Market Intelligence for Central & Eastern Europe

Market Intelligence for
Central & Eastern Europe
Webinar presentation
October 15, 2009

www.globalintelligence.com

Webinar Content Outline
This document contains excerpts from GIA’s “Market Intelligence
for Central & Eastern Europe” White Paper. For the free white
paper, please visit www.globalintelligence.com or email
info@globalintelligence.com.

•  Introduction and background

•  MI in Central & Eastern Europe
!  Country overviews
•  Central & Eastern Europe
•  Baltic region
!  Challenges
!  MI solutions and case examples (not
included here)

www.globalintelligence.com - page 2

Market Intelligence for


Introduction to market intelligence in
Defining Central and Eastern Europe

Baltics

Eastern Europe
Central
Europe

The Balkans


•  190 million market (50% of Western Europe)

•  2 million km2 (60% of Western Europe)

•  20 countries (10 EU members)

•  10 countries covered in this webinar


Overview of basic economic indicators


Country Overviews


Czech Republic

•  10.3 million people
•  2nd highest GDP per capita of all new EU
members
•  Strong manufacturing industries, excellent
infrastructure
•  Strong FDI, regional HQs, R&D
•  Automotive, electronics & electrical, mechanical
engineering, environmental technologies,
plastics and metallurgy
•  10 years of growth up to 2008
•  Open liberal economy, export focused –
positive trade balance
•  Mature market = competitive, but has buying
power and recognition of quality, open to new
partners
•  Prague / Czech / crown (CZK)


Poland

•  38.5 million people (2nd in CEE)
•  Largest consumer market in CEE
•  Underdeveloped transport infrastructure
•  Large differences between regions
•  4th lowest GDP per capita in EU-27, 57% of EU-27
average (2008, PPS)
•  Least hit by current crisis
•  Electronics, cars, buses, aircraft, metal processing,
clothes, furniture, agriculture + food & beverages…
•  Warsaw / Polish / zloty (PLN)


Hungary

•  10 million people
•  Among first in CEE to introduce pro-market reforms
(prior to 1989)
•  Among top FDI destinations in CEE, hosting 30,000
firms with foreign $
•  Automotive, electronics, machinery
•  Most developed biotech in CEE
•  Serious troubles with state debt and personal loans,
strongly hit by crisis
•  From 4.9% in 2004 to 0.8% in 2008
•  Tourist destination for thermal caves, thermal lakes,
largest lake, grassland
•  Budapest / Hungarian / forint (HUF)


Slovakia

•  No longer younger brother
•  15 consecutive years of growth
•  CEE’s 2nd to introduce Euro, 3rd by GDP per
capita, no. 1 in 2007 by GDP growth, world‘s no. 1
in car production per capita
•  Danube river, Tatra mountains
•  50 km from Vienna, Austria
•  Low costs, educated labour, 19% flat tax rate,
liberal economy, labour code
•  Automotive, electronics, machinery, metals,
chemicals
•  Bratislava / Slovak /EUR)


Romania

•  21.5 million people (7th in EU)
•  EU‘s 2nd poorest (GDP per cap.)
•  32% of population in agriculture & primary
production (agri = 10% GDP)
•  Fast growing low-cost manufacturing
•  Since 2000 – high growth, low inflation, low
unemployment, flat income tax
•  Issues: poverty, red tape, corruption
•  Export items (esp. Germany & Italy): clothing &
textiles, machinery, electrical & electronic
equipment, metals, raw materials, cars, pharma,
fine chemicals, agricultural products
•  Strong in IT
•  Good language skills of Rom. firms
•  Bucharest / Romanian / leu (RON)


Bulgaria

•  EU‘s poorest, 40% of EU-27 average GDP per
capita (PPS), incl. 5 of EU‘s 10 poorest regions
•  Potential for tourism (Black Sea, mountains)
•  18% share of agriculture, important share of food
industry, dairy, wine
•  Biggest power exporter in the Balkan region
•  A long fight with corruption ahead
•  Currency pegged to Euro; high inflation
•  Manufacturing = ¼ of GDP, neglected by FDI, low
added value production
•  New favorable tax legislation to support growth and
FDI
•  Uses cyrilic, trades with Russia
•  Sofia / Bulgarian / leva (BGN)


Ukraine

•  45.8 million – largest in CEE
•  Largest territory of CEE states, incl. 2,782 km of
Black Sea coastline
•  Rich natural resources,
•  Large metal, chemical and agricultural sectors;
traditionally strong in aerospace, aviation and
military industry;
•  2nd largest army in Europe (after Russia)
•  Still closely tied with Russia/CIS in trade
•  Wide gap between poor and rich, very narrow
middle class, vast grey economy
•  Recent fall of local currency cuts imports
•  5 cities over 1 million
•  Uses Cyrillic, Ukrainian & Russian
•  Kyiv/Kiev / Ukrainian (Rus.) / hryvnia (UAH)


Baltic States

•  Northern part of Europe
•  Re-gained the independence from Soviet rule in
1991
•  EU member countries since 2004
•  Relatively new market economies
•  In total 7 mill inhabitants
•  Strategic location:
Baltics as the bridge to Russia and CIS
markets
!  Good transportation infrastructure linking EU and CIS –
railways, ports, road and airway
!  Understanding two business cultures: Western business
manners and post-soviet business thinking
•  Competitive and educated labour force


Estonia

•  1.4 million – “small, but kicking”
•  Likely to be the 1st one in the Baltics to adapt euro
(target in 2013), most stable of the Baltic countries
•  Lower inflation and CA deficit, higher GDP per capita
than in Latvia and Lithuania
•  Least energy- dependent - locally mined oil-shale
generates 90% of electricity; many investments into
green energy
•  Top industries - machinery, electronics, wood
processing
•  Promising sectors of IT and biotechnology
•  Modern tax system - flat income tax with 0% on
reinvested profits
•  Close links to Finland and Sweden (FDI, exports)
•  Tallinn / Estonian / Estonian kroon (EEK)


Latvia
•  2.3 million – population declining
•  Has had the highest GDP growth rates in 2005-2007 and
now the steepest decline
•  Centre of attention due to the IMF loan
•  Currently 2nd highest unemployment rate (18.3%) in the
EU (Eurostat, Aug 2009)
•  Currently in peak-period of EU financing for 2007-2013,
utilizes and reviews support programmes
•  Developed metalworking, wood manufacturing and food
sector
•  Country with strong R&D traditions: specialists work in
materials science, biotechnology, pharmaceuticals, ICT,
and other fields
•  Good opportunities for M& A in production and sales
sector
•  Capital Riga hosts 1/3 of the population
•  Riga / Latvian / lats (LVL)

Lithuania

•  3.4 million – nearly ½ the Baltic population
•  Good transport and IT infrastructure
•  Traditionally developed food, wood and textile
industries
•  Promising sectors: mechatronics, laser technologies
and ICT
•  3rd lowest tax burden in the EU (29.9% of GDP in
2007)
•  Strongly linked with the other two Baltic countries
(FDI, trade, politics)
•  Issues with energy supply after closing of Ignalina
nuclear plant in 2009
•  Currency pegged to EUR while other currencies in
CEE have lost value – this has hurt exports
•  Vilnius / Lithuanian / litas (LTL)


Challenges to market intelligence
in Central & Eastern Europe


Challenges to market intelligence
in Central & Eastern Europe

•  Cultural and language diversity must be taken into account

•  Availability of information sources varies greatly

•  Bureaucracy

•  Determining and understanding market size and potential

•  Choosing the target market & obtaining comparable data


Thank You for Your
Attention

These slides are excerpts from Contact Us
the GIA White Paper: “Market
Intelligence for Central & Eastern For additional information about the
Europe”. Global Intelligence Alliance and our
services, please send email to
info@globalintelligence.com or log on
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The report has been published under the
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www.globalintelligence.com.


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