Interview with Federico Cassi, Director of Confindustria Bulgaria, the association of Italian businesses in Bulgaria, for the "International Survey: Bulgaria-Italy" of Novinite.com (Sofia News Agency).

In the last decades many Italian companies decided to relocate part of their business to Bulgaria. Could you please give us a general overview of this phenomenon?

The data in our possess show that it is more and more common for Italian companies to partially or wholly relocate their activity outside Italy.

There are different reasons that explain this phenomenon: the necessity of finding new markets, the quest for remarkably good ratios between labor costs and human resources level, the trust in the Italian products and technologies.

The Balkans' area remains one of the most attractive destinations. Relocating its own business activity in Bulgaria is a great opportunity that this country offers to the Italian entrepreneurs who want to increase the competitiveness of their companies at the European and international level.

What is important to understand is that nowadays we work in a global economy, so we need to find global solutions to the challenges we face.

The recent financial crisis, which started in 2008 in the USA, has shown that economies are strictly linked to each other, so it is important not to restrict our vision only to the economy of our country.

Here in Bulgaria the economic crisis arrived a bit later than the other European countries, but it was really a shock because the Bulgarian entrepreneurs didn't understand immediately the seriousness of the crisis.

Now the Bulgarian economy is showing signs of recovery, as the latest analysis of the main economic institutions reported, but the country was seriously hit.

Nonetheless, this negative scenario had also positive aspects: for instance, thanks to the higher competition, only the most serious and competitive companies have remained on the market resulting in a general growth of the quality of the products and services offered.

In this new context, the internationalization will be more and more common. Of course every company that decides to move its production to another country is supposed to re-adapt not only its productive structure but also its very nature.

Why does an Italian company decide to come to Bulgaria?

For many different reasons. First of all, Bulgaria and Italy share a common cultural background.

Besides the linguistic issues, the Bulgarian mentality is highly compatible with the Italian one. Many of the members of our association strongly respect the Bulgarian attitude in the workplace. Many Bulgarians are highly motivated, truly focused and greatly passionate for their job.

Moreover, Bulgaria is a developing market, situated right in the center of the Balkans. This logistically strategic placement is very attractive for the Italian companies that are looking for new interesting markets.

Another reason why such a great number of Italian companies choose Bulgaria is connected with the opportunities created by the new infrastructures that will be implemented in the future.  In this field, through joint ventures, consortia or partnership, Bulgarian and Italian companies can cooperate sharing their know-how and their past experience. This cooperation is of the greatest value for both Bulgaria and Italy.

Another relevant plus is represented by the taxation system. The 10% flat tax is really supportive for a company that decides to start a new business in Bulgaria. We hope that the Government will keep its promise about maintaining this system unchanged.

Last but not least, Bulgaria is a stable country, it is member of the EU and offers to the foreign investors increasingly good standards. The recent examples of countries like Tunisia, Libya, Egypt and Syria gave us a clear idea about the relevance of stability for all the economic operators.

What problems do the Italian companies face when they start their business in Bulgaria?

Generally speaking, the members of Confindustria Bulgaria are satisfied of the current situation in Bulgaria. I would say that, rather than "problems", there are some aspects of the Bulgarian economic life to be implemented.

First of all, I think that, in order to secure a stronger development to the country, the process of absorption of the EU funds should be accelerated.

I have to admit that in the last six months the Government, and in particular Minister for EU funds Tomislav Donchev, did fairy well. Nonetheless, I think that even more ambitious goals can be reached. Indeed, especially in this phase of recovery, the funds provided by Brussels are crucial.

Another important issue is related with bureaucracy. We need faster and simpler procedures. This is an important result that can be reached through European best practices and a stronger use of the e-government. We know that the great majority of the public servants in Bulgaria are competent. They deserve better tools to get their job done in the best possible ways.

What about the relation with the administrative system?

Italian companies have a fair amount of "know-how" to export here in Bulgaria and they are ready to do it. What is really important is to create a smooth and predictable legal framework.

The renewable energy sector is an interesting example.  Many big Italian companies decided to invest in this field and need now a clear and well defined legal environment.

On April 19th Confindustria Bulgaria organized a "round table" and voiced the Italian business community's opinion about this important topic. Managers from the main Italian companies participated to the event (supported by Edison Trading, Italgen, Leitwind, PVB Power, UniCredit Bulbank) and discussed the most relevant topics with the representatives of the Bulgarian institutions. This is our style: we don't criticize Bulgaria; we try to participate to the public debate and make Bulgaria stronger.

Could you give an example of an Italian company which has achieved good results here in Bulgaria?

There are many examples of Italian companies that came to Bulgaria and gained a significant position into the market. Among the bigger companies it's important to mention remarkable examples like Unicredit Bulbank, Generali, Italcementi, Enel, Rigoni di Asiago and PVB Power.

All these Italian corporations, in the last years, became important operators of the Bulgarian market.

But the Italian presence in Bulgaria is also connected with the many small and medium enterprises – the so called "pocket-size multinational companies – that started their operations in the country. Metallurgy, constructions, agriculture, energy and trade: all those sectors are characterized by high numbers of successful Italian companies.

Let's focus on the small and medium companies, is the process of relocation more difficult for them?

Obviously, the process of relocating its economic activity, or a part of it, in Bulgaria, and in general abroad, is more difficult for a small or medium enterprise (SME) than for a big corporation.

It is vital to draw the correct strategy, to choose the right management, to understand the peculiarities of the new market.

A good economic analysis is the starting point. Human resources, European standards, labor costs and economic stability: all these are crucial variables for a SME that head toward a new market. Many of them are optimally fulfilled in Bulgaria but only well structured companies – regardless to their size – can take advantage of them.

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