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Interview: Ljiljana Tangar, manager of Tangar Croatian customers still have more confidence in foreign products

PV analysis: Confectionery industry in Croatia Confectionery products make it easier to overcome the crisis

Children - young consumers Children want everything the purchasing patterns and behaviour of children as consumerss





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PAGE 8 2010

Croatian Business & Finance Weekly Established in 1953 Monday / 13th December / 2010 Year IV / No 0134




pvinternational pv international C R O A T I A N




Jandroković in London


British interested in investment into Croatia

“The Brussels way” of writing an imperative

Great Britain shows serious interest in investing into Croatia with London as its strongest financial centre and its investment funds prepared to invest in any profitable business, as has recently been communicated from the Ministry of Foreign Affairs, after Gordan Jandroković’s roundtable presentation in London.

Croatian Minister of Foreign Affairs Gordan Jandroković and his British counterpart William Hague

The political and economic situation in Croatia was presented as well as possibilities to improve economic co-operation. Such possibilities for co-operation and experience exchange are numerous in the fields of research and development, biotechnology, IT sector, knowledge-based economy and within the framework of scientific co-operation, particularly with regard to the correlation between education and business. The British have shown interest for investment in all forms of production technology and in the use of alternative energy sources, as well as other technology related to energy saving and environmental protection, particularly in large and small water purification systems, forestry and wood industry and in tourism (tourist capacity, golf, sailing).

Minister of the Economy, Đuro Popijač, stressed that difficult negotiations covering shipyards and meeting conditions on market competition as part of EU accession talks will outweigh all previous ones Igor Vukić pplications for the EU funds tenders are a preparation for “the Brussels way” of writing as has been recently suggested by Robert Markt, Secretary of State at the Ministry of Economy at the Croatian Employers’ Association working lunch. “Once Croatia has become an EU member, there will be huge opportunities for entrepreneurs to receive grants from EU funds. Meanwhile, new models of application writing and an explana-


believe they will receive a positive assessment. We hope that shipyards will continue to be one of the propellers of Croatian entrepreneurship”, added Popijač. The final step is the hardest Popijač emphasised that the closing round of EU accession negotiations will be more difficult and serious than previous rounds, due to shipyards

Tenders will be invited for the Zagreb airport operator in January with companies from Turkey, France, Canada and Switzerland showing interest tion of new entrepreneurial ideas are an imperative. Our Ministry will gladly offer help”, proposed Markt. Đuro Popijač, the Minister of Economy, stressed that one of the tests for the adoption of European regulations was the shipyard privatisation tender. “Plans for shipyards are in Brussels and we

and meeting conditions on market competition. The government expects state and private investment to be the major protagonists in economic growth next year. Popijač pointed out that he and his colleagues are ready for talks with big investors and for breaking down any potential barriers to investment.

“All investors have their own particular stories and we are certainly satisfied with their show of interest in our offers. We have continuously been contacted by potential investors after having published our catalogue of state investment of €14 billion. We will analyse the difficulties with each investor and see why some investment is successful and some not” proposed Popijač. He also announced to Saša Cvjetković, representative of the Business Angels Association that all liabilities provided to the Association by the terminated Investment and Export Promotion Agency will be undertaken by the Ministry of Economy. The European Union will soon approve the regulations on the cumulative origin of goods, which has hindered domestic exporters from appearing on the European market with lower-cost raw materials after the sugar affair of 2003. Tenders for the Zagreb airport operator will be invited in January, announced Popijač. Companies from Turkey, France, Canada and Switzerland have shown interest and thus this sector will also be open for considerable foreign investment.


Privredni vjesnik Year IV No 0134

Davor Hauptmann, manager, Arhidom, Split

Both individuals and investors benefit from the legalisation of individual buildings


any individuals and investors have been attempting to authorise (legalise) their buildings for a number of years. The most significant problem relates to a lack of information on how to commence the procedure. Arhidom has prepared a legalisation guide, including categories such as floor area of the particular building, its age and purpose. This guide aims to assist the legalisation procedure for investors. In addition, the individual legalisation process will be carried out as foreseen under the Construction Act, which requires property rights certificates, up-to-date architectural footage together with a certificate of mechanical resistance and stability of the building, published by the authorised organisation. The guide to the legalisation of unauthorised buildings drafted by Arhidom contains the most important information, thereby assisting the legalisation procedure for investors. Previous experience has shown that the acquisition of the property rights certificate(s) takes up most of the investors‘ time. The legaliIMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 subscription

sation procedure includes utility charges, which vary within particular districts and water charges, as established for the entire country. If an individual building is to be authorised, the investor should provide funds for one-time utility charges which, in housing zones in larger cities, may wary from HRK35 (€4.80) in Slavonski Brod, to as much as HRK138 (€5.20) in Split, Dubrovnik and Zagreb. For example, if the owner is to authorise a house with a floor area of 400 m2, the costs would amount to HRK150,000 (€20,550) in Split whilst in Slavonski Brod they would total around HRK38,500 (€5,300). This amount increases with water charges, amounting to HRK22.5 (€3.10) for family houses in zone A, including the Zagreb area and the protected coastal region. However, this amount decreases to HRK15 (€2.05) and HRK5.6 (€0.77) per cubic meter for zones B and C respectively. Utility charges have been reduced in Dubrovnik, Pula, Rijeka, Zadar and Zagreb only for the primary housing zone but were increased in Šibenik, Varaždin, Zadar and Zagreb but only covering the fourth housing zone. The procedure for the authorisation of commercial buildings is conducted in the same manner as for housing. However, the current condition of the building should be aligned with minimal project specifications. If the building is to be authorised under the provision of the Urban Planning and Construction Act, and if all required documentation has been submitted, the legalisation procedure may be carried out within 90 days.

FOR PUBLISHER Nikola Baučić +385 1 4846661

IMC MANAGER Dea Olup +385 1 5600028

EDITOR IN CHIEF Darko Buković +385 1 5600003


EXECUTIVE EDITORS Andrea Marić Vesna Antonić



€36.36 billion total lending at end October Corporate lending increase minimal due to stagnation of incoming funding Drago Živković


verall lending amounted to €36.36 billion at the end of October, according to the latest Croatian National Bank (HNB) data. Although an insignificant drop of 0.1% over the previous month was shown, overall lending was in line with annual growth. With respect to October of last year, it has increased by 5.7%. Credit financing in all three segments (personal, corporate and government) has contributed to the annual growth in lending. Corporate sector credit financing has recently been slightly more intense, with overall corporate lending totalling €14.45 billion (9.2% greater than in the same month last year). In addition to government measures for granting loans to companies affected by the crisis, the overall lending increase has been leveraged by stagnation in incoming funding. Moreover, annual growth in total personal loans (+ 2.2%) has been seen for the fifth consecutive month. Consumer credit totalled €17.08 billion at the end of October, thus retaining its dominant share in the overall lending structure (47%). Annual personal lending growth has been primarily due to housing loans, with 44.4% of total personal lending. Lending to government reduced Regardless of the annual growth of housing loans being slightly more intense over recent months, such growth rates are still relatively low with respect to the pre-crisis period, when they exceeded 30%.

Housing credit showed 6.5% annual growth in October this year totalling €7.59 billion towards the end of the month. Lending to government increased by 5.6% in the last year, to €4.53 billion at the end of October, some 12.5% of overall lending. Even though reduced lending to government was seen this year, its share in overall credit is significantly higher than before the beginning of the financial cri-

House lending annualised growth rate still relatively low compared with pre-crisis period sis in autumn 2008 when it stood at approximately 8%. Overseas financing became less attainable and more expensive towards the end of 2008, and far more so in the first half of 2009, causing the government to turn towards domestic sources. Notwithstanding the annual overall lending increase, its slight monthly drop indicates it is still too early to talk about any recovery in lending activity. As personal loans are under negative pressure from labour market movement and at a still low level of available income, any recovery in personal lending may expected only through major labour market revitalisation. A stronger and longer lasting corporate financing revitalisation will depend upon a considerable recovery in domestic demand.


( €2.5 million

invested in production equipment

( 15%

of total production intended d for export


Croatian customers still have more confidence in foreign manufacturers As a result of unpaid bills, at least two employees are compelled to handle compensation and the collection of outstanding debts rather than sales Jozo Vrdoljak


jiljana Tangar, manager of Tangar from near Split, discusses the specific problems her company currently has to handle. Tangar is the first Croatian company manufacturing raw materials for the production of handmade ice-cream. Their product range also covers equipment for the manufacture, decoration and sales of ice-cream together with instant products for the preparation of hot chocolate, cold milk shakes, granitas, hot and iced teas and various products for the bakery industry. Due to certain limitations in the Croatian market s well as increased import competition, Tangar aims to increase its share of exports. How did you have the idea of starting your company? The company was founded in 1991 when the company I was initially working for was declared bankrupt. I decided not to wait, but to try my skills as an entrepreneur. I was completely unaware of my entrepreneurial talent but I did not want to stand idle. The business started successfully, as within a very short period the company started representing several international compa-

nies. In the meantime, my husband decided to join me and is currently responsible for both commercial and technical areas. What was the secret of its early success? It was the first Croatian distributor of the raw materials for icecream production, which were at the time items in high demand. Competition was almost nonexistent. Italian and European competition appeared only after the end of the war. When did the company begin more serious expansion? I believe 2001 was the turning point as Tangar decided to purchase part of the former Adriavinil plant which was converted into a storage and office area.

Ice-cream parlours on the Adriatic coast What new investments are currently planned? Around €2.5 million has already been invested into production equipment. We have the technology, excellent products and reliable professionals at our disposal. Unfortunately, during the current financial crisis, no significant investment is encouraged. However, we have developed several ideas, one of which is “Ice-cream Parlours” on the Adriatic coast and the Croatian mainland. Other plans include the opening of new offices and branch offices in other countries together with a school for bartenders and pastry chefs. However, part of the area was still unused. As Splitsko-Dalmatinska county and the Ministry of Economy, Labour and Entrepreneurship offered credit lines to support production and female entrepreneurs, we applied for a loan of €1 million in order to start production of raw materials for ice-cream production.

ufacturers, especially Italian, even though they are not completely sure of their quality. On the contrary, such products qualify for the third or even fourth quality category. However, we maintain co-operation not only with long-standing partners who have recognised our quality, but also with larger store chains.

How many employees does Tangar have? Currently we employ 50 people. A further 10 are employed during the summer high season. In order to ensure stability of employment, we have expanded our product range, which now includes the manufacture of raw materials for hot chocolate, which we export quite successfully. In addition, we are the only Croatian manufacturer of cocktail syrups.

What problems do you currently face? Unpaid bills represent the major problem. Whilst we have excellent sales our company barely manages to collect sufficient funds required for salaries and operating expenses. As a result, at least two employees are compelled to handle compensation and the collection of outstanding debts instead of sales.

How would you describe current competition on the Croatian market? We are still price-competitive. However, competition is extremely fierce due to the increased number of foreign company dealerships, as their agents will use any means to get their products to the market. Unfortunately, Croatian customers still have more confidence in foreign man-

How can this problem be solved? Our plan is to increase our exports. We attend various fairs, mostly organised by CCE. 15% of our total production is intended for export, mostly to Poland, Bosnia and Herzegovina, Serbia, Sweden, Canada, the USA, Morocco, Portugal and Cape Verde amongst others. We are currently negotiating with Australian and Dubai representatives and are to close deals in the near future; these will be extremely important as our winter equates to their summer.


Privredni ni vjesnik Year IV No o 0134

( 49,970 to 86,501 tonnes sales increase from 1989 to 2008


Sweets make it more comfo

EU population eats 25 to 30 kilos of confectionery products whilst Croatians eat about 20 kilos eac Krešimir Sočković ating chocolate is one of the most effective methods of releasing psychological tension, with a growing demand for chocolate during the crisis, according to experts and as shown by data on confectionery products consumption on the US market. This crisis-affected country has recorded a 20% sales increase and similar has also happened in Croatia. According to GfK market research, this year Croatian general public bought 23% more dark chocolate and spent 18% more than last year. Yet this may be a consequence of saving by baking cakes at home rather than buying. Similarly, commercial brands have had the best sales, and Kraš is the largest domestic producer.


More and more sweets consumed To take a broader view, confectionery products, as opposed to other types of food processing industry products, belong in the luxury product sphere. This segment of the industry is more vul-

nerable to stress than basic food production. Confectionery products consumption has been increasing since Croatian independence, with sales having almost doubled over this period - from 49,970 tonnes in 1989 to 86,501 tonnes in 2008. However Croatian confectioners have almost halved their production in this period, slumping from 109,413 tonnes to 61,089 tonnes. Production last year by local producers was slightly less than 60.970 tonnes whilst total sales in Croatia amounted to 84,101 tonnes. Confectionery products share of total the consumption of food products in the European Union amounts to between 8% and 9% with their industrial production share of approximately 70%, with the remainder being produced by craft and small factory production. The European Union population eats 25 to 32 kilos of confectionery products each year with the consumption structure being determined by climate, eating habits and the confectionery industry ability to encourage and generate con-


Imposition and monopoly impede better deals “Numerous production costs have been institutionally defined, recognised and imposed or monopolised, and local confectioners have no influence over them”, suggested Stipan Bilić, director of Kondin. “These extreme and imposed costs in real terms increase domestic confectionery industry prices by as much as 50% in comparison with prices we could charge if producers operated under the same conditions as their

foreign competitors”, opines Bilić. “The increased business activity cost in the sector is also caused by the fact that most companies in Croatian economy do not have a high level of turnover and are entirely dependent on bank loans, or financing themselves by supplier debt. Similarly, retailers fix rebates for confectioners which they do not collect from importers. The Croatian competition agency, although most likely ac-

quainted with the problem, has never initiated the protection of domestic confectioners or other domestic food processing industry operators. Rebates of this size are blackmail imposed by trade, as it has a market monopoly. In EU countries price rebates amount to not more than 2% or 3% and is paid in cases of early payment or to customers purchasing in bulk”, proposed the director of Kondin. The confectionery sector financial results show that their short-

term liabilities stand at €89.86 million and these high-level short-term liabilities are due to the fact that the industry finances its activities by bank lending prior to sales to final customers. “Confectioners paid €7.12 million in loan interest in 2009, with an approximate interest rate being 8%, some 5% to 6% higher than in the EU. The amount of interest paid in that period was higher than profits, which totalled €6.16 million”, stresses Bilić. Business & Finance Weekly


( 109,413 to 61,089 tonnes slump in confectionery production over same period

rtable to overcome the crisis

ch year uct factory prices by more than 12% as suggested by Croatian confectioners. Furthermore, nontax levies, higher than abroad, put pressure on production, as well as the maintenance of workers’ high social benefits increase the price by an additional 8%. Retailers increase the sales price by as much as 25% with their many non-invoice payments – rebates, discounts, policy payment and marketing, deferred payments and 80 to 180 day terms, as well as high loan interest, all exacerbate an increase in the product price by as much as 5%. Companies export approximately 50% of their production, equating to as little as 37% of revenue. Therefore, the confectionery industry is both extremely exportactive but considerably more vulnerable as the foreign market is not as safe and is less profitable. Business activities above average Nevertheless, the Croatian confectionery industry is classified as among the best industrial branches and the preeminent sumption. Consumers spend between €110 and €170 each year. However, Croatian consumers eat slightly less sweets with such product consumption being approximately 20 kilos per person. Market shrinking, slumping production Market shrinkage has had an enormous impact shown by a significant slump in production over the last 20 years, as Croatian confectioners’ major sales were within the former state territory. In the last ten years this market has slowly been returning, yet confectioners have been turning exports to other markets, doubling

them in comparison with figures from 20 years ago. However the open Croatian market has resulted in a no longer dominant position of Croatian confectioners. Their market share twenty years ago was over 75%, whilst last year this share was under 37.1%. Croatian confectioners opine higher sales figures are hindered by high material costs - cacao, confectionery industry fruits and also local raw materials, specifically flour, vegetable fat, milk and milk fat and sugar, often attracting prices more than 30% higher than on world markets. Prices of local agricultural raw materials increase costs and prod-

This year Croatians have bought 23% more dark chocolate than last year segment of the food processing industry, especially when considering the fact that confectioners have incurred neither major losses, nor made any wrong business decisions which would influence their market position. Each factory is a ‘merchandise brand’, but every factory also has ‘merchandise brands’ of particular products on both national and regional markets. The industry has a high level of exports - almost

twice as much as it imports for its own needs. Confectioners are able to attract more convenient loan terms than other producers, due to their superior production as shown by various economic indicators. Nevertheless, these comparatively good results are in fact due to other industries difficulties. Therefore, confectionery business activities by themselves are neither overly safe nor stable. When compared with other food processing industries, the results appear very good; the Croatian confectionery industry employs 3,976 people, or 7.9% of the total number of employees within the food processing industry. Sales amount to €0.19 billion (5.3%) of total food processing industry sales of €3.62 billion. However, in comparison with German industry, where the food processing industry sells merchandise per worker with a value of €230,000, in Croatia this figure is a meagre €72,000. On the other hand, German confectioners sell even more per worker - €236,000, whilst in Croatia this figure is estimated to be not more than €46,000.


Privredni vjesnik Year IV No 0134



Cellfood is a very healthy preventative measure Cellfood products reduce fatigue, stress, pain, cramps, inflammations and allergic reactions

The ideal blend of architecture and publishing In addition to providing regular services in the areas of architecture and planning, Kap4 plans to start publishing a professional magazine ap4, a newly established company in Zagreb, employs young experts in the area of architecture and construction planning. However, in addition to their usual services, Kap4 plans to publish a professional magazine Presjek (“Cross Section”). “The creation of a new product intended for the construction and architecture market, is quite a challenge, especially during these times when many architectural firms have closed and the media regularly publishes articles on negative trends in the construction industry. Nevertheless, the financial crisis may lead to the development of surprisingly creative projects and solutions. Hence, our young team has opted for publishing a professional industry magazine”, stated Nikola Miletić, Kap4 manager. “We first came up with this idea during the plan development stage for a building of steel construction. We realised there was no professional magazine in Croatia which could provide a detailed plan of such a construction whilst foreign articles were not applicable due to differences in standards and regulations. Croatia has a long architectural heritage and the recent uptick in quality and more rapid production is in our favour. Somewhat popular


books published by Peulić and Neufert, regarded as architectural must-reads, are currently no longer up-to-date as details from these publications can rarely be applied to modern constructions. Therefore, we have decided to create a magazine which will use real examples in order to develop Croatian architects and inform them of new trends in related areas”, explains Dalija Milonja, Editor-in-Chief. New trends applied in plans and practice The magazine will be published every two months and will be dedicated to a specific topic. It will present buildings related to the specific topic, together with photographs, plans, professional articles and debates. The first issue, entitled Steel constructions, should be published in mid-February, and will, for the first time, present the detailed implementation of awarded examples of Croatian architecture. Unlike other related magazines, Presjek will promote solutions which have upgraded the architectural profession as it develops, grows and changes daily. The creation of a knowledge base, which will grow and evolve, is an absolute must. Hence, Presjek is regarded as akin to a meeting point for architects, constructors, investors, professional experts and manufacturers of construction-related products. (J.F.)

ellfood products have primarily been developed as a healthy prevention measure. They are defined as neither cure nor stimulant as they are extremely useful and support basic biological processes. Cellfood manufacture includes water decomposition under protected technology, which directly supplies cells with biologically available oxygen anions and 129 nutritious ingredients (78 minerals, 34 enzymes and 17 amino acids). Cortina HBA represents Cellfood products in Croatia with Medical Intertrade being the chief importer and distributor. Mladen Heigl, research assistant at Cortina HBA, points out that these products have been manufactured from selected natural organic and inorganic deep-sea ingredients, with the addition of herbal origin organic ingredients, which have been cryogenically purified. The application of highly developed technology during the manufacturing process includes low temperature and pressure as they maintain biological activity without the intervention of organic solvents. “Cellfood products contain no prohibited ingredients. In addition, they do not contain alcohol, glucose, yeast or gluten”, adds Heigl.


Drops gel or spray The inventor and manufacturer of Cellfood products is Everett Storey (1914-1988), a chemist and

microbiologist. Interestingly, l All bert Einstein provided help during the research, as he believed Storey to be one of the most ingenious of inventors. Although Cellfood has been manufactured by NuScience since 1969 and thus been present on the American market for 40 years, it was introduced to the EU market only eight years ago. However, several positive reactions and a long tradition have contributed to many awards, one of which is the US HITECH award (1997) as the best food supplement. Cellfood products reduce fatigue, stress, pain, cramps, inflammations and allergic reactions. “However, 8 to 12 hours are required for effective performance of the individual product. General positive effects from the therapy can be expected in three to four days”, says Heigl and adds that Cellfood products are available as drops, gel or spray. For example, Cellfood Oxygen for Life drops reduce processes caused by reduced oxygen levels. Silica Plus drops are applied in the case of bone and connective tissue problems, extremely useful to both professional and amateur athletes to prevent osteoporosis. Oxygen gel regenerates and revitalises the skin. After the distribution of Cellfood products in selected Croatian pharmacies, Heigl adds that their registration and sales are to be expected in other regional countries. (B.O.) Business & Finance Weekly




5,509669 5,516668 6,660416 5,678773 8,814812 5,565746 7,382405



Kuna exchange mid-rate


7.12. 8.12. 9.12. 10.12. 11.12











5.20 7.12. 8.12. 9.12. 10.12. 11.12

5.00 7.12. 8.12. 9.12. 10.12. 11.12

European Association of Public Banks

Inflation up to 3% next year Inflationary pressure could be generated by zero VAT rate amendment yet PBZ analysts estimate no change due to forthcoming elections


High unemployment level Inflationary pressure could be generated by zero VAT rate amendment, yet PBZ analysts estimate it most probably will not be changed due to the forthcoming election next year. On the other hand, inflation will remain low as a result of high unemployment which will continue throughout 2011. The consequences of high unemployment will be shown through consumer



PBZ Analysis

BZ analysts believe the announced gas price increase and the possible utility services price increase could prompt inflationary pressure next year. Basic prices dropped by 0.6% owing to reduced demand last year and salesmen and producers have not succeeded in accepting a VAT increase from 22% to 23%. Notwithstanding the fact that the semi-annual price increase in September and October, as expected, was slightly higher than in previous months when it amounted to 1.4%, the twelve month average remained stable at 1.1% although a slight increase could be expected by the end of the year. Reduced real income does not enhance the prospects of any impending recovery in demand. However, according to a PBZ analysis by Ana Lokin, inflation in 2011 could vary between 2.5% and 3% year-on-year, due to a lower base statistical effect. This inflation range is in accordance with a ten year average which, between 2002 and 2010, was 2.9%.






Prices, annual rate of change 12,0 10,0 8,0 6,0 %

4,0 2,0 0,0 -2,0 I 2006 III V VII IX XI I 2007 III V VII IX XI I 2008 III V VII IX XI I 2009 III V VII IX XI I 2010 III V VII IX


Producer Prices

Consumer prices

Core consumer prices

Source: DZS, HNB

pessimism and the expected stability of the kuna, which will provide a counterweight to any price increase. The impact of world price changes on domestic production and consumer prices has already been significant. It should be note therefore, that food, oil and raw material prices on world markets have been considerably higher this year than in 2009 the reces-

sion notwithstanding, PBZ analysts pointed out. The product and raw material price index HWWI was 36.8% higher in October this year than the 2009 average, with 24.4% higher food prices, 59.2% higher industrial raw material prices and 32.1% higher oil prices. Prices of these products were higher in October than in the middle of the year. (I.V.)

Kovačev elected EAPB President Anton Kovačev, President of the Croatian Bank for Reconstruction and Development (HBOR) was elected President of the European Association of Public Banks for a two year term at their General Assembly held in Brussels last week. The EAPB was founded in 2000 to represent the specific interests of public banks, development banks and funding agencies vis-à-vis European Union legislation and Parliament. There has been an increase in the Association members from 10 to 130. It represents institutions from different European countries and now covers banks with a 15% share of the European market, around 190,000 employees and total member assets amounting to €3,500 billion. Kovačev will be representing the Association and its members’ interests for a two year term before European Union bodies, which will provide opportunities for Croatia to play an active role in European financial circles prior to formal European Union accession.

8 ::: news Worker productivity grows, unemployment also Unemployment increased by 5.2% within the overall economy and by 0.5% in industry during October. However, year-on-year industrial output slumped 6.2%. Worker productivity measuring industrial production (physical volume) and the number of employees’ (in the field), has recorded growth since the beginning of the year and in comparison with the same period last year stands at 6%. It is primarily a consequence of a comparatively more serious unemployment problem rather than an industrial production slump. Siemens chooses first projects for integrity initiative Siemens AG announced the first anti-corruption projects which are to be financed from an initiative with a value of $100 million for good standing market promotion. The initiative is part of an all-inclusive agreement between the World Bank and Siemens AG made in July last year. The first tranche of $40 million will be allocated to over 30 initiatives in more than 20 chosen countries except Croatia. Approximately 300 non-profit organisations from 66 countries applied for funds in the first round. New contracts on financing will be issued next year. Varaždin county leads in attracting foreign investment

International Development Ireland, one of the most successful agencies for the promotion of foreign investment in Europe, and the Ministry of Economy, Labour and Entrepreneurship have recently announced that Agency for Development of Varaždin County (AZRA) has achieved the highest mark for the investment encouragement project “Promotional initiative for information and communication technologies in Varaždin county”. Therefore, AZRA is the first of twelve counties participating in the advanced County Certification Programme for Investment (ICPR).

Privredni P Pr riv ivrreed dn ni vvj vjesnik jesnik Year 0134 Ye Y ear ar IIV VN No o0 134

( €5.50

average weekly pocket money for children aged 7 to 14

Children - young but very important consumers

Children want everything At a recently held conference, “Children - young but very important consumers”, economic experts discussed the purchasing patterns and behaviour of children Sanja Plješa hat type of consumer children are and whether they buy unnecessary products which may “collapse” the family budget, are two questions often raised during the Christmas period. Vigorous debate on this matter has been intensifying in western European countries for the last decade whilst the topic is still relatively new to the Croatian public. Children and teenagers significantly influence family shopping habits. In addition, experts believe children represent one of the fastest growing “market segments” globally. The expectations and needs of individual consumers change with age. However, children and teenagers show a 20% faster increase than any other demographic group and consumption encouraged by children increases every 10 years.


Children believe commercials At the recently held conference, entitled “Children - young but very important consumers”, economic experts discussed the purchasing behaviour of children. In addition, experts emphasised the importance of stressing the positive social behaviour and lifestyle when communicating with children, although marketing communication should not exploit their gullibility. “The Codex of HURA (Croatian Association of Advertising Agencies) clearly states that specific commercials should not exaggerate the size, nature or value of certain product or withhold information on the purchase of additional products. Furthermore, individual companies should carefully apply and encourage fantasy in communication with children in order

not to hinder distinguishing imagination from real life”, points out Elvira Mlivić Budeš, the manager of Filaks. This implies that children should not be able to identify particular marketing communication tools in order to be aware that they will not acquire a specific physical, psychological or social advantage over other children, by purchasing the specific product. Although children are often attracted to products which will enable them to go up against adults, such as sweets that change the tongue colour or various ‘monster’ toys, marketing communication tools should not diminish parental authority, responsibility or taste. Brand identification KGUY (Kids Grow Up Young), a marketing analysis of child behaviour, shows not only that children grow up faster but also that they are more connected, direct and fully informed of the world around them. The survey of the Croatian agency, Ipsos Plus, carried out on a national representative sample of 500 children, shows that Croatian children aged 7 and 14, receive on average €5.50 pocket money every week, which is mainly spent on sweets, food and drinks in schools and to cover mobile

phone expenses. Almost 60% of those surveyed emphasised they save in order to buy a more expensive product. Such behaviour, together with loyalty to specific brands, plays an important role in their adult behaviour. Hence, companies often try to communicate with children as early as possible in order to create future relations, according to Elvira Mlivić Budeš. She also emphasised the fact that marketing experts have singled out “tweens” as a specific category, which includes children aged 8 to 14. They are still considered as children but are old enough to have pocket money and to influence family shopping. “They want to fit into society, be adult and independent. Interestingly, they believe specific brands define their social status as such products enable them to accumulate fear, imagination, a sense of humour and love. Younger children, however, are less emotionally attached to brands, but still copy “tweens”, says Elvira Mlivić Budeš. In conclusion, due to the increased number of various communication messages, parents have a crucial role in enabling their children to differentiate between wishes and needs, according to Budeš.

PV International 0134  
PV International 0134  

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