very similar. By observing the published data tables in the appendixes it is easily visible that while

the euro zone is experiencing upward economic development – GDP growth, industrial production;

of course proportionally tied to the increasing price indices and inflation trends – the Bulgarian

manufacturing industry, just as the overall state of the economy, is also rising. Statistics shows that

exports in larger share determine and influence creation of GDP in comparison with domestic

consumption because the manufactured products for export have generally higher added value and

increased labour productivity.

What has lasting negative impact on the development and production in the country, and in

specifics on the mid- and long- term strategies of SMEs are high interest rates which all together

hinder industrial growth. In quite severe extend this could be noticed in industrial production

(except fully in SMEs) which rely on high-tech development passing trough common investments,

update on production processes, need of saving resources for R&D and providing technological and

production advantages in those highly dynamic sectors. Due to this reason, one of the most pressing

problems that Bulgarian SMEs are facing – and in particular those SMEs of sector C26 – is

provision of access to flexible alternatives of financial engineering that allow businesses not to lag

behind in technological or financial aspect and also to provide them with investment opportunities

in improving their export potential.

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Social factors

Social factors in Bulgaria are also broadly researched. The aging Bulgarian population have

a need to maintain and increase the insurance rates for supporting stable social system. In this

aspect a main influence has the earlier mentioned necessity of educated and perspective workforce

and skilled professional. According to current trend in the labour market (nearly 11% of

unemployment), quantitative entrée of competitive workforce would not be a major problem for the

business, but instead main issues could be finding professionals who could foster growth in

competitive and export advantages.

Technological factors. Innovation and sustainability factor.

Due to comprehensive reasons technological factors are of great importance for the

manufacturing industry and in particular they play a significant role in sectors with high-tech

manufacturing. New technologies create new product ranges and new production processes.

Possible improvement provides them with additional competitive advantages, decrease in costs,

energy needs, accelerated and improved production. Trade and distribution are also evolving as

improvements for global clients and multilateral business relations are affected by the Internet trade

(including wholesale), flexible customization of orders, contemporary communications and

opportunities for promotion and sales.

Availability of new technologies and development of next generation in technological

advancements should not be only viewed as short term advantage or facilitation for multinational

trade. Next to low costs it is also taken on improved quality but above all strive for innovation and

improvement. Among the long term commitments of Bulgaria towards the European Union is the

prioritization of objectives for strategy Europe 2020. Between the main topics in this key

development area for the vision, are investments with 3% of GDP in research and development

(R&D) as well as access to “green” energy resources which to improve the energy efficiency of

Bulgarian society with 20% (a major part of which is the energy need of the industry).

National long-term strategies are closely linked to similar vision of the Union. At a position

in which the current state demonstrates lack of resources and defects in mechanism and regulatory

frameworks, there the interested parties are expected to make joint cross-sectoral efforts

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(governmental agencies, industry and individual efforts) and to strive to achieve and put into

practice the flagship thematic initiatives of EU for accomplishment of Europe 2020 objectives.

And if in most macro factors the purposes of this long-term vision have apparent gravity and

importance, then four out of the seven flagship initiatives, mentioned beforehand, that bring us to

the national level towards the requirements and views of EU will lead to the introduction of tangible

technological changes in society and, of course, in the industry. “Innovation Union” seeks to

improve the framework conditions and access to financing for R&D activities and innovations, for

strengthening chain of innovations which to boost further levels of investment in the field across

EU.

“Youth on the move” aims to improve the performance of education systems on the

continent and to reinforce the international attractiveness of European education system. Such a

framework will improve tremendously the innovation and technological potential of the society and

is something the Bulgarian government should also strive to partner in if it wants to support small

business development in the long run.

“A digital agenda for Europe" aims to accelerate the use of broadband and to benefit from

the digitization of a common market for end users and companies. This vision, which should

highlight the efforts of small and medium sized businesses, is much closer to its applicability in

Bulgaria. For its accomplishment there is an accessibility of a large number of national and

European sectoral operational programs and initiatives.

"Resource Efficient Europe" is a long-term intention of the community to diversify its

energy sources - with a highlighted development in renewable energy – to reduce consumption and

to improve their effectiveness during their use. This requires also planning, financing and

investment in technological developments for achieving goals of energy sustainability and

efficiency.

There is also an all-encompassing thematic initiative – “Industrial Policy for the Globalized

Era” – that aims to improve the business environment especially for micro, small and medium sized

enterprises which are the notorious feature of the economic backbone of Europe and the

actualization of the most active part of the work – age population. Framework agreements and the

European initiates are not missing: “The European Charter for SME”, „Small Business Act”,

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sectoral programs of the DG Enterprise and Industry, prescriptions and goals of the national

Operational Programs. The ultimate goal is to support the development of strong and sustainable

growing industrial base of Europe, capable to complete on a global level and on current markets.

Commitments here are also in reference to all parties involved thus the achievement of such goals is

ambitious and long-termed although every little step in the following direction will support

industrial SMEs and will improve their prospects and positioning in global markets.

Environmental factors

After the initial step and in general less commonly mentioned, but at the same time with

growing importance and currently taking key positions in the analysis of macro environment, are

the arguments for sustainable positioning of industry in the environment. Current weather

conditions could affect the cycle, resource delivery, supplies or other momentary consideration of

the business. The long term concern in the last two decades, however, affects the trends of climate

changes and the effects of industry on the environment.

High technology sectors are not directly affected of the extent to which other sectors such as

the hospitality, agriculture and mining sectors could be affected. However, the public importance

together with direct effect of the changes in consumptions and availability of resources force

national governments and intergovernmental committees to pursue development of environmentally

sustainable patterns of production and consumption. Those factors will increasingly become

stronger part of new legislations, adopted environmental standards and taxes, logistic and industry

constraints. This trend could on a first look have some immediate negative effects on the

competitiveness of Bulgarian and European industrial companies – and especially over SMEs with

lower capacity for allocation of resources and alignment of production to developed norms – but in

the long run, for the same industries this will ensure sustainable resource provision.

Often could be seen in seemingly negative and restrictive tendencies that this new

environmental awareness could be analyzed and considered as a significant change in consumer

expectations and demand, which could mean new market opportunities for businesses to create their

timely products or to properly position themselves based on current developments and market

trends.

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Legal factors

If we need to define a single all-encompassing historical problem in the development of

small and medium businesses in Bulgaria, it undoubtedly will be the lack of continuity in the

political and legal initiatives; thus we have a frequent passing of new and changes of existing laws

and law groups, having a direct or implicit effect on small businesses. This is a factor of

considerable importance for international investors and trade partners as well. And if for them the

overcoming of some obstacles could limit itself to an in-depth research of the existing norms, for

SMEs in Bulgaria adhering to such requirements often means a great deal of effort in terms of

resources and time necessary.

With regard to these concerns we have hinted to some of the responsibilities of the

Executive and Legal branches may adopt in order to simplify procedures and requirements – legal

and administrative ones; thus facilitating SMEs and keeping in mind the clearly declared

commitments to stimulate such enterprises and implement various forms of promotional efforts to

their benefit. Besides the parliamentary working commissions and expert groups at the apposite

Directorates and Ministries, there are also consultative councils to the Council of Ministers which

also have a direct interest in developing SME measures, and specifically those from the

manufacturing industry and sector in question, subject of the present analysis. Those concerned are:

Council for administrative reform, Consultative council for promotion of small and medium

enterprises, Consultative council for sustainable development, Intra-institutional council for export

insurance, National council for science and innovation (as well as a separate National council for

innovations), National consultative council for vocational training of the workforce, Council for

protection of intellectual property, Council for coordination in the management of European Union

funds; as well as some that have an indirect but still strategic meaning for the prospects for

development of the Bulgarian SMEs and the industry as a whole: councils for promoting

employment, statistical activities, labour inspection, economic growth, “international cooperation

for development” and others.

They are composed of members of the Government administration and the respective

Ministries but also of some branch, financial and non-governmental organisations, local authorities

and others. (As an example, the Consultative council for the promotion of small and medium

enterprises under the Chairmanship of the Minister of MEET, at present contains government

employees from the Ministry of Finance, MLSP, MEYS, BSMEPA, the Council for coordination

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and management of the EU funds, as well as representatives from banks, BIA, BCCI, NAMRB, and

NGOs such as the Centre for economic development, Institute for market economy, and the

Entrepreneurship development foundation.)

This aggregation of experts from various sectors and spheres of social and economic life

should regularly re-evaluate, review and suggest constructive changes and improvements to the

framework, while aiming to maintain a stable and predictable basis for the development of

Bulgarian SMEs in their work with current and potential future partners.

The legal framework as one of the six macro factors of the present analysis is the most

extensive one. It encompasses not only specific institutions and experts, and end users, but also

influences generally the formation of the business environment for the development of the

Bulgarian industrial SMEs. It is the macro factor that covers and regards probably all of the above-

mentioned single parameters and conditions of a future Bulgarian sustainable and long-term

development: it has political, economic, social, technological and ecological effects and

repercussions.

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BARRIERS TO THE INTERNATIONALISATION OF ENTERPRISES FROM

THE SECTOR

Analyses of the statistical datasets may give us a large portion of the information needed to

infer some of the most important trends in the development of SMEs and the sector in general. With

a view to individuating the essential problems facing the enterprises themselves, however, much

more effective can undoubtedly be the sociological surveys, focus groups and cross-institutional

working relations with actual owners and managers of SMEs producing optical, precision and

medical apparatus.

The surveys in their entirety are presented and analysed within a separate annex to the

present strategy. The conclusions that we can draw at this stage, nonetheless, are among the ones

pointed out and graded as most serious obstacles and barriers to the internationalisation of the

enterprises themselves. Sorted according to their relative importance and frequency of occurrence,

they are the following:

Unfavourable business environment in Bulgaria

Customs and non-customs limitations by other countries

Lack of experience in foreign trade matters

Higher risk on the various foreign markets

Those are followed by little less urgent ones but with a growing perceivable importance:

Lack of qualified staff/experts able to guarantee quality

High input prices

High export-related expenditures

Language barriers

High export-related expenditures for access to some of the identified key export target

countries – e.g. India, are related to high transport costs, while for Russia – the high export costs are

related to high market entry costs, including inter alia high administrative costs and costs due to

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bureaucraticy. The competitive prices of the local products and the different business culture should

be noted as specifice barriers to the access to the Chinese market.

Additionally expressed opinions refine and specify the wider categories of barriers that

SMEs from the sectors are faced with in their attempts to go global.

According to experts and upper management within the branch the difficulties of market

entry could be offset by participating in specialised expositions and apposite forums. Those are

followed in importance by clarifications regarding customs requirements and licensing regimes

which they expect to be able to find in specialised informative publications for the industrial sector

in question.

Replacing the production facilities and investing in innovative production processes requires

the structuring of preferential conditions and negotiations with banks and other crediting

institutions, especially for the SMEs that apply for financing under OP calls of the BSMEPA, as

well as other Structural funds and Sectoral Programmes.

Financial problems regard also the lack of resources for innovations, advertisement and

patent acquisition. Small and medium enterprises rarely have the available funds to invest in

innovations (time and financial ones above all), and the smaller ones can hardly afford to maintain

a unit of good researchers. Possible solutions may include the creation of a guarantee Fund

which could be used to loan credits to SMEs for the actualisation of their ideas.

Actual SME exponents also speak of the discrepancy between the realities of theoretical

developments and theorisation in the educational institutions and the trends in the practice of the

high-technological sectors of production, such as the one analysed by this study. SMEs expect the

government to provide motivation for the business and educational structures to work together –

structural incentives (e.g. fiscal, tax) as such a working relationship will lead to a better

professional and academic environment.

Similar are the expected stimuli for cross-sectoral clusters, technological and innovative

parks which could support the development and improvement of research and manufacturing

processes altogether.

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Explicitly pointed out are the needs to elaborate unified standards and certificates, bilingual

documentation (to drastically facilitate exports), as well as the higher activity and visibility of the

national trade representations abroad.

The creation of a “Strategic planning” unit responsible for the monitoring of present and

future strategic frameworks is also desirable. As for the BSMEPA, although under criticism for its

lack of efficiency in some initiatives, as a whole it receives the approval for its actions and

cooperation whenever mutual projects are at the stage of their implementation.

Business Environment Anti-corruption Components

The level of transparency and the corruption risk should be analyzed as crucial elements in

the assessment of the availability of favorable business environment for the SMEs internalization in

the sector – at a national level, as well as in the identified priority export markets.

LEGAL REGULATION OF THE ACTIVITIES OF THE EXECUTIVE AGENCY FOR

PROMOTION OF SMALL AND MEDIUM ENTERPRISES: CORRUPTION RISK

ASSESSMENT

1. HIERARCHY OF THE LEGAL FRAMEWORK

The work, organisational structure and functions of the Executive Agency for promotion of

Small and Medium Enterprises (the SME Agency) are laid down in the Law on Small and Medium

Enterprises, its Implementing Provisions and the Statute of the SME Agency. Other secondary

legislation and internal bylaws have been adopted as well. A Regulation on the terms and conditions

for awarding contracts under Art. 7(2) of the Law (direct negotiation procedures) has been approved

by Decree of the Council of Ministers. The analysis reveals that the centre of regulatory gravity is

shifted to second-level legislation and the executive bodies are given extended powers to regulate

this type of activity, at the expense of the legislature.

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2. STAKEHOLDERS AWARENESS OF THE AGENCY’S ACTIVITIES

Organisational arrangements are in place to ensure that the framework of procedures and

activities is accessible by a wide circle of users. The website of the SME Agency contains all laws

and regulations related with its work. Information is also available on the specific activities and

opportunities provided by the Agency. The information is regularly updated to ensure better

awareness of all stakeholders. It should be noted that these are only prerequisites for better

awareness of the Agency by increasing its transparency, which in turn reduces the chances for

exacting potential corruptive pressures on the users of its services.

3. JUDICIAL REVIEW OF THE ACTS

The administrative acts issued by the SME Agency in exercising its powers and performing

its activities are subject to judicial review under the Administrative Procedure Code.

4. ANTICORRUPTION MEASURES

4.1 GENERAL FRAMEWORK

The SME Agency has developed and put in place Internal rules for protection of persons

submitting reports regarding corruption (whistleblowers), abuse of power, trading in influence and

conflict of interest against staff members of the Agency, Internal rules regarding provision of access

to public information and Internal administrative arrangements for checks undertaken by the

Ombudsman.

It is envisaged a detailed procedure for registration and follow up of the received reports,

which afford maximum protection to the submitter of the report.

4.2 RULES FOR FOLLOWING UP THE REPORTS

The staff member alleged in the report can not continue dealing with the case, to which the

report relates. If the case has not been assigned to the alleged staff member, measures are taken to

restrict any access of the latter to information and materials related with the case.

The internal rules are contain detailed measures for protection of whistleblowers who report

alleged cases of corruption, abuse of power, trading in influence and conflict of interest.

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4.3 REPORTING

While adequate regulatory provisions are in place for the work of the administrative bodies

and the mechanisms for prevention and combating corruption, and for protection of whistleblowers,

there is no feedback about the follow-up on the submitted complaints and reports or the final

outcomes of the inquiries made. Neither is there information about how many reports are

confirmed, dismissed or referred to other competent authorities for further investigation.

Making this feedback publicly available would let all stakeholders and organisations see

clearly the results from the activities aimed at assistance and promotion of small and medium

enterprises as well as the measures taken to prevent illicit acts of administrative officials in carrying

out these processes.

LEGAL REGULATION OF THE ACTIVITIES OF BULGARIAN EXPORT

INSURANCE AGENCY EAD: CORRUPTION RISK ASSESSMENT

1. LEGAL REGULATION OF THE ACTIVITIES

The Export Insurance Code governs the activities of the Agency related with the

performance of the specific functions entrusted to it by the State. Detailed arrangements of the

various types of insurance services are laid down in the Rules of Bulgarian Export Insurance

Agency EAD on the activities and procedures related with the conclusion of insurance contracts and

settlement of insurance claims. The detailed regulation envisages clear and accessible procedures

and reduces the scope for discretionary decisions of the administration.

2. STAKEHOLDER AWARENESS OF THE AGENCY’S ACTIVITIES

The procedural rules are available to a wide circle of users of the Agency’s services. All

laws and regulations related with its activities are posted on the website of the Agency. Detailed

information is available for the various procedures and the required documents. The information is

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updated on regular basis to ensure better awareness of the stakeholders. It should be noted that these

are only guideline materials and the choice of a specific option for using the export insurance

services should be a matter of additional research.

3. JUDICIAL REVIEW OF THE AGENCY’S ACTIVITIES

The relationships between Bulgarian Export Insurance Agency EAD and its counterparties

do not occur at the plane of administrative law. They are governed by the rules of the civil law.

Any disputes or differences of opinion between the Agency and the insured party related to

settlement of claims under insurance contracts (policies) are resolved by negotiations. If the parties

fail to reach an agreement, the insured party or a third beneficiary, if so provided for in the

insurance contract, can contest the refusal for payment of insurance compensation or the amount of

the compensation before the Board of Directors. If the negotiations and the subsequent decision on

the contestation of the insured party or the third beneficiary do not lead to resolution of the dispute,

the party concerned can file for court action under the Civil Procedure Code.

Pursuant to Art. 14(7) of the Export Insurance Act, the Bulgarian Court of Auditors

(National Audit Office) exercises specific control insofar as the financial operations related with the

activities of the Agency are at the expense of the State.

4. DIRECT ANTICORRUPTION MEASURES

The Rules of Bulgarian Export Insurance Agency EAD does not contain specific

arrangements for filing of complaints/reports regarding corruptive behaviour of staff members of

the Agency (whistleblowing). There are no specific provisions for protection of whistleblowers who

report suspected cases of abuse of power, trading in influence or conflict of interest. Neither are

there specific rules regarding the staff members alleged in these reports. Despite the specific

character of the Agency as a business/commercial entity, one should try to look beyond the confines

of the concept that anticorruption rules are a territory reserved for the state administration only. The

business sector also uses and applies such rules.

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I. LEGAL REGULATON OF THE ACTIVITIES OF THE NATIONAL CUSTOMS

AGENCY: CORRUPTION RISK ASSESSMENT

1. HIERARCHY OF THE LEGAL FRAMEWORK

Being a centralised administrative structure under the Minister of Finance, the National

Customs Agency (NCA) and its work are regulated by the Community and national legislation. At

supranational level, customs affairs are subject to a huge number of international and customs

conventions, treaties and agreements.

A) The functions of the customs administration and the procedures liable to customs control

and supervision are regulated by one national law and a plethora of second-level legislation,

including rule books, ordinances, instructions and decrees. Numerous EC Regulations on the

working arrangements of the customs administration and the procedures applicable to movements

of goods within and outside the Community, including the Regulation establishing the Community

Customs Code, are directly applicable in Bulgaria and prevail on the national legislation in case of

conflict and divergence.

B) The work of the customs administration and the procedures liable to customs control are

also the subject matter of administrative acts issued by the Director General of NCA alone or jointly

with the heads of other agencies involved in the movement of the goods concerned.

C) The last level in the hierarchy of the legal instruments comprises the individual decisions

and other acts, which the customs officers directly responsible for the particular movements or

procedures take every day in respect to the operators concerned, however these decisions and other

acts do not apply to customs matters in their generality.

There is a balance between the acts issued by the customs administration and those issued at

higher levels. Since the customs procedures can be very diverse, the day-to-day work involves

numerous decisions, which the customs administration is expected to make. On the other side,

however, both the national laws (the Customs Act and its Implementing Rules) and the EU acquis

provide operational independence to customs officers in making these decisions, which quite

frequently results in unjustified decisions and impediments for the operators concerned.

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In a number of cases the highly detailed rules render the operators unable to fulfill the

statutory requirements in order to receive permission for the desired customs procedure or

arrangement.

The very detailed Community and national rules for the so called “simplified procedures” in

practice prevent their wide application as there are many requirements to the operators who wish to

use them, so very few companies have obtained Approved Exporter or Approved Economic

Operator (AEO) status. Although electronic declaration procedures are available, essentially they

provide little facilitation to the clients of the customs administration since the existing laws and

regulations still require the (physical) presentation of various documents.

2. STAKEHOLDER AWARENESS OF CUSTOMS ACTIVITIES

The legal rules governing the customs procedures are available to a wide circle of users of

the customs administration’s services. The NCA website contains all laws and regulations, at

national and EU level, concerning the movement of goods. The information is updated on regular

basis to ensure better awareness of all stakeholders. However, an issue that has to be raised is the

complexity of customs work and the difficulties involved in the practical application of the various

customs procedures, especially if they are pursued without the help of customs brokers.

Regarding the details of the customs procedures, the Customs Act establishes the right of

free access to information and the conditions under which the customs administration may issue

Binding Tariff Information (BTI) and information about the origin of the goods.

3. JUDICIAL CONTROL ON THE ACTIVITIES OF THE AGENCY

The decisions issued by customs officers are individual administrative acts and therefore

must be supported with reasons. They can be appealed administratively or in court. Despite the

existence of explicit norms, the final decision as to whether the legal requirements for issuing the

act requested by the customs client are met or otherwise is in the discretion of the administrative

authority. This fact does not determine the final contents of the act, but it costs financial and human

resources and time for the customs client to appeal the act to a higher administrative level or in

court. However, the appellable administrative acts do not include the numerous decisions to demand

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additional information or documents, which are left to the discretion of the customs officers directly

involved in the procedure. In essence, this may lead to unreasoned demands aimed at achieving

results which are not regulated by the law. The preemption of these “decisions” must equally be the

objective of regulatory, structural and functional changes aimed at reducing to reasonable limits the

discretionary powers of customs authorities. While the customs legislation contains very detailed

rules for each and every customs procedure, it nevertheless leaves leeway for discretionary

decisions of the customs officers, and this, rather than facilitating the users of the customs services

and the customs officers themselves, leads to displacement of focus and replacement of the

objectives intended by the law.

4. DIRECT ANTICORRUPTION MEASURES

4.1 GENERAL FRAMEWORK

The efforts to reform the customs administration and achieve higher integrity of customs

officers have lead to serious structural and staff changes, new rules for recruitment of customs

officers, new forms of job description sheets, and a new integrated IT system for management of

human resources. In order to achieve greater transparency in the work of the administration, citizens

transiting the border crossing points are asked to complete anonymous questionnaires. New forms

and methods for attestation of the staff members are introduced and job candidates undergo

psychological tests for determining their loyalty to the organisation (HCS – Integrity check).

4.2 SPECIFIC ANTICORRUPTION ACTIONS

There is a solid legal basis for prevention and countering illegal acts of customs officers,

which rests on the provisions of the Customs Act and is further elaborated by the Minister of

Finance in the Code of Ethics of the Customs Officer. There is also the Client Charter, which

fosters the statutory rights of stakeholders. The NCA website provides easy and accessible

information and office phones (email address) to anyone willing to report allegedly illegal acts of

customs officers. The administration disregards anonymous reports and does not have specific

measures for protection of persons reporting illegal acts of customs authorities, however,

notwithstanding the official position in respect to anonymous information, the Annual Customs

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Report for 2011 does provide the total number of all investigated reports, including the anonymous

ones.

5. SPECIALISED UNITS AND THEIR FUNCTIONS

The Inspectorate service of NCA, whose task is to ensure that staff members behave

appropriately and in compliance with the established rules, is now part of the Inspectorate Unit of

the Ministry of Finance. The Statute of NCA provides that recommendations and reports containing

allegations against staff members are responsibility of Directorate “Organisation and management

of human resources”, more specifically of its “Professional standards and internal investigation”

unit at the Central Customs Directorate (Head Office of Customs). The officers of this Directorate

have powers to undertake investigations, establish offenses and impose administrative-penal

liability for conflict of interest or other disciplinary offences, and these powers are officially

regulated. There are approved Guidelines for establishment of disciplinary offenses and carrying

out disciplinary procedures, and compliance officers/controllers have received dedicated training.

6. REPORTING

Already the first pages of the Annual Report of NCA, which is published on the website of

the Agency, provide very detailed statistics regarding the detected offenses, the undertaken

disciplinary procedures and the imposed penalties. The information includes the number of initiated

cases and internal investigations, the law under which they were carried out (the Civil Servants Act,

the Conflict of Interest Prevention and Detection Act or the Customs Act) and the findings/results

of these checks and investigations: incompliance of staff members, conflict of interest or other

disciplinary offenses. The published information also includes details of inquiries into the personal

assets of staff members as well as the fact that some cases were forwarded to the competent

authorities of the National Revenue Agency (the tax service).

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7. GENERAL CONCLUSION

The regulatory provisions on the functioning of the customs administration ensure

harmonised implementation of the administrative procedures, however the discretionary powers

afforded by certain provisions are conductive to elicitation of corruptive practices. The

“appropriate” legal environment, combined with legislation imposing multiple licensing regimes,

the control of which is mandated on the customs authorities, gives rise to administrative hurdles that

can be overcome not necessarily by legitimate means. The creation of conditions for wider usage of

simplified procedures and the optimisation of the administrative capacity for application of these

procedures would be a important step for preemption of corruption.

ІІ. ASSESSMENT OF EXPORT-RELATED CORRUPTION RISKS

Until now, the small and medium enterprises in this sector have been carrying out their

export operations in competitive market environments, under relatively limited financial resources

for innovations and continuously increasing requirements to the quality of the exported goods and

services. The bulk of the export in this sector is for EU Member States, all of which have stringent

regulations for marketing the products and services generated by Bulgarian SMEs. At the same

time, some exports are destined for African, Middle East, Asian and other Balkan countries. In this

market situation, the corruption risk profile is defined both by the existing objective conditions and

subjective (discretionary) drivers.

The first phase of export operations – establishment of contacts, seeking of international

partners and entering into contractual arrangements, involves the following corruption risk

elements:

• Ignorance of the applicable regulatory framework;

• Insufficient technical capacity and resources, including lack of investments in

innovations;

• Tendency to over-rely on the experience of intermediaries and entrepreneurs, who

have already been involved in similar businesses;

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• Lack of competent staff for performing these operations.

In such circumstances there is a growing risk of resorting to unauthorised or illicit means to

compensate these deficiencies.

Small enterprises encounter huge difficulties trying to access whatever options for making

direct contacts with potential partners in the export of these types of products and services. In

contrast with other sectors, the highly specialised nature of these products means that demand is

confined to a relatively limited number of international importers. On the other hand, practical

experience has shown that most exporters in this sector have already some sort of relationship,

either as subcontractors or as distributors, with one or more companies operating in these markets.

This situation nourishes at least three other elements of corruption risk, namely:

• Possible monopoly on the market;

• Lack of effective mechanisms for abating unfair competition;

• Lack of intra-company rules for protecting the interests of exporters.

Where one of these elements or a combination of these elements is in place, the level of

corruption risk is higher as the potential exporter is not independent and responsible for its acts.

The second phase is one which elicits high levels of corruption risk, namely the organisation

of export operations in accordance with requirements and rules existing in the country. This

involves the following factors of commercial risk:

• Ignorance of the applicable legal framework;

• Strong distrusts in public institutions;

• Lack of clear comparability and uniform standards among the institutions existing in

other countries and in our country.

The third critical area or relevance to the level of export-related corruption risk in this sector

is delineated by the guarantees of the remedies available to the exporter. The specificity of these

exports determines at a higher degree the readiness of the exporters to make additional efforts for

protecting their receivables. Accordingly, practices which provide financial guarantees for

receivables from international partners can efficiently preempt the risk of resorting to illicit

maneuvers.

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ІІІ. DESIGN AND IMPLEMENTATION OF EXPORT STRATEGIES DRIVEN BY

GENERAL AND SPECIFIC CHARACTERISTICS OF THE ENVIRONMENT

(COMPARATIVE INTERNATIONAL BENCHMARKS OF THE SPREAD OF CORRUPTION

AND SPECIFIC NATIONAL CHARACTERISTICS OF THE MAJOR MARKETS)

To ensure successful design and implementation of effective export strategies for businesses

in the sector, account should be taken, among other factors, of the characteristics of environment in

which these businesses plan to implement and achieve their business programmes and targets.

Accordingly, it is important take into consideration analytical materials and data from international

comparative surveys, which provide benchmarking evaluations of:

• The overall anticorruption context in which businesses and public institutions in the

individual countries and regions carry out their functions;

• The efficiency of institutional efforts in combating corruption;

• The sectors and institutions, which are found to exhibit most significant deficiencies

in terms of functional efficiency, operational transparency and extent to which they have been

affected by the spread of corruptive practices.

Three well recognised cross-national surveys of the international anticorruption organisation

Transparency International can be used as tools for estimation of the spread of corruption on global

scale and the extent to which key national institutions and sectors have been affected:

Corruption Perception Index

Transparency International’s Corruption Perception Index measures the level of political and

administrative corruption based on the judgments of representatives of the business community,

economic and political risk analysts across the globe, including polled experts from the countries

included in the survey. The Corruption Perception Index varies from 10 (indicates low level of

corruption and practical absence of corruptive pressure) to 0 (indicates an extremely high level of

corruption enrooted in all institutions and spheres of socio-economic activity), the midpoint 5

defines the line in the sand above which corruption is not a system problem, while values lesser

than 3 are critical as they mean that corruption in the country concerned is ubiquitous. The survey

can be used for making regional and subregional comparisons in order to give broad guidance to

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businesses as to which countries in a given region present the highest corruption risk and

accordingly offer the most inappropriate business environment as a whole.

Global Corruption Barometer

The Global Corruption Barometer measures the spread of corruption across individual

sectors and institutions in the countries included in the survey. It reflects the perceptions of citizens

and their immediate experience from encounters with corruptive practices. GCB values vary from 0

(for corruption-free sectors and institutions) to 5 (for heavily corrupted sectors and institutions).

This survey makes it possible to compare the levels to which the corruption has permeated

key sectors of social, economic and political life within the surveyed country. In addition to being a

tool for sectoral analysis, the Barometer can be used as a basis for development of anticorruption

policies with clearly defined priorities. Businesses can use the survey in order to flag those

institutions and sectors of social, economic and political life, which have greater deficiencies in

their work and accordingly present a more serious corruption risk.

Bribe Payers Index

The Bribe Payers Index tells us to what extent the companies in a given country are prepared

to offer and pay bribes in pursuance of their export strategies abroad. The Bribe Payers Index varies

from 10 (lack of willingness to offer and pay bribes) to 0 (high degree of willingness to offer and

pay bribes). The BPI encompasses a relatively limited number of countries (28), but it should be

stressed that these include the largest producing and exporting countries in the world. Businesses

can use this survey to gauge the willingness of their competitors, which operate abroad or

contemplate expansions to new export markets, to offer and pay bribes.

Export strategies in the sector for manufacturing of medical, high-precision and optical

devices and tools should be designed and implemented with attention to the huge difference

between the two groups of countries, which are the major markets for this type of products: 1)

markets in EU Member States and 2) markets in non-EU countries. There is a major difference in

the overarching environment, in which institutions and businesses perform their functions.

Accordingly, this reflects not only on the scope and spread of corruptive practices in the second

group of countries, but also on the way their national companies do business abroad.

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The design and implementation of export strategies in the sector for manufacturing of

medical, high-precision and optical devices should be made with reference to the data for the most

important markets:

A) MARKETS IN EU MEMBER STATES: BELGIUM, GERMANY, ITALY,

AUSTRIA, FRANCE

The Corruption Perception Index puts Germany, Austria, Belgium and France at the top of

the rating list. These countries demonstrate high institutional efficiency in countering corruption.

While the EU average value of the Index is 6.27 points, the CPI values for these countries stand at 8

for Germany, 7.8 for Austria, 7.5 for Belgium and 7 for France. Within this group of countries, the

one having more serious issues with the spread of corruption is Italy with CPI 3.9 for 2011, which

suggests that the country’s efforts in combating corruption are not efficient enough.

The other comparative survey, the Global Corruption Barometer, demonstrates that the

public institutions in these countries work efficiently and apply leading standards for prevention and

combating corruption.

The designers and implementers of export strategies in the above countries should take into

account the likelihood of encountering corruption pressures in Italy. The most serious corruption

pressures can be expected from the judicial system, customs, agricultural agencies and in the

medical services sector. This conclusion can be supported with data from the Global Corruption

Barometer, which reflects citizens’ immediate experiences from their encounters with corruptive

practices. The respondents’ answers to the straightforward question “Have paid any bribe during the

last 12 months?” indicate that the most serious corruption pressure is in the judicial system (28.8%

of the citizens have paid bribes), customs (13.9%), agricultural agencies (12.9%) and the medical

services sector (10%). Concerning the medical services, it should be borne in mind that the

questions relate to the provision of medical services for citizens. Nonetheless, the GCB exposes

deficiencies in the integrity of the key actors in this system. The spread of corruptive practices is

relatively lower with the tax services (6.9%), registration services (6.4%) and police (3.8%). France

and Germany have created a much more integrated environment. More serious risks of corruption

pressure in France can be expected from the agricultural agencies (to which bribes were paid by

8.1% of the citizens during the past year), customs (5.4%), and the medical services (5.1%), while

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businesses can expect more efficient assistance from the tax and registration services, police and the

judiciary (2 to 3 per cent are the cases in which citizens paid bribes during the last year). German

and Austrian institutions and businesses can be expected to operate at highest levels of integrity.

German businesses are practically free from any corruption pressures on the part of customs, the tax

services and the judiciary; the highest percentage of those who paid bribes is among the citizens and

companies interacting with the registration services (1.9%).

According to the listings of the Global Corruption Barometer, the highest risk of

proliferation of corruptive practices of various nature in the group of countries under consideration

can be expected from political actors – political parties are the sector believed to be most heavily

affected by corruption in Germany. Similar data can be seen in respect of Austria.

B) MARKETS IN NON-EU COUNTRIES: CHINA (INCL. HONG KONG), TURKEY,

JAPAN, REPUBLIC OF KOREA, CANADA, TAIWAN, USA, RUSSIA, SWITZERLAND,

SINGAPORE, MEXICO, INDIA

Compared to the EU states, this group of countries offers a less favourable business

environment due to two main deficiencies: less efficient work of public institutions and stronger

corruptive pressure exerted on businesses.

In designing export strategies in this sector, the first dataset to be taken into account is the

Corruption Perception Index. This international ranking can be used for making regional and

subregional comparisons in order to give broad guidance to businesses as to which countries in a

given region present the highest corruption risk and accordingly offer the most inappropriate

business environment as a whole. According to the corruption index, the above countries are classed

as follows (in terms of corruption-free environment):

a) Asia and Pacific Asia (9.2 points on a scale of 10), Hong Kong (8.4), Japan (8), Taiwan

(6.1), China (3.6), India (3.1), Russia (2.4), Republic of Korea (1);

b) the Americas: Canada (8.7), USA (7.1), Mexico (3);

c) Europe and Euro-Asia: Switzerland (8.8), Turkey (4.2), Russia (2.4).

According to the Global Corruption Barometer, the most corrupt domain in China is the

business sector followed by political parties, police and Parliament. This specificity should be taken

into account when designing export strategies for this country, bearing also in mind that Chinese

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companies are quite prepared to offer bribes in other countries as well. Indian political parties,

police and Parliament bear the heaviest onus of corruption risk. The most corrupt sector in Taiwan

is police followed by the state administration, while the risk of political corruption is only the third

most important one. Similar is the situation in Russia, where the risk of administrative corruption

considerably outweighs the politically underpinned risk: the most corrupt sectors are police and

public administration, followed by the judiciary and Parliament.

The heaviest corruption risk in Turkey exists in the business and administrative sectors.

According to the Bribe Payers Index (based on a scale from 10 – absence of bribe payments,

to 0 – profuse bribing practices), Chinese companies come second after Russian ones in terms of

willingness to pay bribes abroad: the BPI values are 6.1 for Russia and 6.5 for China. Very similar

is the situation in Mexico with BPI of 7 as well as Taiwan and India with BPI of 7.5. Conversely,

the companies in Switzerland, US, Singapore and Japan are far less willing to pay bribes.

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FINANCIAL ANALYSIS

The present analysis of the financial state of the enterprises in sector “Manufacturing of

medical, precision and optical apparatus and instruments” is carried out on the basis of the

following types of financial and performance indicators:

Profitability indicators.

Efficiency indicators

Financial stability/autonomy

Liquidity indicators.

The analysis is based on data from the financial reports1 of 20 export-oriented small and

medium enterprises from the sector that participated in the sociological survey during the month of

November 2011, with the data output presented in the following table:

Table 58 Output data: financial analysis of 11 SMEs from the sector “Manufacturing of medical, precision

and optical apparatus and instruments”, (BGN thousand)

2007 2008 2009 2010

ASSETS 5014 5951 5950 3899

Fixed assets 2467 3135 3184 1713

Current assets – total, out or which: 2519 2756 2693 2158

Inventory 931 1304 999 831

Accounts receivable 929 693 809 566

Cash 659 626 885 759

LIABILITIES 5014 5951 5950 3899

Equity capital 2408 2697 3863 2986

Long-term liabilities 1036 1738 615 192

Short-term liabilities 1570 1516 1472 721

Accounts payable 1565 1499 1424 690

Liabilities to suppliers and clients 734 743 588 173

TOTAL REVENUES 10090 8354 7554 4384

Net sales income 9049 8090 7191 4214

TOTAL EXPENDITURES 8574 7623 7161 3982

Accounting profit 1516 731 393 402

Tax expenses 152 81 51 42

Net profit 1364 650 342 360

1 The data source is the Trade Register at the Registry Agency, Ministry of Justice.

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The listed statistics delineate a decrease in practically all financial parameters in 2010

compared to 2007, with the exception of cash reserves. The most significant decrease regards the

profits, especially in 2009, most likely under the influence of the global economic crisis. In 2010

the enterprises recorded a minor improvement, while profits remain far below the pre-crisis levels.

Three of the analysed enterprises hold two-thirds of all the assets and are responsible for

more than 80% of the profits for 2007-2010.

Profitability indicators

The indicators for profitability regard the overall yields and returns. They show the

efficiency in using the input resources and turning them into revenue for the enterprises. The

coefficients for profitability are positive values when the financial results of the company represent

a profit, and negative when it is a loss.

When elaborating the profitability analysis of the enterprises we have used the following

indicators:

Net profit margin

This coefficient shows how much financial profit the company makes as a result of one unit

of generated revenue – or in other words how much profit/loss has 1 BGN of revenue produced. It

is calculated according to the following formula:

Net profit margin = _____After-tax net profit_____

Net sales income

The values of this indicator for the surveyed SMEs are presented in the following

table:

Table 59 Net profit margin coefficient

2007 2008 2009 2010

Total for 20 SMEs 0,15 0,08 0,05 0,09

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During the analysed period the coefficient for the net profit margin has deteriorated because

of the more rapid drop in profits of the enterprises compared to the net sales income since 2007.

The decreasing values of this indicator demonstrate that the enterprises cannot maintain higher net

profits from the sales they record. Nevertheless, the interruption of the trend in 2010 gives

promising signs of recovery.

Return on Equity

The return on equity (ROE) ratio reveals the amount of profit/loss generated by a unit of

equity (owner and paid-in capital), and consequentially the share of the current profits/losses

compared to the total equity. This is among the frequently used ratios when analysing prospective

investment in a given enterprise. The coefficient is calculated according to the following formula

Return on equity = _____ Net income ________

Shareholders’ equity

The values of this indicator for the SMEs are listed in the following table:

Table 60. Return on Equity (ROE) ratio

2007 2008 2009 2010

Total for 20 SMEs 0,57 0,24 0,09 0,12

Using equity capital for the SMEs leads to positive financial results. The significant

decrease in the ROE values in 2009 is owed to the drastic drop (by around 50% annually in the

period 2007-2010) of the profits compared to the increase in total equity.

Return on assets

The return on assets (ROA) indicator demonstrates how profitable a company is relative to

its assets. The ratio is calculated according to the following formula:

Return on assets = _____ Net income ________

Total assets

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Values of the indicator for the 20 analysed SMEs are presented below:

Table 61 Return on Assets (ROA) ratio

2007 г. 2008 г. 2009 г. 2010 г.

Total for 20 SMEs 0,40 0,15 0,08 0,11

The dependency of these profitability indicator ratios on the amounts of profits reported

established once again in the ROA ratio and manifests a directly proportional correlation between

short-term changes and the volume of profits posted.

Thus calculated, the profitability ratios indicate that higher profitability for the enterprises in

question is gained by net sales and equity “employed” rather than total assets.

Efficiency indicator

The efficiency ratio is an indicator of the relation between revenues and expenses of the

enterprise. They reveal the economic effects the enterprises manage to obtain out of a unit of

expenditures (or alternatively a unit of revenues).

Classic indicators of efficiency are the ratios of expense efficiency or revenue efficiency.

They are reciprocal and the difference in their values is in the value of the coefficients and the

direction of the indicator itself. Hence in this analysis we will use the revenue efficiency ratio which

is the one rather more often. It shows the amount of expenditures needed to realise one unit of

revenues and is calculated according to the following formula:

Efficiency ratio = _____ Total expenditures_______

Total revenues

The values of the indicator for the analysed SMEs are presented herewith below:

Table 62 Efficiency ratio indicator

2007 2008 2009 2010

Total for 20 SME 0,85 0,91 0,95 0,91

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If we have positive financial results for the period in question, the efficiency coefficient is

below 1,0. The increase of the ratio – closer to 1,0 – during the analysed period speaks of a negative

trend in the financial results reported by the 20 SMEs.

Indicators of financial stability/autonomy

Indicators of financial autonomy give quantifiable characteristics to the degree of financial

independence of the company from creditors. They express the ratio between equity capital and the

total amount of various amounts of financing that the enterprise uses.

Financial autonomy ratio

The financial autonomy ratio gives a quantifiable description of the degree of financial

independence of the enterprise from creditors. If the coefficient is below 1,0 then the company has

exceeding liabilities compared to equity capital, and vice versa. It is calculated according to the

formula:

Financial autonomy ratio = _____ Equity capital_______

Total liabilities

The values of the indicator for the analysed period are presented in the following table:

Table 63 Financial autonomy ratio

2007 2008 2009 2010

Total for 20 SMEs 0,92 0,83 1,85 3,27

In all of the analysed enterprises from sector “Manufacturing of medical, precision and

optical apparatus and instruments” we have a prevalence of liabilities in the beginning of the period

in question. However, with the overall upturn in their economic performance and development, in

2010 we register a stable dominance of equity compared to liabilities and we can consider the

enterprises financially independent from outside funds.

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Indebtedness ratio

This indicator represents the degree of dependence of the enterprise on its creditors for

settling its liabilities and payments. It shows how much liabilities have been incurred when

compared to one unit of equity capital. When larger than 1,0, the coefficient demonstrates a certain

degree of dependence of the SME on external sources of funds. The ratio is calculated according to

the following formula:

Indebtedness ratio = _____ Total liabilities_______

Total equity

The values for the 20 analysed SMEs are presented below:

Table 64 Indebtedness ratio

2007 2008 2009 2010

Total for 20 SME 1,08 1,21 0,54 0,31

Despite the fact that in the beginning of the analysed period the SMEs report a high

indebtedness ratio, the dynamic changes in its value demonstrate a clearly positive trend in

progress. The results correlate with the calculated values for the financial autonomy ratio, thus

showing that by the end of the reported period the SMEs in question could safely and securely

cover their liabilities with own equity and resources.

Liquidity measurement ratios

Indicator ratios for liquidity demonstrate the capacity of a company to liquidate current

accounts payable. The liquidity of the 20 enterprises is reported in terms of the following indicators:

Current liquidity ratio

This indicator accounts for the degree to which current liabilities are covered by assets and

is calculated thus:

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Current liquidity ratio = _____ Current assets_______

Current liabilities

Quick liquidity ratio

This indicator is calculated according to the formula:

Quick liquidity ratio = Cash & equivalents + Short-term investments + Accounts receivable__

Current liabilities

Cash liquidity ratio

The indicator is calculated according to the formula:

Cash liquidity ratio = ___ Cash + Cash equivalents + Accounts receivable______

Current liabilities

Absolute liquidity ratio

This ratio is represented by the following calculations:

Absolute liquidity ratio = _____ Cash

Current liabilities

Average values for the above described liquidity ratios for the 20 SMEs in the survey are

presented in the following table:

Table 65 Liquidity radios

2007 2008 2009 2010

Current liquidity ratio 1,60 1,82 1,83 2,99

Quick liquidity ratio 1,01 0,97 1,19 1,92

Cash liquidity ratio 1,01 0,88 1,19 1,92

Absolute liquidity ratio 0,42 0,42 0,62 1,10

The higher the values for the liquidity ratios, the better prepared is a company to meet its

liability payments. Values below 1,0 are significative of the incapability of an enterprise to

eliminate all short-term liabilities and accounts, should they be required at a short notice. Given

such a situation the company may opt for alternative sources of financing (such as loans). Ratios for

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current, quick and cash liquidities keep their values above 1,0 for the analysed enterprises,

especially in 2010; and we also notice an increase in the indicators’ values due to the drop in overall

short-term liabilities. Therefore enterprises from the sector have at their disposal more current assets

than liabilities. At the present levels the degree of risk that the SMEs face of possibly being

incapable of meeting their financial obligations is much lower.

The analysis of the coefficient of absolute liquidity – which characterises the solvency of the

enterprise, should the maturity of current liabilities be close to the date of balance elaboration –

demonstrates favourable present financial conditions for the 20 surveyed enterprises, although it is

not able to outline a long-term security and stability at the current values reported.

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RESULTS FROM THE SOCIOLOGICAL SURVEYS AND PUBLIC

DISCUSSIONS

In the framework of the project “Elaboration of 18 export strategies and analyses” with a

contracting authority the Bulgarian Small and Medium Enterprise Promotion Agency a sociological

survey has been carried out among 362 small and medium enterprises in Bulgaria, distributed in 18

industrial manufacturing sectors. The field work on the survey has been conducted successfully

during the period 31 October – 28 November 2011. It was implemented by more than 80

interviewers from across the country.

Main goal of the survey is the accumulation of empirical information to be analysed and

intended to facilitate the elaboration of the export strategies.

Subject matter of the study is the export activity of small and medium enterprises from 18

industrial sectors; their present capacities and future possibilities and intentions to export.

Subjects are representatives from the managing teams of the SMEs in question. The

interviews with members of upper management have allowed the accumulation of relevant and

reliable information about the current state, opportunities and perspectives in the export activities of

the analysed industrial units.

Method of data collection – face to face interviews with the manager/owner of the

enterprise or with a substitute of their choice. Apart from a paper copy (a printed survey card), some

of the interviews (at the express consent of the respondents) have been recorded in audio, thus

complementing and expanding the information that is reported in the survey cards.

Criteria for inclusion of the enterprises as survey subjects. In order for an SME to be

considered for inclusion, it has to comply with each and all of the following conditions:

1) to qualify as a small or medium enterprise (according to the definition of the SME

national Law); 2) to be registered in Bulgaria; 3) to be represented by at least 51 % Bulgarian

capital ownership; 4) not to represent a foreign company as a branch; 5) to currently export or

intend (and have the capacity) to export in the near future.

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Fieldwork of the survey. For the implementation of the survey to be carried out in the field

for each one of the 18 sectors there have been lists made available containing the names,

headquarters and possible contacts (telephone, e-mail) of SMEs from the entire country. Depending

on the location of the enterprises, the lists were divided between the 28 territorial administrative

districts in Bulgaria. (The division of the lists is related to the fact that the survey network is

structured by districts. That is in each administrative and territorial district in Bulgaria there are

teams in place, led by a local supervisor, which carry out “in the field” the empirical examinations.

For every specific survey the supervisors and the interviewers undergo a separate training and/or are

presented with written instructions that should be able to guarantee the collection of quality and

reliable empirical information). For each one of the sectors within the districts the appropriate

number of enterprises was defined amongst which to carry out the survey.

The preliminary assignment has been to survey 20 enterprises for each of the 18 industrial

sectors. For most of the manufacturing categories this requirement was fulfilled, and for some of

them even overachieved. Some of the interviewed managers have responded readily and given

valuable information, conscious that without their active participation the present survey could

hardly achieve its goals. Some of them were even managing enterprises that in one form or another

have received assistance by the BSMEPA.

In the process of implementing the fieldwork, however, some obstacles have arisen. With

some SMEs from the sector “Manufacturing of medical, precision and optical apparatus and

instruments” in particular they were the following:

The total number of enterprises for the entire country listed in the preliminary

database presented certain problems reaching the required number of enterprises – 20. Nevertheless

this problem has been overcome. The multitude of criteria that the enterprises had to meet

concurrently led to the exclusion of some of them, mainly because they are not relevant as units to

be surveyed (they do not export or do not even have the potential to do so.)

Out-datedness of the lists – in the work process it appeared that a considerable part of

the SMEs listed do not exist in reality; others have changed their address or telephone numbers and

remain difficult to trace.

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Refusals from potential and suitable respondents for participation in the survey. For a

variety of reasons (very busy; negative attitude towards governmental structures which so far have

not provided assistance needed; fear of “information leakage” from the enterprise; or mere

unwillingness to participate in any kind and form of surveys and studies) some SME managers did

not wish to share their opinions.

Despite all the difficulties the survey has achieved its goals – the necessary empirical

information was assembled. It does not claim to represent the sector in its entirety but nevertheless

offers insight into the current development of the enterprises and their export efforts in times of

crisis; their export prospects, obstacles to those, measures to overcoming such barriers and the

manners and forms of support that the SMEs expect from the state authorities in order to continue

developing their industrial activities.

For sector “Manufacturing of medical, precision and optical apparatus and instruments”

the survey includes 20 small and medium enterprises producing:

Optical apparatus, instruments and elements – microscopes for various medical

areas, optical lenses, spherical and flat optical elements;

Instruments and devices for automatisation;

Medical equipment – for electro-surgery;

Mechanical details;

Devices for physiotherapy and sauna control;

Apparatus for cosmetic procedures.

The enterprises are located in five different Bulgarian towns. Predominantly they are

situated in the city of Sofia.

The locations of the surveyed enterprises are presented in the following table:

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Table 66. Location of the SMEs in the sociological survey

Location Number of

enterprises

Sofia-city 11

Panagyurishte 3

Botevgrad 1

Plovdiv 1

Gabrovo 1

Velingrad 1

Bourgas 1

Varna 1

Data source: Sociological survey

Below we present the distribution of the surveyed enterprises according to the number of

employees and the annual turnover they record.

Table 67. Distribution of the surveyed enterprises according to the number of employees in 2011

Employees Number Percentage

Less than 10 9 45,0

Between 11 and 50 5 25,0

Between 50 and 250 4 20,0

Total 2 10,0

Table 68 Annual turnover of the surveyed enterprises

Turnover Number

of SMEs

Percentage

Less than BGN 3,900,000 16 80,0

Between BGN 3,900,000 and 19,500,000 3 15,0

Between BGN 19,500,001 and

97,500,000 1 5,0

Total 20 100,0

Data sources: Sociological survey

The enterprises that took part in the survey are primarily of “micro” size. In about half of

them (45,0%) the number of employees is less than 10. In the annual turnover statistics we notice

the dominant share (80,0%) of those with less than BGN 3,900,000 reported (2,000,000 Euro).

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For sector “Manufacturing of medical, precision and optical apparatus and instruments” the

interviewed 20 respondents are members of upper management with positions of general manager

or director (13) or owner (2). There have been five experts and managers interviewed as well. Their

summarised opinion about the priority measures needed to promote small and medium enterprises

in the sector before 2013, as well as in the next planning period (2014-2020) are given in Table 52.

Table 69 Priority measures for promoting SMEs in the sector

Priority Extremely high or a

high priority

Average priority Low or no priority

before 2013 2014 - 2020 before 2013 2014-2020 before 2013 2014 - 2020

Promotion of SME export efforts 72,7 77,8 22,2 16,7 5,6 5,6

Support for technological

modernisation of the production

94,4 94,5 5,6 5,6 0,0- 0,0

Support in adhering to

EU standards

77,8 72,2 22,2 27,8 0,0 0,0

Financing of

innovative projects

88,9 88,9 5,6 5,6 5,6 5,6

Vocational education and training

of SME employed professionals

61,6 66,7 38,9 27,8 0,0 5,6

Attracting direct foreign

investment

52,9 64,7 29,4 23,5 17,6 11,8

Business cooperation and

industrial cluster participation

31,6 44,5 57,9 50,0 10,5 22,2

Consulting and

information services

44,5 61,1 33,3 16,7 22,2 22,2

Improving access

to financing

89,4 83,4 10,6 16,7 0,0 0,0

Note: The percentages are calculated on the basis of valid responses.

In a textual addition one of the respondents has pointed out that “The creation of a

Guarantee Fund to match business plans” could also be a high priority measure, while another one

wrote “None of those measures have any effect on the company. Relying on own efforts.”

The data analysis from the table allows us to mark the following important aspects in

relation to the set of priority measures for promoting the SMEs in the sector.

There are no considerable differences in opinion of the management as to the importance of

the promotion measures in support of SMEs up until 2013 and in the following programme period,

2014 to 2020. According to the experts both periods share analogous distribution of the measures’

importance in ranking. The crucial ones, however, are considered to be:

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Support for technological modernisation of the manufacturing process;

Improvement of the access to finance;

Financing for innovation projects aiming to develop new products, technologies

and services.

These measures are pointed out as having primary importance for both periods by about

90% of the interviewees. The ones that follow also represent a practically equal percentage of

importance for both periods:

Overall promotion of exports of the SMEs

Support for meeting standards of the EU

As far as other measures are concerned, the respondents have defined them as substantial

but to a lower degree; and what stands out for the next planning period of 2014-2020 is that their

significance in supporting and promoting the small and medium enterprises increases. In other

words, the interviewees regard the listed measures as ever growing in importance and requiring

more resources in the future. Worth noting is for example the fact that the importance of

“consultancy and information services” grows by 20 percent for the next period.

When comparing the relative shares of the positive (‘exceptionally high’ and ‘high’ priority)

with the negative (‘low or no priority’) range of responses it is clear that the experts are focused in

the positive part of the scale and the margin between these shares is clearly defined. For the

measures pointed out by the experts as the ones with the highest priority there are no responses in

the negative, as well as the neutral part of the scale. For most of the remaining measures the shares

in the positive range exceed significantly the ones in the negative part of the table. In other words,

according to the evaluations of the interviewed individuals most of the listed measures – although to

a different extent – have their meaning and could assist the existence and growth of SMEs in the

sector. The only exception is made for “business cooperation and cluster participation” with less

than half of the surveyed participants defining them as having high priority. It has been given an

average priority by about half the participants.

Worth noting is the response that according to more than half of the experts (52,9%) the

measure “attracting direct foreign investment” is thought to be of ‘extremely high or high’ priority.

The rest place it within the measures of average or low importance. For the next programming

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period however its priority grows up to 64,7% which is in line with the overall opinion of the

significance of foreign investment.

In only 3 of the surveyed enterprises there has been some of co-financing of their projects. It

is only related to the European Structural Funds. In general the projects that have been financed

have covered meeting international standardisation requirements, as well as technological

modifications – two projects in 2008 and 2010; one under Programme PHARE in 2008, and one

project related to the enhancement of the competitiveness of Bulgarian enterprises in 2011 that has

been accounted for and financing is expected to be dispensed by the beginning of 2012. But keeping

in mind that institutional support for the technological modernisation of production is a highly rated

priority measure by 90,0% of all experts, it can be concluded that co-financing of these proportions

appears rather insufficient.

Goods and services which the surveyed companies produce are principally within the sector

“Manufacturing of medical, precision and optical apparatus and instruments”. Insignificant

(between 7% and 30% of their production capacity) is the share of those that operate in other

sectors as well. Data from this study show the following distribution of the enterprises according to

the number of the manufactured goods and the share that those occupy in the overall manufacturing

activity of the companies:

Three of the enterprises have pointed to a single main item that has successfully

established its market shares. And it occupies 100% of their main production activity.

One of the enterprises reported one successful principal product that occupies 80% of

their manufacturing activity, while their operations are completed by 20% production of other

goods and services outside the sector in question.

Five enterprises have two successfully positioned products on the market which take

up between 70% and 100% of their production capacity.

Five SMEs have established three products on the market, taking up their entire

production capacity, with said products having success on the markets occupied.

Six enterprises have successfully positioned more than three products on the markets,

while for two of them the number of said products is five.

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In another perspective (regarding product shares) where the first and main product occupies

a certain productive capacity of the enterprises, the distribution is as follows:

For twelve companies their first and main product takes up 50% or less than their full

operational capacity.

For three companies the first and only product encompasses 100% of their

productive capacities.

For the remaining five companies the first product represents anywhere between 60%

and 80% of their main activity as a manufacturer.

The product assortment of the companies in the sector is relatively ample – 6 of them

produce more than three products that have established themselves on the market, while for 5

enterprises one of the proven products occupies more than 50% of their entire manufacturing

activity.

As for the productive capacities regarding exportable goods and services, the data shows

30% of the companies do not have the necessary capacity, while the remaining 70% think they do.

95,0% of the managing teams have the will to export the products they manufacture. And keeping

in mind the almost unanimous (94,4%) opinion of all the experts that technological modernisation

of the manufacturing processes is a measure of the highest priority needed to promote the

development of SMEs, we can deduce that by overcoming insufficient productive capacities and

through their technological improvement a substantial barrier to successful export efforts could be

worked out of the way for most SMEs in the sector.

Data for the capabilities and knowledge of employed staff regarding export activities are

shown in the below Table. According to the interviewed managers about half of the employees in

their enterprises have the necessary knowledge and skills. The largest share is the one representing

employees with high capabilities for carrying out export sales; while their weakest trait is the

command of foreign languages and operating on the foreign markets. Foreign language knowledge,

on the other hand has the lowest share in the negative part of the rankings.

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Table 70 Assessment of the abilities and knowledge of employees in the surveyed SMEs

High Average Low

Accomplishing export sales 63,2 26,3 10,5

Operating on foreign markets 47,4 36,8 15,8

Collecting payments 57,9 21,1 21,1

Command of foreign languages 47,4 47,4 5,3

Source: Sociological survey

This said, we can understand the reasoning behind 66,7% of the managers considering

vocational education and training of employees among the leading priority measures for

promoting SMEs during the 2014-2020 planning period.

For the reporting period 2008-2011 the number of companies which have increased their

turnover compared to the pre-crisis 2007 (that is 2007-indexed basis=100%) has naturally decreased

and those that have seen their turnover shrink have increased. Moreover, in the period 2008-2010

every following year their number grows in comparison with the previous year. In the following

Table we can observe the changes in the average indexed values of the turnover.

Table 71 Changes in turnover of SMEs for the period 2008 – 2011 (basis 2007 = 100 %)

year Number of

SMEs with

decreased

turnover

Number of

SMEs that

maintain

turnover

Number of

SMEs with

increased

turnover

Did not exist

in 2007

Did not

answer

Ratio of companies

with increased to

decreased turnover

Average indexed

values: median

changes in %

2008 6 5 8 1 1,33 100,0 6

2009 9 3 7 1 0,78 100,0 9

2010 13 2 4 1 0,31 90,0 13

2011 10 3 4 3 0,36 90,0 10


For the enterprises in question the data analysis related to their turnover can lead us to the

following conclusions:

Six of the companies experience a lasting decrease in turnovers, with two of those

reporting levels of around 30% for 2011 compared to 2007.

Two enterprises in 2011 have succeeded in surpassing turnovers from the 2007 level

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Four companies, although hesitantly, have reached 2007 turnovers and are

maintaining them

The remaining seven enterprises do not have a clearly delineated trend in their

turnover changes

One company has not revealed turnover change data for the period

Figure 7 Average change in turnover within the surveyed companies by years (in %)

Data source: Sociological survey

From the graphic example above we can see that for the companies with a positive change in

turnover for the 2008-2011 period the values keep increasing. For the group of enterprises that have

dropped below 2007 levels there is no particular trend. Despite that we can note that the most

critical one has been 2010. And for the time period 2009-2011 the average drop in turnover has

exceeded the average increases, apparently reflecting the adverse effects on the surveyed

companies. (The graph omits data for enterprises which have kept their turnovers at 2007 levels).

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Over the entire reporting period (2007-2011) the direct export of the enterprises has been the

preferred approach – they export their production on their own. About a quarter of all enterprises

have used the services of other companies or trade associations, with one of them reporting the

share of mediated export to exceed 50% in each one of the years in question. One company exports

only through an intermediary, however the volume of exports is always within 1% for the period

2007-2011. At present they are establishing their own trade contacts. Two enterprises have reported

neither a direct nor a mediated export simply because it expects to start exporting in the near future.

If we trace the export trends in the years 2007-2011 we will notice that despite the decrease

in turnover of the companies, the average share of the exported production remains stable. Attention

should be placed on the fact that four of the enterprises have exported all of their production for the

period in question. 7 economic units have exported half or more of their production, while for three

of them this share reaches 94-95%. Only three companies report shares of under 5%.

Table 72 Number of SMEs according to the share of self-sustained exports for 2007 – 2011

year Share of own exports

No

exports

up to 50

%

51 – 99 % 100 % Median % value of

exports

2007 5 5 5 5 55,0

2008 5 5 5 5 55,0

2009 5 6 4 5 50,0

2010 4 6 6 4 55,0

2011 3 8 5 4 50,0

The data shows that during 2007 – 2011 the number of non-exporting companies has

decreased; but so has the number of those that export 100% of their production. There is a trend for

increasing the number of enterprises that export up to 50% of their production. For 2011 this trend

compensates for the decrease in number of economic units that have exported more than 50% of

their production in the past years.

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Managers of those SMEs have also evaluated the degrees of importance of the principal

barriers (obstacles) to the export functions of their enterprises, as well as for the sector as a whole

for the reported period 2007 – 2011. The data is presented in Table 56.

Table 73 Table 73. Evaluation of the importance of barriers (obstacles) to SME and overall sectoral export

efforts for 2007 – 2011 (in %)

Barriers (obstacles)

Degree of importance/gravity of barriers (obstacles)

Very serious

and serious obstacle

Not especially serious

or not an obstacle at all

for the

enterprise

for the

sector

for the

enterprise

for the

sector

1. High input prices

of produced goods and services 36,8 27,8 63,2 72,2

2. High export-related expenditures 27,8 27,8 72,2 72,2

3. Insufficient quality levels

of produced goods and services 15,8 22,2 84,2 77,8

4. Lack of qualified staff/experts

able to guarantee quality 16,7 33,3 83,3 66,7

5. Lack of experience

in foreign trade matters 36,9 44,4 63,2 55,6

6. Language barriers 15,8 17,6 84,2 82,4

7. Unfavourable business environment

in Bulgaria 68,5 77,8 31,6 22,3

8. High risk on the

various foreign markets 29,4 33,3 70,5 66,7

9. Customs and non-customs limitations

imposed by other countries 35,3 33,3 64,7 66,7

10. The need to upgrade economic and

administrative support for the sector on behalf

of the Bulgarian state authorities, esp. in

formulating tasks for the new programming

period of EU financing

72,2 72,2 27,8 27,8

Note: The percentages are calculated on the basis of valid responses.

With some provisional delineations we could place the responses into three different groups

of barriers to the export development of SMEs from the sector: 1) barriers tied to the technological

conditions and levels of performance /1, 2 and 3/; 2) obstacles connected to the human factor /4, 5

and 6/; 3) obstacles related to the actions (and inactions) of the state administration and institutions

/7, 8, 9, 10/. The analysis of the data in the above table allows us to draw several important

conclusions.

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To begin with, in the first two groups (technological and human factors) the predominant

evaluations characterise the listed barriers as not so serious or defining for the export capabilities of

the enterprises and the sector as a whole. Here we can underline the above-mentioned opinion of the

experts that only 5,3% of the personnel possess sufficient language training.

Secondly, the last group of barriers (those that to a large extent are associated with the

“environment”) are evaluated by the surveyed managers as representing a much greater and more

serious group of obstacles that the exporting companies face. The foreign market risks and the

customs and non-customs limitations do not represent a serious barrier to the business.

Lastly, but just as important to be singled out as a prevailing impression among the

interviewees, the most serious barrier to their export efforts is the “lack of support from the

Bulgarian state authorities for the exporters” (conditionally placed in the “third” group of barriers –

actions/inactions of the public authorities and institutions). This was pointed out by 72,2% of the

respondents. From the point of view of the sector as a whole the most serious barrier remains the

unfavourable business environment in Bulgaria – 77,8%. It is important to emphasise that almost all

other obstacles to the exporting enterprises have been evaluated as “very serious or serious” by less

than half of the respondents.

We could summarise:

The most serious barriers to the exporting SMEs are: the lack of state support (72,2%), the

unfavourable business environment in Bulgaria (68,5%), and at third place with almost 37% are the

high production prices of the goods and services, along with the lack of experience in conducting

foreign trade.

For the sector the unfavourable business environment in Bulgaria has the greatest share

among the serious barriers to exporting (77,8%). It is followed in second place (72,2%) by the lack

of support from the State for the export.

The respondents value very highly the quality of the produced goods and services that they

manufacture, with 80,0% pointing out that it does not represent an obstacle to exports.

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Tied to all the above-mentioned barriers are the measures that the respondents have qualified

as having priority in overcoming said obstacles to exporting enterprises and the sector as a whole.

Likewise, they are tied mostly to an adequate state policy in support and promotion of the export by

small and medium enterprises, state protectionism measures including:

Provision of State assistance for participation in expos and other forums, including

expenditures reimbursement;

Cooperation and support in advertising the products;

Promoting Bulgarian products in public procurement tenders;

Support in seeking new markets;

Expansion and modernisation of the manufacturing capacities of the enterprises

which is to a certain extent also related to an improved access to financing;

Better OP’s with a higher percentage rate of co-financing, better project

implementation and funds absorption;

Creation of a Fund for stimulation of the exports;

Quality programmes for vocational training in foreign trade matters.

The following table presents the evaluations that the respondents have given to factors more

or less critical to the enterprises’ success in positioning as exporters of goods and services.

Table 74 Evaluations of the respondents to the degree of importance of factors tied to export success (in %)

Critical factors Evaluation

Very important Important Not important

Low labour costs 31,6 42,1 26,3

High employee qualifications 52,6 42,1 5,3

High technological levels 73,7 26,3 -

Own R&D basis 57,9 26,3 15,8

Staff that is experienced in

foreign trade 47,4 42,1 10,5

Logistic support by the State

authorities when exporting 52,6 31,6 15,8


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The most important factor for successful export activity is the high technological

levels (or operation and development), voted at 73,7% as very important by the experts.

Followed in second place with 57,9% by the need to possess a research facility. Joint third

most influential with 52,6% categorizing them as “very important” are the personnel

qualification and the logistic support by the government. If we take a look at which factors

the respondents have considered not so important, at the top of such ranking we find the

low labour costs with 26,3%.

Figure 8 depicts the export markets of the surveyed enterprises.

Figure 8. Export markets for SMEs in the survey


The majority of the enterprises export their production in counties of the European Union.

Second place in the rankings share the North American countries. Followed by equal shares of

Balkan countries (not in the EU), other European countries and the Asian countries. The remaining

export markets are ones with a lower total share – under 5 %.

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Figure 9. Percentile distribution of exports according to the number of export markets

Most numerous are the markets on which single SME export volumes amount to 30%.

In the opinion of the respondents their principal competitors among the EU countries are

mainly the Western-European ones – Germany, Italy and France. Among the Central European

competitors those that stand out are the Czech Republic, Poland and Hungary. Eastern-European

competition is mainly represented by Romania.

The main competition coming from outside the EU is perceived to present itself from the

Asian countries – China first and foremost; but also Japan and Korea with a smaller share. Taiwan

is also on that list, as well as manufacturers from the USA, from from Turkey, Ukraine and Iran.

One of the managers claims to have no perceivable competitors.

For the two types of markets (those within EU and outside the EU) we can call attention to

the fact that the neighbouring countries do not present competing enterprises in the sector (with the

exception of Romania). This could probably signal the existence of possible local market niches for

the Bulgarian exporters in the sector.

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The main comparative advantages of the competitors outlined by the respondents are

connected to: 1) low prices – especially coming from China and Taiwan; 2) better state policy and

strong governmental support; 3) access to financial resources and financial aid; 4) the possibility to

develop basic research and R&DI, and as a result of which to be able to offer innovative products;

5) established trademarks; 6) more attractive design of the products; 7) larger and better developed

technological base; 8) common policy – “united in something like a holding” [sic]; 9) highly

qualified staff; 10) extremely well developed retail/trade network. Among the advantages we also

find high [quality] standards and brand loyalty.

In other words, the advantages of the EU competitors to a great extent are connected to

exactly those factors which the surveyed managers define as highly critical and with a high priority

for the Bulgarian enterprises in the sector.

As far as the advantages of the Asian countries are concerned (mainly China cited) the low

input prices and final product price levels – except for labour costs – could also be tied to a high-

technological manufacturing establishments, access to cheaper financial resources, etc.; all of the

factors that the foreign competitors have and the Bulgarian enterprises do not.

The respondents’ opinions on some potential markets and their evaluation of their separate

viability is presented in Table 58.

Table 75 Potential markets, according to the managers of the surveyed SMEs

Potential

market

Number of

SMEs that

regard it as

potential

Why do favourable prospects exist?

European

Union

5 They have established contacts and contracts,

agreed to be partners

1 did not specify

Europe 2 Ratio price/quality

Faster procedural developments

Easier movement of goods

Price-wise it is more profitable and quality is better

Customer service is better

Italy 2 European Trade centre

1 did not specify

Germany 2 Very strong economy

Company’s particular product is demanded

France 2 Market expands

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Did not specify

Greece 2 Lack of domestic production of equipment for optics stores

Demand for pellet fuel boilers

Austria 1 Very strong economy

UK 1 Market expands

Czech Republic 1 New projects starting, tied to medicine

Hungary 1 Market underenexploited by China

Romania 2 Lack of domestic production of equipment for optics stores

Accept quality and prices

The Balkan

countries

1 Easier communications

Easier access

Close-by

There’s no language barrier

Turkey 3 Strong economy

The price is good – 2 companies

FYROM 2 Lack of domestic production of equipment for optics stores

Accept quality and prices

Serbia 1 Lack of domestic production of equipment for optics stores

Russia 2 Traditional market that can absorb anything

Did not specify

Ukraine 1 Accept quality and prices

Japan 1 Did not specify

Rep. Korea 1 Did not specify

China 1 A huge and developing market

Australia 1 Interesting market

USA 3 Buying European production regardless of country of origin,

happy with quality

Direct clash and taking over the segments from leading

companies

A huge and developing market

Possibility of quick payments

Middle East

“Arab world”

2 Unsaturated

Unsure

Developing market

Possibility of quick payments

Abu Dhabi 1 Have the intention to position there single items


To summarise, the European market represent good prospects mostly because of the

developed economies of the countries it includes, because of already established contacts and

partnerships, easier circulation of goods and faster services, in addition to better sale prices.

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We present the opinion of the respondents on the changes in export performance that they

expect in the next five years:

Table 76. Changes in export performance of the enterprise in the next 5 years (in %)

What type of change do you expect %

Exports will grow rapidly 10,0

Exports will grow slowly 50,0

Exports will maintain current levels 10,0

Company yet to begin exporting 10,0

Cannot decide 20,0

A simple analysis shows that 70,0% of the enterprise managers are optimistic and think they

will be able to maintain their current export performance over the next five years. Half of the

companies expect this to happen at a slower rate. Pessimistically inclined ones – who think that

exports will drop – are missing. About 20,0% cannot presently decide what may happen to the

export performance of the enterprise.

When surveyed the respondents have evaluated a list of information sources they use (or do

not use) in their enterprises. The distribution of these ratings is presented in the table below.

Table 77 Frequence of use of some information sources (in %)

Information source Rating

Main most

frequent

info source

Additional most

frequent

info source

Additional

non-frequent

info source

Do not use

as info source

BSMEPA 10,5 10,5 10,5 68,5

Branch association 10,5 15,8 15,8 57,9

Colleagues within the sector

in Bulgaria

15,8 47,4 26,3 10,5

Colleagues within the sector

abroad

47,4 31,6 5,3 15,8

Own research 63,2 31,6 - 5,3

Internet 57,9 36,8 - 5,3


It is clear that for the most part the surveyed enterprises acquire the necessary information

for carrying out export functions on their own. The main permanent information sources are own

research (63,2%) and the Internet (57,9%). What makes an impression is that 47,4% of the experts

use their colleagues and partners abroad as a main information source. Those who use the Agency

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and the Branch association as a main information source are quite few – 10,5%. Between 10 and

15% use those two sources as an additional source – whether it’s regularly or not so much. A high

percentage (68,5%) of respondents admit to not using information from a governmental structure

such as the BSMEPA. Also high is the share of managers who do not rely on information from their

branch association (57,9%).

For the interviewed experts the necessary information is above all logistics-related (45.0%).

Additional information on the mechanisms of international commercial payment settlements is

needed barely by 20%. An answer “Other” has been given by 45,0% and they have clarified that

such needs include marketing analyses, information about the markets, about “an easier access to

foreign markets, communications with them, a single trade market, not only Internet exposure”.

(Percentages add up to more than 100, since the question allows more than one answer.)

Out of the services provided by the BSMEPA, the highest effect on export performance of

the enterprises have had participations at international expos and fairs (30,0%), followed by

information campaigns organisation (20,0%) and information about offers and inquiries from

foreign companies (20,0%).

Table 78 Evaluation of the effect on the SME export performance of the services provided by the BSMEPA

(in %)

BSMEPA provided services High

effect

Average

effect

Low

effect

No

effect

Did not

answer

Foreign trade information 15,0 15,0 - 30,0 40,0

Information on foreign

and regional markets 10,0 20,0 - 30,0 40,0

Organisation of participations at

international expos and fairs 30,0 5,0 - 25,0 40,0

Organisation of business forums

in Bulgaria and abroad 15,0 15,0 - 30,0 40,0

Organisation of

information campaigns 20,0 10,0 - 30,0 40,0

Information on international

tenders and auctions 15,0 15,0 - 30,0 40,0

Information on offers and inquiries

by foreign companies 20,0 10,0 - 30,0 40,0


40% of the respondents have not evaluated the effect of the services provided by the

BSMEPA on their companies’ export operations. They have given textual answers to those. Three

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of them have pointed out that they have not used the services of the Agency and one has specified

that it entails “controversies, bureaucracy, complicated procedures”. One of the managers has

admitted “not to have had the need” and to “not even know what the Agency does”; another that “it

does not provide information”. One of the opinions is that “activity is inexistent, candidates have

been pre-selected. Seven years ago they have presented a project and have been answered that there

is no funds available for them, it has been appropriated to someone else.”

Experts from the surveyed enterprises have ranked a set of factors according to the effect

they have on the export performance of the companies, where with a 1 has been given to the most

important ones and a 9 – to the least important factors. With the highest rank (4,0) has been voted

the factor “provision of information and consultancy services”. “Financial services and products” is

ranked next with 4,5. The lowest rankings (6,0) are achieved by “organisation of instructional

seminars” and “promoting participation at international fairs, expos and other business forums”. All

of the other factors have been given more or less the same importance (graded from 5,0 to 5,5).

Half of the enterprises surveyed (50,0%) have a clear, thought-out and solid export strategy.

With a 95.0% willingness of the managers to actually export, the elaboration of a clear and well-

founded strategy in this respect is grounds for successful exportation in the future.

All forms of cooperation with foreign partners have been narrowed down to merely imports

and exports. Sixteen of the enterprises have established contacts through their export, eleven of the

SMEs also through imports. Three of the companies do not currently have any contacts with foreign

partners. They are about to begin exportation or are in the process of establishing contacts.

A relatively high share of the surveyed enterprises have been able to put on the market a

new product after 2007 – 80,0% of the participants.

Merely 35,0% of the enterprises already use web-sites for advertisement and/or electronic

commerce. The share of exports that has actually been carried out through such sites is presented in

the following table:

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Table 79 Share of exports carried out via web-sites (in %)

Share of the enterprise exports %

Up to 10% of exports 66,7

Between 10 and 20 % of exports 16,7

Between 41 and 50 % of exports 16,7


The majority of the enterprises carry out up to 10% of their exports through websites.

The share of the surveyed companies in the sector that invest in R&DI is reported as 60,0%.

Most of the investment in innovations is appropriated to expanding the existing activities (61,5%),

followed by the diversification of the production lines (addition of products) (46,2%). The

alternative two suggested forms of investment have a considerably lower share. (Percentages add

up to more than 100 since the question allows for more than one answer.)

As far as owning a trade mark goes, the surveyed enterprises are divided exactly in half –

50% own one while the others do not. 90,0% of the manufacturing units possess international

certificates (mainly ISO), which can be considered good perspectives for future exports.

Some of the interviewed managers have considered sharing their own additional opinions,

needs and problems which may pose an interest to the survey. They are formulated as an answer to

an open-ended question at the end of the survey. We quote these opinions.

“Trainings on managerial and organisational systems”

“The Government should take measures to actively promote the link between students and

business”

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“To remove the currency board – it impedes exports”

“They had a trade mark but they lost it”

“Bureaucracy impedes”

“Not able to co-finance; heavy and slow procedures related to projects”

“Too much pressure with rules and regulations, over-regulated environment that kills business”

“Cosmetics should carry Bulgarian labels, and at the same time foreign goods to not have the

requirement – e.g. French imports. The Hygiene Inspectorate approves the equipment, hence they

impose the equipment of those who bribe them. Certification – ISO (2006) – the HI should not

interfere and pressure the cosmeticians”.

“Goods that are on sale (China) have no rights to be sold according to safety standards because they

have no certificates but put false labels”

“There are no courts and no control”

“Do not see the point of expos. The single items that they sell benefit from of personal contacts and

acquaintances”

“The person refuses to reply to the questions as they have been presented. To him this is just talk

that will not lead to real changes. The Government is taken out of the equation as a factor that can

stimulate, it only creates problems and obstacles.”

“The success of the company is due mainly to own efforts (there is continuity in upper management

– the partners are family members). They have no desire or need to rely on the State in any way. All

the state institutions expect is only money from the companies.”

“Corruption. Pointless requirements, incompetence and bureaucracy. Lazy government employees

that do not know what it means to take responsibility for people that actually work and have to

receive their salaries. We have no faith in the Government, do not participate in political games and

want to be left alone to develop our business.”

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“The enterprise relies on own efforts and direct contacts with foreign partners from which it

receives orders of specific technical assignments”.

“I have a sad experience when submitting a project for financial support. Straightforwardly asked

for money to participate in the project. Do not want to have anything to do with this structure”

“EU membership bonuses are: 1)VAT refunds, and 2)customs procedures made easier”

“Sporadically have received support from the Branch association when participating in expositions

(partial reimbursement of expenses)”

„Procedures of applying through the Agency are very complicated – too much paperwork and time”

“More efficient approach is the directly contacting foreign companies and memberships in branch

organisations with a foreign participation (e.g. Bulgarian-German Chamber)”

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BIBLIOGRAPHY AND STATISTICAL SOURCES:

1. Member States competitiveness performance and policies – EC, Brussels

SEC(2010)1272, accompanying document to „ An integrated Industrial Policy for the

Globalisation Era. Putting Competitiveness and Sustainability at Front Stage”. {COM(2010)61}

2. National Reform Programme (2011-2015) of the Republic of Bulgaria. (In compliance

with “Europe 2020”) – Council of Ministers of Bulgaria, Sofia, 13 April, 2011.

3. Research, Innovation and Competitiveness Package – a Proposal for a Regulation of

the EP and of the Council establishing a “Programme for the Competitiveness of Enterprises and

SMEs (2014 - 2020) – Brussels, 30.11.2011; COM(2011) 834 final.

4. Methodology for strategic planning in Bulgaria – Council for administrative reform at

the Council of Ministers of Bulgaria, Sofia, April 2010

5. Foundations of economics – Gillespie, Andrew; (2nd

ed.) Oxford University Press, 2011

6. Industrial Policy: Reinforcing competitiveness – EC, Brussels, 14 October 2011;

COM(2011) 642 final.

7. Standard Trade Classification (STC-2008) – NSI, Sofia 2008

8. Innovation.bg – 2010 report by Applied Research and Communications Foundation,

Sofia, 2010

9. “Small Business Act” for Europe – EC, Brussels, 25 June 2008; СОМ(2008) 394 final

10. Analysis of the state and factors of development of SMEs (Bulgarian SMEs in crisis

conditions) – NOEMA, BSMEPA, Sofia 2011

11. In developing the present strategy we have consulted and used publicly accessible

statistical data and documents bases from:

i. NSI

ii. Eurostat

iii. MEET of Bulgaria

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iv. WTO (UN)

v. International Trade Centre, Genève

vi. Data and publications of the BIA, BCCI, BICM

vii. Information from a sociological survey carried out in the period between 31 October and

28 November 2011 with upper management from micro, small and medium enterprises from the

analysed sector

viii. Other official digital information sources

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