When thinking about expanding your sales efforts into the Southeast Europe (SEE) region, it’s worth paying attention to the Adriatics subregion: this is the most fragmented part of the sales theater. It includes the countries formed after the dissolution of Yugoslavia (Bosnia and Herzegovina, Croatia, Kosovo, North Macedonia, Montenegro, Serbia, Slovenia), plus Albania.
In most sales plans, these countries are lumped together precisely because only by grouping them can the market potential be seen as comparable to some other countries in the wider CEE area.
To get some sense of proportion regarding the market potential, these 8 countries combined generate a GDP of just 38% of Poland’s economy, still less than a “single” Romania (92%), and certainly a small fraction (<5%) of the mighty DACH region (based on 2021 current USD data from World Bank database).
However, there are inherent complications in grouping those countries together - let’s see some of them.
Divergent economies
The dissolution of Yugoslavia in a tragic war occurred more than 3 decades ago. This means the former Yugoslav countries in the Adriatics area have diverged a lot in terms of economic development. IT companies do have some region-wide presence, but this is nowhere the level of integration you might expect. These divergencies mean that expectations regarding market potential and sales quotas must be taken on a per-country basis, rather than on a regional level.
Different regulatory environments
Slovenia and Croatia are the only EU members in this area. Although the other countries are converging towards the EU, their paths are very different. This means lots of regulations, labor law, tax regimes, and customs barriers for import/export, are very different according to country. The implications for administrative overhead are quite clear.
Different currencies and financial risks
Only Slovenia has adopted Euro as currency, with Croatia expected to follow in 2023. Montenegro and Kosovo have adopted the Euro unilaterally. Although all the countries have rather stable exchange rates against the Euro, fact is there are inherent currency risks (besides the obvious US Dollar risk).
Also, the countries vary substantially in terms of receivables collection, with payments being most timely in Slovenia, and degrading further east in Bosnia and Serbia, making it a managed risk and cost of doing business for distributors and partners.
Different languages and cultures
People in Bosnia, Croatia, and Serbia and Montenegro speak similar languages, which means meetings and business conversations are largely frictionless. However, the cultures and histories are quite different and it’s immediately clear you are a foreigner should you cover, say Bosnia operations from Serbia (or any other combination). Again, the local presence and connections are very important, and this imposes substantial costs for any regional presence.
Wrap up
Although it makes sense to lump together the Adriatics countries (and SEE in general), it also means that the internal differences within this region make it very hard to scale operations in the area without above-average costs and operational complexities.
As a result, vendors should expect that any partners in the area (from distributors to channel resellers) will have a varying degree of sales success in individual countries. They will also have limited operational efficiencies and expertise in areas such as digital marketing or technical marketing.
Our sales and digital marketing skills, intimate knowledge of channel ecosystem in the region, as well as local idiosyncrasies, combined with an expertise in enterprise IT technology - can help you navigate the region complexities and deliver sales results faster at a lower cost.
Interested? Let’s talk – contact us!