French-Bulgarian Chamber of Commerce Chair Stephane Delahaye: French Investors Are Yet to Show Potential in Bulgaria
An exclusive interview with Stephane Delahaye, Chairman of the French-Bulgarian Chamber of Commerce for International Survey "Bulgaria-France" of Novinite.com (Sofia News Agency) and Novinite.bg.
There is ageneral belief that French business and investment in Bulgaria are stillunderrepresented or "unsatisfactory". Do you think this criticism is justified?
Yes, in Bulgaria the "weight" of France as a country or as a source of investment and business is not as important as it is across Europe as a whole. In Bulgaria we never got really big French investments – I mean here large manufacturers of cars, for example – as we got Renault in Romania – that can become engines for the entire economy. It is true that we never got such a large French investment in Bulgaria.
It is also true that in Bulgaria we are in the shadow of French business in Romania. First of all, Romania a country with a Latin language, and you know that the second language for most Romanians is French. For French businesspeople it is always good to communicate with people with knowledge of French, and from that point of view we have historical links with Romania.
I would say, however, that France's rank as the 12th largest foreign investor in Bulgaria is not quite precise because many of the French investments have come to Bulgaria through Greece.
For example, if you take Carrefour, I'm not sure if it's counted as a French or Greek investment. Many French companies are a bit reluctant to do business in Bulgaria, and they've decided to grant their business rights to franchises for the Bulgarian territory – or to do that through their Greek subsidiaries.
That could change with the crisis in Greece. Obviously, now it is probably better to target the Greek market through a Bulgarian company.
All these things mean that France is still far from its deserved place as an investor in Bulgaria – but pay attention here because the fact that France is a little low in the ranking now is good because the potential is great, and it's looking up.
Many French companies are now interested in Bulgaria's energy sector, in infrastructure, and I think we are yet to demonstrate the huge potential of French investors.
I would like to point out that in the French-Bulgarian Chamber of Commerce we have good forecasts for the Bulgarian economy next year.
So the answer is yes but we are doing our best to change that.
What are the primary investment interests of French businesses in Bulgaria? Where are Bulgaria's advantages found from the point of view of French investors?
I think that for the French companies first comes the proximity because we are together in Europe. Even though Bulgaria is still not in Schengen, that is still quite important.
For example, for call centers – there are a couple of companies setting up call centers in Bulgaria, and it's better and cheaper than call centers in France, and not as far away as Vietnam or China - when you want to make software it's much better to fly 3 hours by plane to meet your supplier instead of flying 20 hours to India (even if India is cheaper). So in terms of geography, Bulgaria is really a very good location.
In terms of labor costs, Bulgaria is very interesting, too. They are lower than in Western countries, and provide very interesting opportunities.
Then there are the specifics of the Bulgarian industry – for example, in the textile business many French brands are made in Bulgaria. The specifics of the industry plus the location are a great asset for Bulgaria.
Of course, one of Bulgaria's major advantages is taxation – so far the 10% flat tax is a great asset to attract the French investors even though we have a kind of dual taxation treaty between Bulgaria and France, and it's not so clear how to take advantage of these lower taxes. For instance, the Germans reviewed their tax treaty with Bulgaria a couple of years ago but our tax treaty is from 1989. So probably some adjustments should be made. But I think this too is a great asset.
How does Bulgaria fare with French investors in comparison to its neighbors and other countries from its region?
The middle of the 1990s was a complicated time for investment. If we compare Romania and Bulgaria, France has a historical link with Romania, so for us to deal with Romania it's quite easy. That's why in Romania we are always among the top 3 of the foreign investors. If you meet a taxi driver in Bucharest, they speak French.
For Bulgaria it's more complicated. In Bulgaria the administration is very complicated for French business. Let's not talk about corruption – because you know, there is corruption everywhere – but nevertheless it's quite difficult to make business here. Take all the paperwork...
And if you compare Bulgaria with Romania – the GDP per capita is quite the same but the market in Romania is 20 million, the market in Bulgaria is 7 million. So why should I make my life difficult and invest in Bulgaria? That's why in the early 1990s all the big French companies left Bulgaria's territory to their franchises in Greece. They were overlooking Bulgaria over Greece. So I think we should add some of the Greek investments to the amount of French investments in Bulgaria. Carrefour is one of the examples because it's coming from the Marinopoulos franchise in Greece.
Switching to trade – which Bulgarian products and producers are competitive on the French market, and vice versa?
I think in terms of exchange the trade relations between Bulgaria and France are not bad – because France is 6-8th supplier of products in Bulgaria, and we import from Bulgaria some manufacturing products, food, textiles,
But I think there is a problem of marketing. My mission with the French-Bulgarian Chamber of Commerce is to try to help Bulgarian producers to market their products in France – because global competition is huge.
The Bulgarian producers must understand that marketing is helping added value. For example, in France there are a lot of wine tasting ads from California, or many other places but it is very rare to see such ads from Bulgaria. I don't know if this is a good example because the French produce wine but you see my point.
That is why I try to invite Bulgarian businesses to enter the French market. That's why I would like to establish some meetings between Bulgarian and French delegations. And we are ready to help the Bulgarian business to develop. We have a lot to do.
France, together with Germany, has initiated the new EU Fiscal Pact, whose inception included demands for uniform taxes in the EUmembers that subscribe to it. How do you evaluate Bulgaria's position to defendits low taxation policy? Given that its low taxes are Bulgaria's maininvestment advantage, do you think that France and Germany's demands forBulgaria in that respect are fair?
It depends on whose point of view you are seeing things from. If Bulgaria would like to attract foreign companies, it should have massive advantages – so it's very good to have this 10% flat tax.
In my opinion the Bulgarian government should do everything in order to keep this flat tax because otherwise why come to invest in Bulgaria? It's an economic crisis, FDI is declining, so I think it's mandatory.
It's fair in one way that all EU member states say, "Let's not make this a kind of competition!" They are right in one way but life is made of compromise. The demands of France and Germany are fair but if I were a Bulgarian... – please try to fight in order to keep it because this is how the Bulgarian economy will get through the crisis.
Do you agree that Bulgaria's greatest issue in failing to attract more investments from France has to do with its flawed image?
Bulgaria is not well known. You have a deficit of good image. I remember when I travel to France – you see ads "Invest in Macedonia." They make advertising. Bulgaria in France is quite unknown in terms of business. French companies don't know very well where Bulgaria is.
We cannot say that Bulgaria has a bad image in France. But having no image is worse. There are many anecdotes of French moving to Bulgaria with the luggage arriving in Poland etc.. So it's about the lack of consistency in image.
What is the role of the French-Bulgarian Chamber of Commerce in boosting business ties?
We are here to help. We have over 150 members – all French companies represented in Bulgaria are members of the Chamber. We are not only French but a Bulgarian-French Chamber of Commerce – this means that our aim is to help attract French investors in Bulgaria and Bulgarian businesses to France. We have one big event - Beaujolais Nouveaux – in the first Thursday of November, and one meeting every month for networking.
Many Bulgarian companies appreciate that because that's how they make business connections with French businessmen. One project I'd like to develop is to help more of them visit the network of the French Chamber of Commerce in France.
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