Guest Post: Bulgarian-Romanian Commercial Relationship
Bucharest, Romania -
Guest Post by Doru Dragomir of the Bulgarian-Romanian Bilateral Chamber of Commerce
The two neighbouring countries have had commercial ties since the ancient times. Even before their first medieval states were established, the merchants north and south of Danube were trading goods between the regions.
Over time, trade relationships increased, with the quality of trade relationships varying throughout history - depending on the political and administrative regimes of the two nations. Every time trade was liberalized, the merchants in the region were developing new relationships with mutual benefits. At the beginning of the 20th century, the traders from Gabrovo region in Bulgaria created a strong community in Bucharest. Its effects can be seen today, as the city’s Gabroveni street was named after them.
In the socialist period, due to similar political regimes the trade between the two socialist countries was very high and both of them had trade representatives at industries level in the neighbouring country, besides the commercial attaches of the Embassies.
After the socialist regimes collapsed, Bulgaria and Romania entered a period in which they were on different paths in terms of foreign investments and entered into some harsh competition of industries that were producing similar goods. Before 2007 Romania’s growth was faster than Bulgaria due to foreign investments, population and geographical measurements, and also privatization strategies of old industries assets.
At the beginning of 2007, both countries were accepted as Member States of the European Union, and on the EU level, the two countries were seen as increasingly linked to one another. From that moment the economies of Romania and Bulgaria were growing and an increased number of multinational companies were clustering the administrative management of subsidiaries in the region by having common management teams for both countries in one of the capital cities, usually Bucharest. More and more Romanian managers were sent to Bulgaria to administrate Bulgarian entities, and Bulgarians to Romania also.
Besides the multinational companies, especially in the border area, a lot of local companies developed the trade between the two countries, and step by step bigger national companies established their own subsidiaries in each of the neighbors. The pioneers from the Romanian side were: Mobexpert, Arabesque (under the brand Budmax), Petrom, and Romsdal. From the Bulgarian side we had: Bella Bulgaria, Monbat (for a long period of time in Romania was the biggest Bulgarian investment outside Bulgarian territory), and Datex.
In recent years, trade marked an increase in growth from 3 billion EUR in 2013 to almost 4.2 billion EUR in 2017, and the trend continues. For Bulgaria, Romania represents at this moment the 4th largest commercial partner worldwide and the 3rd within EU with a balanced trade of exports and imports.
In the last years, with the support of the Commercial Offices of the Bulgarian embassy in Romania, and the Romanian embassy in Bulgaria, two chambers of commerce were formed. They are: The Bulgarian Romanian Industry Chamber in Ruse, which mostly covers the border area, and the Bulgarian Romanian Bilateral Chamber of Commerce, with offices in Bucharest and Sofia, which covers the entirety of the national territories. Additionally, more organizations were created to support small businesses, and to develop the trading relations and partnerships within these markets, and as a result, the level of investments is increasing substantially.
The latest figures from the trade Registries of both countries, which the Bulgarian Romanian Bilateral Chamber of Commerce has, showed that Romania has registered over 2400 companies with Bulgarian capital. Bulgaria registered over 2200 companies with Romanian capital. Most of these companies are registered in the border areas and in the capital cities of the two countries.
These figures show the increased interest from Romanians and Bulgarians of investing capital, and developing new markets for their products or services in the region. At the same time, more companies are understanding the added value of identifying complementary services and products that can be packed together and presented to EU and international markets.
The 3 main barriers to developing trade relationships are related to:
- Language, because it is very different and difficult to learn from both sides.
- Transport infrastructure – on 600 km of the Danube border there are just two passing points (bridges).
- Lack of trust from both sides, based on previous unsuccessful business activities.
In order to overcome these barriers, the stakeholders have important roles.
On the educational level, we noticed an increased interest from both sides in developing language courses, and particular interest of young people to learn the neighbouring language due to more and more working opportunities that have appeared. Romanian companies present on the Bulgarian market are interested in finding personnel that speak Romanian, and Bulgarian companies in Romania are in a similar situation. Moreover, both economies have a very strong outsourcing industry that brings together almost 90 000 employees - 60 000 in Romania, and 30 000 in Bulgaria. Besides the special skills that each of the outsourcing companies need from their employees – accounting, IT, etc – they need to have good knowledge on foreign languages and lately Romanian and Bulgarian have become more important in the region.
On the infrastructure level, both governments are discussing possibilities of further developing the interconnections on road and railway infrastructure. In the last years in every official government meeting, the road infrastructure was one of the main topics, taking in consideration that 5 of the European TEN-T corridors are passing through Romania and Bulgaria.
Regarding trust, all of the business support organizations are trying to create a better environment for commercial trade and investments in the two countries. BCCBR’s main activity is to identify the best commercial partners in the two countries for the counterpart country’s national company and to support them in starting to develop the trade or even the investment by representing the company in front of partners, authorities, third party companies, etc.
We consider that together the two countries can and should represent the entrance point of the EU markets for the products from Eastern Europe, the Balkans, Asia etc. In the same time, they can represent a great opportunity for investment from the occidental economic area, due to some clear advantages: fiscal facilities, labor cost still low compared with the rest of EU, good business knowledge, common EU market and more.
This is the reason we, at BCCBR, are ready to support not only the bilateral business but also to support third-party countries that are looking for support in the area to identify the best solution for them in doing business in Romanian/Bulgarian region.