PV International 0182

Dražen Matiegka, Vice-President Eurocable Group Our company has been exportoriented since its inception and our aim is to increase

A Croatian-Chinese company Badel 1862 selling wines in China and opening wine shops with Chinese partners

Paltry indications of recovery in a faltering industry The textile industry has seen a collapse over the past few years

INTERVIEW PAGES 2-3

TRADE WITH CHINA PAGE 5

TEXTILE INDUSTRY PAGE 8 2008 2009 2010 2011

Croatian Business & Finance Weekly Established in 1953 Monday / 16th January / 2012 Year V / No 0182 www.privredni.hr

S U P P O R T E D

B Y

T H E

pvinternational pv international C R O A T I A N

C H A M B E R

O F

E C O N O M Y

NEW PRODUCTION FACILITY FOR TROMONT

Metal industry returns to Croatia The new production facility is of interest to the region, and Tromont CEO says the final goal is to reach the EU market Tromont also celebrated its 15th anniversary. The company is the current Croatian leader in design, fitting and engineering

Jozo Vrdoljak ven though Tromont does have a small production plant in Split, its first big leap forward was marked by the construction of a state-of-the art production facility near Trilj. It also represents the return of metal industry to the region since the capacity and significance of this plant cannot be overlooked within both Croatia and the region.

E

Mainly personal equity “Our goal is to produce not only for the needs of our company.

Our ultimate aim is to penetrate the EU market. We have all the necessary certificates and have an engineer in charge of quality management in order to reduce the number of complaints. We also expect good results from the B&H market where we opened our company last year”, says Ivan Džaja, CEO of Tromont.

The President of the Republic of Croatia, Ivo Josipović, opened the new production plant. Total investment, including the purchase of machines, is worth around €10 million. The funds were primarily obtained from private equity, and the rest from banks as well as a small share from subsidies. “It

Tromont wants to become the leader in the production of installation components

is never easy to take on a market, but we are not afraid. Tromont enjoys the reputation of being a quality company with many obvious values and comparative advantages. This is precisely the reason it will not be difficult for us to penetrate the market. Since we are Croatian leaders in installation works, I am convinced we will also be leaders in the production of installation components.

Our company advantage is that

we have always based our work on realistic estimates. No similar plant exists in Croatia since there is no factory which produces all installation components. Tromont’s most severe competition comes from products imported from China”, suggests Džaja.

Strongest on the local market On the occasion of the opening ceremony of the new plant,

of thermo-technical, hydro and electrical installations. It currently employs 129 workers, 27 of whom are electrical and mechanical engineers. “Their training is something we constantly work on and pay special attention to”. At the end of 2011, Tromont signed a contract for the construction of administrative and business buildings for Atlanska plovidba and also opened a company in Bosnia and Herzegovina.

Immediately after the opening of the new production plant, they signed a contract in co-operation with Brodogradilište specijalnih objekata Split (Naval and Special Vessel Shipyard) for the construction and assembly of a wind-park for the Spanish group Acciona energia. More precisely, they will build 80 meter high frameworks for wind power plants.

2

Privredni vjesnik Year V No 0182

Goran Radić, Applicon Board Member and CISEx Management Board Member

Future Positive Media and politicians need to deepen their insight into the potential of software production

t first sight one could conclude that Croatia has just witnessed two years of crisis, yet a more realistic snapshot reveals she has seen at least 20 lost years, ruining her own production sector and witnessing a plunge in export/import coverage from 100% to 60%, piling up a huge external debt, fostering the non-payment culture and consequently facing an internal debt of nearly €5.4 billion. Croatia is one of the countries with a high tax burden, with an economy burdened by corruption, mainly generated through the public sector and with an on-going trend of unemployment. She is still repressive regarding business activity regulations. There is a substantial increase in poverty amongst the general public and there is no good news in the media. Consequently, someone decided to address all these issues. Hence, 52 people founded an association called Croatian Independent Software Exporters (CISEx) in March 2011. The association groups individuals and companies in this area, where there are normally no unemployment problems and not

A

IMPRESSUM: Privredni vjesnik Kačićeva 9 10000 Zagreb +385 1 5600020 uprava@privredni.hr www.privredni-vjesnik.hr/ subscription

many difficulties in emigrating from Croatia and starting a new business life in another country.

Nevertheless, those in this association have decided to remain in Croatia and create a more prosperous future. Software production has not yet been identified as a strategic branch of the Croatian economy, which is not unusual in a country with absolutely no economic strategy. The media and politicians need to deepen their insight into the potential of software production. However, its heaviest baggage from the past was software producers, primarily companies who had initiated that activity long ago. Constantly focusing on IT exports and on the local public and services sector, software producers have not contributed significantly to the considerable development of software production which could achieve satisfactory export results.

Fortunately, the trend is for positive changes. An increasing number of IT experts opt for self employment, whilst an increasing number of cases indicates that software production can be initiated with less investment and less obstacles than any other product.

The Association Croatian Independent Software Exporters attracted around 80 Croatian companies whose activity is primarily export-oriented during its first eight months of operation and that is significant. We are planning to announce a plethora of good news regarding the Croatian economy and society and believe that irrespective of the sovereign debt crisis we can achieve our goals. A future positive.

FOR PUBLISHER Nikola Baučić +385 1 4846661 uprava@privredni.hr

IMC MANAGER Dea Olup +385 1 5600028 olup@privredni.hr

EDITOR IN CHIEF Darko Buković +385 1 5600003 bukovic@privredni.hr

TRANSLATION Lučana Banek lucanab@gmail.com Mirjana Cibulka mirjana.cibulka@gmail.com

EXECUTIVE EDITORS Andrea Marić maric@privredni.hr Vesna Antonić antonic@privredni.hr

INTERNATIONAL OPERATIONS Ray Fletcher fletcher@privredni.hr

( 26,000 tonnes annual production in 2011

INTERVIEW: DRAŽEN MATIEGKA, VICE-PRE

Export-o

Our company has been export-oriented since its inception, w clear indication of Croatia being on the right path towards re Boris Odorčić urocable Group was founded in 1999 focusing on installation ducts and electric cable distribution. Its activity expanded to installation ducts in 2001, followed by electric cable production two years later. The company has recently expanded its product range into copper wire production, thus becoming one of the rare European producers relying on its own supply of one of its basic raw materials.

Eurocable Group currently consists of the parent company Eurocable Group and the group members of Eurocable-Zagreb, Eurocable Group Handels-Wien, Eurocable-Beograd and Eurocable-Podgorica.

Dražen Matiegka, Vice-President of Eurocable Group, pointed out that 2011 was a year of investment for the company. It opened a new greenfield production facility in July 2011 worth nearly €27 million. The project included land purchase, residential building construction and accompanying infrastructure, the purchase of the new production equipment and the creation of around a hundred jobs.

E

What is the role of the new production facility?

The opening and start-up of the new production facility was a challenge, primarily regarding finance and also that the new production plant facility started operations in July. Production capacity increased towards the end of the year and this year will be used to its full potential, which will eventually result in

the production of 26,000 tonnes of finished goods. Irrespective of all the challenges, the company saw an increase of around 45% over 2010 and the new facility will provide an annual production capacity of 38,000 tonnes, which should result in over €0.14 billion in revenue and over €2.7 million in profit.

What is your opinion of business activity in Croatia?

Our company has been strategically export-oriented since its inception, primarily as a consequence of our perception of

The size and potential of the Croatian market is insufficient to allow company development regional and West European export markets as a suitable venue for significant growth and development. Our business results reveal we opted for the right direction. Our current import/ export ratio stands at 90% but we would like this figure to approach 75%, which would be a clear indication of Croatia being on the right path towards recovery. The size and potential of the Croatian market are not satisfactory, yet they are sufficient to satisfy the company development potential. We identified the critical necessity of relying on foreign customers some ten years ago. Nevertheless, we cannot expect considerable movement in 2012 and consequently

www.privredni.hr Business & Finance Weekly

3

( over €90.5 million ( €121.6 million export revenue in 2011

anticipated exports value in 2012

ESIDENT EUROCABLE GROUP

rientation

with current import/export ratio standing at 90%. We would like this figure to approach 75%, which would be a ecovery export-orientation is imperative.

Unfortunately, Croatia is currently still witnessing recession and it has been recurring for a period of time. We believe that our investment has significantly contributed to an improvement in economic conditions.

Nevertheless, we are hoping the state w i l l focus on exports as a condition

We are planning the construction of an additional production plant What is the company orientation in the near future?

A five-year development plan anticipates the integration of the two current production facilities as well as the construction of a new, identical production plant near the current one. We are also planning to purchase new production equipment, a new office building construction and the sine qua non for long term economic development. Croatian entrepreneurs will subsequently be able to provide their assistance.

integration of all the business functions. Certainly, this investment requires considerable capital. In addition to our own resources, we are relying on our strategic partners or recapitalisation investor assistance. Our latest significant investment cycle, worth nearly €16.5 million, was based on a combination of recapitalisation worth €15.5 million via the Euro-

pean Bank for Reconstruction and Development (EBRD) with the remainder being provided by ourselves. Our experience with EBRD has been more than satisfactory and we have clearly illustrated the possibility of this model of co-operation. There are obviously other capital sources, with a public share offer as clearly one of the most interesting.

What do you use in production in addition to copper wire?

Part of our vertical integration project was also the investment in PVC granules production in the new production facility. It is the basic raw material for electric cable production and is used as an insulation material. Similarly with copper wire, we purchase raw material and process it into granules. Currently, we believe there is ample potential for lowering costs and increasing final product quality control in these two areas.

potential and investment growth in all economic areas from construction to infrastructure. We are hoping to penetrate such markets with a wide range of products comprising construction, industry

Where are your principal exports markets?

Austria, Germany, Switzerland, France, Hungary, Greece, Slovenia and regional markets. The production capacity increase and new market expansion, such as, for example, to Great Britain, Ireland, the Czech Republic, Slovakia, Romania, Bulgaria, Russia, Ukraine and Israel, which are mainly markets with developed investment activities, as well as markets with

We believe our investment has significantly contributed towards an improvement in economic conditions and electricity distribution, such as installation and low-voltage cables. In 2011 export revenue is expected to stand at over €90.5 million, whilst the anticipated level for 2012 is €121.6 million.

Do you expect changes in business activity following EU accession?

Our business activity will continue as planned, as we have been export-oriented since inception.

Generally, we are anticipating further reforms in public administration following EU accession, which could indirectly positively affect business conditions in the Croatian economy.

4

Privredni vjesnik Year V No 0182

The first 11 months of 2011

€1.74 billion gross profit for private entrepreneurs Private entrepreneurs comprise 97.9% of all enterprises and contributed 72.2% in total income or the past several years one of the main characteristics of Croatian entrepreneurs (those who pay VAT) has been their dominance. According to data from the Financial Agency, for the first nine months of 2011 the following apply:

F · · · · · · ·

97.9% of all businesses in the country 74.1% of total working population 72.2% of total income created 73.5% of total expenditure 50.7% of gross profits made 81.8% of accounts payable 72% of total investment made

Mainly positive Entrepreneurs from all four types of ownership operated positively during the first nine months of 2011, achieving an overall gross profit. Profit figures for each type were €1.74 billion from 89,662 private enterprises, €1.52 billion from 609 enterprises in mixed ownership, €0.16 billion from the748 state-owned enterprises

and €4.86 million from enterprises having co-operative ownership. Compared with the first nine months of 2010, enterprises in mixed ownership increased their gross profits by 169.7%, privately-owned enterprises by 2%, and state owned enterprises had reduced gross profits by 14.6%. Those under co-operative ownership operated better than during the first nine months of 2011, achieving an overall gross profit of €4.86 million compared with a €1.62 million gross loss in the same period of the previous year.

In terms of income compared with expenditure for the first nine months, the following applied (figures in Croatian Kuna): Co-operative ownership: · HRK102.53/HRK100 State-owned companies: · HRK103.03/HRK100 Private – ownership: · HRK103.97/HRK100 Mixed ownership: · HRK105.76/HRK100

Marginally positive ratio of income to expenditure Interestingly, whilst achieving the best results in terms of overall gross profit, employees within the private sector were not paid above-average salaries.

Salary structure The average monthly nett salary per private sector employee was €583, some 7.7% below the av-

erage monthly salary. As previously, those employed in stateowned enterprises received the highest salaries at €811, some 28.5% above average, those employed in co-operative ownership received €493, 21.8% above average, with those employed in mixed ownership companies received €740, some 17% above average.

FINA’s analysis of the relation between receivables from buyers and accounts payable, dating from 30 September 2011, reveals that receivables of entrepreneurs were €0.59 billion higher than payables, which is a positive trend. Concerning privately-owned enterprises, the receivables exceed payables by €0.48 billion; for state-owned enterprises the figure was €0.31 billion and for other types of ownership, accounts payable were higher than receivables by €59.7 million in enterprises under co-operative ownership, and by €0.15 billion for enterprises under mixed ownership.

SPLIT SHIPYARD SUCCESS

and the most important ships of the year The ships Orange Star and Piana were awarded reputable international recognition of the most important ships constructed in 2011, according to The Naval Architect magazine and its special publication Significant Ships 2011.

The publisher is RINA – The Royal Institution of Naval Architects. It is an international association grouping shipbuilding industry and marine organisation representatives from over 90 countries throughout the world.

Orange Star is the largest constructed orange juice carrier,

with a length of 190 metres and nett carrying capacity (payload) of 32,000 m3, intended for the transport of refrigerated fruit juice. The project was developed in Brodosplit and the vessel was delivered to the client in February in 2010. Ro-pax Piana, a passenger carrier, personal and cargo vehicles and dangerous cargo carrier ship, is a sophisticated and a technically demanding vessel. It is the first Ro-pax constructed in accordance with the new regulations, guaranteeing the highest vessel stability standards, life at sea safety and

environmental protection as well as the highest level of comfort. It was delivered to the client in December in 2010.

Significant Ships 2011 recognition awarded to the vessels whose projects were developed and implemented in Brodosplit

Shipyard is a significant reference point for the Split shipyard and an acknowledgement of its position in the sophisticated ships market. According to the Brodosplit statement, both ships were constructed without state subsidies. (J.V.)

www.privredni.hr Business & Finance Weekly

5

A CROATIAN-CHINESE COMPANY

Badel 1862 selling wines in China and opening wine shops with Chinese partners Top quality red and quality wines in the first wave of Badel exports and he marked this with his meeting with the Chinese Ambassador Shen Zhifei, held during the first days of the newly appointed Croatian government mandate.

“Our co-operation with China needs to be tackled on three levels. Firstly, by defining the legal framework. Secondly, by defining which institutions will co-ordinate work and whether development banks, economy chambers or similar institutions will be involved. Simultaneously, we need to define which projects are to be implemented and in which production branches and subsequently work can commence. It will be highly advantageous for everyone involved, as there are no geopolitical connotations and it is pure business”, stated Čačić.

Stipe Mesić, the former Croatian President, who strongly supported economic co-operation between the two countries during his term in office, attended the

Igor Vukić he company Badel has recently signed a contract for the incorporation of a company with the Chinese holding Tadee in Zagreb for the sale of wine and strong alcoholic beverages on the Chinese market. The contract value for 2012 is €1.5 million and satisfactory sales results will trigger a considerable product range expansion.

Badel has been present in China for around three years and, according to Srđan Oreb, its Managing Director, negotiations on the incorporation of a joint enterprise lasted for nearly a year. “This is a pioneer venture and irrespective of the moderate value of the current contract, it will be marked as a highly important event in our business activity. This is a last minute Chinese market penetration, since our European competitors have been there for years”, pointed out Oreb.

T

Wine shops on the increase Tadee Holdings has been on the Chinese market around 10 years.

Its activities comprise real estate, oil industry and a plethora of investment in China and abroad. It has been investing in 80 countries globally. The headquarters of the holding company is in Huanghou, which has 7 million inhabitants and it is the centre of a region with a population of 87 million. The newly founded joint enterprise will start its market penetration in shopping centres and wine shops.

Badel and Tadee are planning to open the first wine shop in Huanghou, followed by three more shops and a wine club.

Wine shops will cover an area of 250 m2, whilst the wine club covering 600 m2 will be located

on the 21st floor of a skyscraper in the business zone with Badel and Tadee launching their products there and in addition serving Croatian cuisine specialities.

Zhang Zhuben, Vice-President of Tadee Holding Group, believes the Chinese market has ample potential, since Chinese wine imports annual growth rate stands at nearly 50%. According to estimates, the Chinese alcoholic beverages market will soar from 47 billion litres in 2009 to 61 billion litres in 2014.

Top quality wines in the first wave of Badel exports will be originating from wineries such as Korlat and the Agricultural Co-operative Svirče. White wines will be originating from the Daruvar winery. Badel will also export its Antik wormwood wine, Glembay grape-brandy and

several other brands. Depending of the demand for Badel wines in the Chinese market, there are plans to engage other wineries for joint production. Srđan Oreb has not been willing to reveal the details of these plans, yet he pointed out the fact that company technology is ready to face any production quality challenges and is prepared to contract with other producers on additional production quantities if the need arises.

Government support The incorporation of the joint enterprise received the support from Radimir Čačić, Vice-President of the Government and Minister of Economy. He pointed out that foreign trade co-operation between Croatia and China will receive huge government support

Chinese wine imports annual growth rate at nearly 50% contract signing. In 2012 we will mark the 20th anniversary of diplomatic co-operation. The relationships are friendly and warm, nevertheless there is currently still huge untapped potential in the economic sector. Consequently, the Chinese Ambassador Shen Zifei is hoping that Badel and Tadee Holding Group will be a symbol of growth in economic co-operation. “If this was the wedding, as defined by the VicePresident of the holding, then I hope this young married couple will have many children”, concluded Ambassador Zhifei.

6

WE PRESENT

FREELANCE MASSEUSES, ZAGREB

Privredni vjesnik Year V No 0182

VINMEDIA, ZAGREB

Media experts infatuated by taste The company co-operates with wine producers, hotel owners and caterers, helping them to successfully establish and maintain media relationships

My first free of charge massage Highlighting the importance of massage to maintain health and help masseuses find work he Association of Masseuses was created three years ago with the aim of making massage more popular as well as clustering freelance masseuses. The name Freelance Masseuses might seem odd, but it does have a meaning, points out Silvano Gospodarić, co-founder of the Association. Above all, there are a large number of freelance masseuses in Croatia working independently or through their own small businesses. Even though they are performing excellent work, they are not able to promote themselves since they lack marketing experience. This is where the Association can help them. Not only are its founders masseuses, but they have been in contact with the media, tourism and culture through various projects over the past 15 years.

Furthermore, all Association members are completely independent since they can all work for themselves. “We want to highlight the importance of massage for maintaining health, and help masseuses find work”, notes Gospodarić.

T

Anti-stress massage in a chair The Association has attracted many supporters and members through its website. “The goal is to exchange knowledge and experience, amongst other things.

I must also point out there is no

competition since we contribute to the quality of our work by exchanging experiences and the fact our members are specialised in various types of massage”, pointed out Silvano Gospodarić. He also adds that members work independently with their own client base, but also participate through

Each member works independently or on joint projects through the Association the Association on joint projects through which they have been able to make themselves known to the wider general public over the past two years. During the past 18 months it has been working intensively on promoting corporate and event anti-stress massage. It can be performed anywhere since it does not require space, taking off clothes or the use of massage oils. In order to highlight the value of massage, the Association initiated a project called My first free massage. “We also plan to introduce massage chairs into companies, at least those with a developed awareness for worker health.

We co-operate with the Andrija Štampar Public Health Institute, which included us in their project Healthy Working. (S.P.)

inMedia was founded in 2010 as the first regional agency, specialising in communication counselling for gastronomy and hospitality. The company co-operates with wine producers, hotel owners and caterers, helping them to successfully establish and maintain media relationships, create a reputation in social networks, manage gastronomic events, establish visual communication as well as design and service websites. Director Marko Kovač leads a group of twelve partners distributed through several project teams, consisting of professionals with experience in gastronomy. This aficionado of gastronomy created the company after working in the

V

Kovač is convinced gastronomy and hospitality will continue to grow Delegation of the European Commission, public relations agencies as well as both the national and international press, including the BBC and Financial Times.

VinMedia’s advantage lies in the fact that it is the only media agency fully oriented towards providing marketing services for gastronomy and hospitality, says

Kovač. He underlines that quality co-operation requires the wine makers’ experience of working processes, from planting to selling wine. He says that if we wish to represent something, than we must be thoroughly familiar with it. “I am a big gastronomy enthusiast, which is why I found it quite easy to combine my professional experience and my hobby”.

Proud of their produce VinMedia clients are mainly small and medium-sized companies, some of which encounter media activities for the first time.

After years of work experience, many of them created a product that can proudly stand on the “global table”, such as wine. This is the reason it was only logical to invest in marketing. The marketing budget had been significantly cut. However, the economic slow-down did not have a significant effect on our agency since we offer our clients individual solutions, customised on the basis of their specific needs and offering several flexible financing solutions, explains Kovač. He notes that this year will be challenging. Kovač believes gastronomy and hospitality will continue to grow, especially in the light of approaching EU accession and the fact that a growing number of experts are starting to recognise Croatia as a quality gastronomic destination. (J.V.)

www.privredni.hr Business & Finance Weekly

7

CROATIAN FOREIGN CURRENCY MARKET Currency

AUD CAD JPY CHF GBP USD EUR Source: HNB

EUR

Kuna exchange mid-rate

7.56

6,100306 5,798269 7,688661 6,232384 9,042935 5,897566 7,541808

USD

5.92

10.1.

11.1.

12.1.

13.1

6.24

7.55

5.91

6.23

7.54

5.90

6.22

7.53

5.89

6.21

7.52

5.88

6.20

7.51 9.1.

WEEK JANUARY 14, 2012

CHF

5.87 9.1.

10.1.

11.1.

12.1.

13.1

6.19 9.1.

10.1.

11.1.

12.1.

13.1

::: news

CROATIAN NATIONAL BANK

Imex banka: €3.42 million profit In 2011, Imex banka achieved €3.42 million profit according to preliminary financial reports. Total assets increased by 20.86%, reaching €0.26 billion. Total bank lending increased by 23% over last year, totalling €0.18 billion. Corporate and craft lending increased by 27%. Total client deposits increased by almost 19%, totalling €0.21 billion.

Insurance market drops by 1.1%

Lending at €38.89 billion in November In relation to the end of 2010, the increase in overall lending is primarily due to growth in corporate lending ccording to the latest data provided by the Croatian National Bank, bank loans totalled almost €38.89 billion in November 2011. A slight 1% increase was shown on a monthly level, and in relation to November 2011 lending increased by 6.3%. In relation to the end of 2010, lending increased by 5.5%. Compared with the end of 2010, the increase of total lending is primarily a result of growth in corporate lending. In this sector, lending reached €15.8 billion, which is 8.1% more in relation to the end of 2010. A large proportion of this increased demand was contributed by large-sized companies. On the other hand, annual

A

growth rates in personal lending are considerably lower, reflecting a weaker employment rate and instability in the labour market in terms of generating future income. In November, personal lending continued to decrease on a monthly level, totalling €17.36 billion, which is 0.8% more

Growth in personal finance not anticipated in 2012 in relation to the end of 2010.

Housing loans, which make up the biggest share (46%), totalled €8 billion, a 4.4% increase yearon-year. Notwithstanding, con-

sidering the biggest share of such lending is granted with a currency clause, it should be noted that the kuna is 1.1% weaker in relation to the Euro on a year-onyear level.

In November, state lending increased by €0.16 billion, reaching €5.04 billion, up 8.4% compared with the end of 2010. In 2012, RBA analysts anticipate similar movements as for 2011.

Lending will probably increase, but very modestly. Growth will be generated primarily by corporate demand, mainly those with better repayment capacities.

Considering the already high level of personal debt, any demand for lending is not anticipated in this sector. (V.A.)

In 2010, 26 insurance companies recorded a total of €1.23 billion in gross premiums, which is a poorer result in relation to that achieved in 2010. Non-life insurance was €0.91 billion and life-insurance €0.33 billion. The highest premium was achieved for automobile liability insurance, a total of €0.40 billion or 1.6% up over 2010.

Erste mBanking available on Android After developing the mBanking application for iPhone for providing payment service “Photograph and Pay”, Erste Bank has developed an Android version of the same application. Since mid December 2011, over 3,600 users downloaded the mBanking application for iPhone and Android devices.

8

Privredni vjesnik Year V No 0182

( €3300 million

exports during the first nine months in 2011

( €561 million

imports during the same period

Paltry indications of recovery in a faltering industry

A recovery in the textile and clothing industry?

The textile industry, which has seen a collapse over the last several years, employs over 10% of overall employment and is again recording positive results, following a ruthless year value of exports from the clothing industry stood at €270 million, or 2.3% down, whilst the value of imports was €342 million or 6.5% up over the first nine months in 2010.

Sanja Plješa ast year was a satisfactory year for the textile and clothing industry following several years of stagnation in production. This was particularly evident in the clothing industry where staff redundancies came to a halt and operational productivity improved. For 2011 the total number of those employed in it stood at 10.16%, whilst its share of total exports from the processing industry stood at 5.56%. However those employed in the leather manufacturing and processing industry was 4.21% and its share of total exports was 3%. In addition, 2011 saw a slight increase in employment with 536 new employees, mainly as a result of foreign investment, particularly by the companies Haix and Boxmark.

“The textile, clothing and leather industry market circumstances are extremely complex and thoroughly globalised. Companies are currently facing arduous operating conditions aggravated by the financial crisis adversely

L

Jadran stocking factory saw sales increase by 30% impacting on the statistical and financial indicators”, pointed out Mirjana Gambiroža Jukić, Business Secretary with The Textile and Clothing Industry Association at the Croatian Chamber of

Croatian fashion affirmation Fashion.hr launched a project grouping five Croatian factories and six well-known designers to promote the Croatian textile industry with cooperation between designers and the local textile industry. The results of this co-operation were presented during last year’s fashion fair Fashion.hr Industry and the regional Fashion.hr fair, with 119 exhibitors from Croatia and the region participating. “Our main motivation was to foster changes in the Croatian fashion scene”, explained Vinko Filipić, the Project Director of Fashion.hr.

Economy. Nevertheless, textile companies with satisfactory business results received substantial subsidies from the Ministry of Economy, Labour and Entrepreneurship, allowing the implementation of technological modernisation and consequently cutting expenses and increasing work productivity.

Exports and imports Exports and imports in the textile industry are currently indicating relatively satisfactory

results and hence the value of exports stood at €330 million for the first nine months of 2011, whilst imports were €561 million, according to the Industry Sector at the Croatian Chamber of Economy. In 2010 exports stood at €441 million and imports at €727 million.

During the first nine months in 2011 exports came in at €64 million or 0.5% up over the same period in 2010. Simultaneously, imports value stood at €249 million or 3.2% up. In addition, the

Optimism in the textile sector Vinko Barišić, the Director of Jadran Stocking Factory and Damir Vitez, the Director of Čateks talked to Privredni vjesnik about the situation in the textile industry.

“The Jadran Stocking Factory recorded a 1% - 2% increase in total revenue over 2010, yet the overall results will be slightly worse than for 2010. A 9% - 10% decrease in wholesale and around 5% drop in retail sales were recorded in the local market. Nevertheless, we saw a significant increase in sales (30%) of our products in foreign markets over 2010, primarily regarding Jadran product sales in Austria and Switzerland, where we managed to partly compensate for our work”, stated Barišić. Čateks recorded stable activity in 2011. “We managed to implement all our major plans for 2011, whilst for 2012 we are anticipating a boost in production and sales of our products, irrespective of the catastrophic announcements of a huge forthcoming crisis”, stated Damir Vitez. The company is primarily focused on exports, as over 65% of Čateks products are exported, mainly to Germany, the Benelux countries and Scandinavia.