Doing Business in Greece 2010 Country Commercial Guide for U.S. Companies INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2010. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES. • Chapter 1: Doing Business In Greece • Chapter 2: Political and Economic Environment • Chapter 3: Selling U.S. Products and Services • Chapter 4: Leading Sectors for U.S. Export and Investment • Chapter 5: Trade Regulations and Standards • Chapter 6: Investment Climate • Chapter 7: Trade and Project Financing • Chapter 8: Business Travel • Chapter 9: Contacts, Market Research and Trade Events • Chapter 10: Guide to Our Services Page | 1 Return to table of contents Chapter 1: Doing Business in Greece • Market Overview • Market Challenges • Market Opportunities • Market Entry Strategy Market Overview Return to top Greece finds itself in one of its most challenging economic periods in recent history. The global financial crisis has exposed and exacerbated fiscal and other structural weaknesses in the Greek economy that have lead to a ballooning fiscal deficit (12.7 percent of GDP estimate in 2009 compared to the E.U. ceiling of three percent) and one of the highest levels of public debt in the Eurozone. Additionally, Greece has a history of other challenges such as high levels of corruption and tax evasion, and very low levels of business transparency. Under pressure from markets, ratings agencies and the E.U., the new center-left PASOK government has developed a three-year updated Stability and Growth Program that seeks to reduce the fiscal deficit to three percent by the end of 2012. Implementation of this plan will be difficult and will require vigilance by the Greek government and the E.U. In spite of these challenges, many U.S. companies have been quite successful in the Greek market. A key to successfully doing business in Greece is partnering with a local representative, and there are many effective Greek companies assisting U.S. firms in this market. U.S. products are viewed favorably in Greece for their innovation and quality, and despite stiff competition from the E.U. and Asia, are ubiquitous in this market. • Population: 11.0 million (2009 estimate) • Demographics: 0-14 years – 14.3 percent 15-64 years – 66.6 percent 65 and over – 19.2 percent • GDP: 371.2 billion dollars in 2008* Real Growth Rate: 2.9 percent Per Capita: 33,440 dollars in 2008* • Unemployment Rate: 7.5 percent (annual average) in 2008* • Greece is an import-dependent economy • No significant non-tariff barriers to U.S. exports. • U.S. accounted for 1.9 percent of Greece’s imports in 2008* Market Challenges Return to top • Stiff competition from Greece’s traditional E.U. trading partners - Italy, Germany, France, U.K. and the Netherlands. Page | 2 • E.U. suppliers have duty-free status and proximity to the Greek market (lower transportation costs and faster service). • Competition in many industry sectors in Greece can be characterized as oligopolistic, making it difficult for new entrants. • Eurostat ranks Greece at the bottom of its Payment Index, meaning that the risk of non or delayed payment is high, especially for public sector contracts. • According to the OECD, Greece has one of the more restrictive business environments as pertains to inward investment. Business is heavily regulated. • The public sector share of the GDP approaches 40 percent. Public procurement is consequently an important feature of the commercial landscape. The government of Greece (GoG) prefers, and often requires, foreign bidders to partner with Greek companies. Though Greece is a signatory to the OECD Anti-bribery Convention, Transparency International’s 2009 Annual Perception of Corruption Index ranked Greece 71st overall and 29th out of 30 European countries. Market Opportunities Return to top Sectors: Information Technology and Business Software; Medical Equipment; Renewable Energy Power Plants Systems and Equipment; Environmental Equipment and Engineering Services; Security and Safety Equipment; Telecommunications: Convergence & Broadcasting; Information Technology (IT) and Business Software. • The U.S. trade surplus with Greece in 2008 totaled 765 million dollars*. • Among agricultural products, the best U.S. prospects are seeds, tree nuts, wood products and frozen seafood. • Services represent the largest and fastest growing sector of the Greek economy. Trade, banking, insurance, transportation and shipping, communications, healthcare, education, and tourism are the largest service sub-sectors. The world-wide economic slowdown has negatively impacted some of these sectors. • Energy is a best prospect sector for U.S. companies because of recent deregulation of Greece’s energy sector. There are many opportunities for U.S. businesses in the electricity, gas and renewable energy sectors. • Greece’s proximity to other countries in southeastern Europe, and the traditional trade ties of Greek business people with these neighboring countries, offer a variety of additional opportunities for U.S. businesses with Greek partners. Greece, particularly through its northern port city of Thessaloniki, sees itself as a natural gateway to the Balkan countries. Greek firms enjoy good commercial ties to central and eastern European markets as well, including the Black Sea region. U.S. firms may wish to target these markets from a base in Greece or to explore three-way arrangements with Greek companies or partners. Page | 3 Market Entry Strategy Return to top • The Greek market has its idiosyncrasies, particularly when it comes to procurement and government tenders. Lack of familiarity with regulations and government agencies can lead to frustration and delays in contract negotiations. Thus, a competent local representative is invaluable. • A company that is not willing to travel to Greece to establish an agent, distributor, or partnership relationship, is generally regarded by potential Greek partners as not ready for the Greek market, regardless of the company’s success in other foreign markets. • U.S. firms considering investing in Greece should review the relevant regulations with legal, tax and other business experts in order to avoid potential problems. Invest in Greece, the Greek national investment agency, is able to provide initial assistance in dealing with government institutions. At present, there are over 100 U.S. firms with subsidiaries in Greece and hundreds of more U.S. companies selling through agents and distributors. Although there is an absence of reliable data, the U.S. Embassy estimates total U.S. investment in Greece to be about 4.5 billion dollars, more than one-third of total foreign investment. Greece has the lowest amount of foreign direct investment in the E.U. http://www.tradeinfo.doc.gov or http://www.ita.doc.gov or www.export.gov http://www.state.gov/r/pa/ei/bgn/3395.htm https://www.cia.gov/library/publications/the-world-factbook/geos/gr.html http://www.transparency.org/policy_research/surveys_indices/cpi/2009/cpi_2009_table http://www.transparency.org/policy_research/surveys_indices/cpi/2009/regional_highligh ts *Final figures are not yet available for 2009. Return to table of contents Page | 4 Return to table of contents Chapter 2: Political and Economic Environment For background information on the political and economic environment of the country, please click on the link below to the U.S. Department of State Background Notes. http://www.state.gov/r/pa/ei/bgn/3395.htm Return to table of contents Page | 5 Return to table of contents Chapter 3: Selling U.S. Products and Services • Using an Agent or Distributor • Establishing an Office • Data Privacy/Protection • Franchising • Direct Marketing • Joint Ventures/Licensing • Selling to the Government • Distribution and Sales Channels • Selling Factors/Techniques • Electronic Commerce • Trade Promotion and Advertising • Pricing • Sales Service/Customer Support • Protecting Your Intellectual Property • Due Diligence • Local Professional Services • Web Resources Using an Agent or Distributor Return to top The key to success in the Greek market is to have an experienced agent or joint venture partner with suitable experience and an extensive sales network. A commitment to offering full after-sales support to the end-user, along with spare parts, is also crucial. As the government of Greece (GoG) accounts for most major purchases, it is essential that local agents or joint venture partners have the knowledge and experience to participate in government tenders on behalf of U.S. suppliers. The decisive factor in government purchases is low price and strict adherence to specifications. Private sector purchasers are more likely to weigh price in relation to the quality and after-sales support of the goods or services being purchased. Companies wishing to use distribution, franchising and agency arrangements need to ensure that the agreements they put into place are in accordance with European Union (E.U.) and Member State national laws. Council Directive 86/653/EEC establishes certain minimum standards of protection for self-employed commercial agents who sell or purchase goods on behalf of their principals. In essence, the Directive establishes the rights and obligations of the principal and its agents; the agent’s remuneration; and the conclusion and termination of an agency contract, including the notice to be given and indemnity or compensation to be paid to the agent. U.S. companies should be particularly aware that the Directive states that parties may not derogate certain requirements. Accordingly, the inclusion of a clause specifying an alternate body of law to be applied in the event of a dispute will likely be ruled invalid by European courts. Page | 6 Key Link: http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31986L0653:EN:HTML The European Commission’s Directorate General for Competition enforces legislation concerned with the effects on competition in the internal market of "vertical agreements." U.S. small- and medium-sized companies (SMEs) are exempt from these Regulations because their agreements likely would qualify as "agreements of minor importance," meaning they are considered incapable of affecting competition at the E.U.