Croatia Market Entry

Croatia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

In Croatia, there are a large number of intermediaries, small and medium-sized companies that deal with import, distribution, wholesale and retail activities. The simplified procedure and minimal costs required to establish a trading company have caused an excessive growth in the number of these companies in the distribution and sales network. About 100 important companies operate on the domestic market. Larger companies with an extensive retail network of stores focused on food and small goods include the supermarket KONZUM (Forte Nova Group), NAMA, GAVRILOVIĆ, PEVEX. In recent years, it has been expanded to include foreign retail chains BILLA, LIDL, Kaufland, BAUHAUS. Interspar, METRO. In the case of large retail chains, purchasing from suppliers is almost exclusively concentrated in the company’s headquarters (mostly outside Croatia). In Croatia, it is generally not recommended for small and medium-sized companies to establish their own representative office, unless it is necessary from the point of view of the business. The use of a local company or a local partner/associate appears to be more suitable for carrying out business transactions. The issue of trade margin must be discussed beforehand and the representation negotiated, for example, on the basis of a percentage of the profit. It is appropriate to make the issue of exclusive representation subject to a trial period and minimum sales. Informal connections with local companies (design and engineering offices, consulting and consulting firms, marketing specialists) are also important. It is advisable to involve a local distributor for the import of food or health products. We therefore strongly recommend checking the financial status of the company before starting your own business. Commercial section of the Embassy of the Czech Republic in Croatia, or the Foreign office of the PaulTrade agency in Zagreb, has access to the database of local companies and can find out the basic financial status of a specific company on request. You can find the link to the commercial section in Chapter 6 or on the website of the Embassy of the Czech Republic in Zagreb (www.mzv.cz/zagreb). With Croatia’s entry into the EU in 2013, the country became part of the customs union of the EU countries, and accordingly all requirements related to the free movement of goods, people, capital and services between Croatia and other EU states, including the Czech Republic, are governed. Croatian customs rates, including other detailed information regarding customs procedures and documents, can be found on the website of the Croatian Customs Administration (www.carina.gov.hr). The Act on quality control of certain products during their import and export stipulates: The procedure for determining and controlling the quality of products (corresponding to Croatian standards), declaration and necessary labeling of products, specified description (technical and other), labeling of products with supporting certificates, homologation and certification of products. According to cheeroutdoor.com, the Croatian Ministry of Economy and Sustainable Development provides inspection and quality control through trade inspectors. Costs associated with quality control are borne by the exporter or importer. If the quality does not match, the importer is obliged to take the goods back outside the country immediately, but no later than within 8 days of the announcement of the decision.

Protection of the domestic market

As Croatia has been a member of the EU since July 2013, the rules of the EU Customs Union apply to it. Therefore, the rules listed below apply only to third countries and not to the Czech Republic. The majority of import surcharges, quotas and other non-tariff restrictions were eliminated in connection with the validity of the Law on Customs Tariffs (Official Gazette No. 61/00 and 117/00, Regulation on the Customs Tariff for 2002 No. 113/01, effective from 1. 1.2002). However, certain types of goods, which are determined by the Ministry of Economy and other responsible departments, can only be imported on the basis of licenses – a special permit. These are radioactive and chemical substances, weapons and pyrotechnic materials, works of art and antiques, precious metals, securities, postage stamps, medicines, including veterinary medicines, drugs, paper and cardboard, some agricultural machinery). In order to protect the domestic market, the government adopted a decision to determine the products that are subject to the quality control of the official market inspection at the customs office upon importation. The goods must correspond to valid Croatian standards, must be properly marked, packed, must contain required documents and required quality certificates. Food, agricultural products, automobiles, furniture, textiles, cement, electrical equipment, elevators are subject to this control. For products that are subject to quality controls, the name of the product, the full address of the manufacturer or importer, net weight, volume, information on ingredients, how to use the product, storage and other important notices must be marked. Technically demanding products must contain instructions for use, a list of authorized repair companies, guarantees.

Forms and conditions of operation on the market

The most widespread form of company in Croatia is similar to the Czech spol. Ltd. Doo guarantees its obligations with a share capital of at least 20,000. HRK (CZK 70,000). It can be founded by at least one partner (legal entity or natural person). It is not possible to establish a company only on the basis of a Power of Attorney, the establishment of a bank account, necessary for depositing the share capital, must be carried out by the company manager personally. The establishment process takes an average of 23 days, the costs are HRK 5,740 (roughly CZK 20,000). A joint-stock company (dd, “Dioničko društvo”) can be founded and owned by only one shareholder, with the minimum required capital being 200,000. HRK (about 700,000 CZK). Foreign companies can establish subsidiaries in Croatia according to the rules for the establishment of doo or dd It is similar in the case of setting up branches in Croatia, which can be set up according to the local Companies Act. The main conditions are the parent company’s declaration of its intention to open a branch in the country and the provision of a guarantee that the branch will carry out the same activities as the parent company. At least two or more companies can establish a Joint Venture (JV) in Croatia. All partners involved in the JV must register the business with the Croatian Commercial Register and sign a joint agreement to that effect. They must also obtain the necessary approval from the Croatian Chamber of Commerce (HGK, www.hgk.hr) and then register for tax purposes. Based on the “Trade Act”, a foreigner can establish a representation (“Predstavništvo”) for the purpose of market research, carrying out promotional and informational activities and for the purpose of his presentation. The representation does not have the status of a legal entity, and therefore has no right to enter into contracts. He can start the activity only on the basis of registration in the Register of Representations of Foreign Persons at the Croatian Ministry of Economy and after receiving his very important tax number, the so-called OIB (“Personal Identification Number”). Further detailed information can be found at www.hitro.hr (a service for accelerated communication between citizens and business entities with the state administration). HITRO allows citizens and entities easier access to information and services in one place. There are also new companies (www.apscroatia.com, www.virtual-office.hr) that, for a fee, will perform all the necessary actions to establish a company or representation, or they can also represent a Czech company. Although most companies can be set up relatively easily, we recommend that you always contact a reputable law firm that has experience in setting up companies just to be sure.

Marketing and communication

In Croatia, all the usual means of advertising (newspapers, magazines, TV, radio stations, billboards, posters, electronic media, Direct Marketing, social networks) are available, which are quite widely used. Marketing and communication with customers is increasingly dominated by the Internet, especially social networks such as Facebook, Twitter, Instagram, and LinkedIn. Promotional techniques such as “Sales Promotion”, “Public Relations” and trade fairs are also common and reach quite a good level in regional comparison. In addition to state television, the most suitable media for advertising are national periodicals such as the daily newspapers Večernji list, Jutarnji List, Novi list, Poslovni dnevnik, Slobodna Dalmacija or the weekly newspapers Globus and Poslovni Tjednik. The main economic and business magazine is Privredni Vjesnik. On the products in the sales network, instructions and a description in Croatian are required, which communicates the name of the manufacturer, importer, distributor, representative. When presenting the company, it is appropriate to mention the success in the Western markets, the obtained quality certificates. These are very good reference links. The terms of advertising and its use are similar to those in other EU countries.

Among the most successful PR, advertising and media agencies in Croatia are the following companies: Mediacor, Manjgura (www.manjgura.hr), Briefing Komunikacije, (www.briefing.hr).

The most successful HR agencies in Croatia include: Manpower (www.manpower.hr), Posao and Smart Flex (www.smartflex.hr), Bruketa&Žinič&Grey (www.bruketa-zinic.com).

In general, it is not recommended in marketing to use the theme of the war in the 90s, the theme of the breakup of the former Yugoslavia, it is very sensitive, you need to be careful and not act like a judge, the issue of language and faith / religion that is part of society or ways of humiliation, hatred, or making fun of other (nearby) nations. The issue of patriotism and nationalism is sensitive. Croats are proud, they respect the Czech Republic and recognize us positively, they recognize the industry, they express satisfaction with, for example, Škoda vehicles, they appreciate Czech beer, they have a certain admiration for the peaceful division of Czechoslovakia. There are no open questions in mutual relations, everything works on a friendly basis. There is no need to act superior. Conversely, a good topic is sports (football, hockey, basketball). The young generation points with interest to the symbol of a united Austria-Hungary. Deal with the Croats like this. in order not to feel that the local market is undervalued, it is necessary to perceive information from the market realistically and not to behave superiorly, rather positively. Language editing of contracts and all texts must be entrusted to a native speaker.

Issues of intellectual property protection

In Croatia, there is a modern system of protection of intellectual property rights, which is fully harmonized with the standards of the European Union. Croatia is a member of the European Patent Organization (www.epo.org) and a signatory to all the most important international treaties in this area. The central body responsible for granting rights and coordinating the national system of intellectual property rights is the State Intellectual Property Office of the Republic of Croatia(SIPO, “State Institute for Intellectual Property”). Authorities responsible for enforcement of intellectual property rights are the police, courts, customs and state inspections. Law firms can represent individuals and help them register and enforce their rights. The protection of intellectual property and copyright in Croatia has been dealt with since October 2003 by the following laws: NN 167/03 – “Act on copyright and related rights”, which came into force in October 2003, and NN 173/03 – “Patent Act”, which effective in January 2004. The mentioned legal standards are in accordance with the legislation applied within the EU, therefore also possible legal procedures are determined by the corresponding EU directives.

Public procurement market

In Croatia, the new Public Procurement Act has been in force since January 1, 2017. The offered price influences the evaluation of the offer up to a maximum of 90%. The law was published in the collection “Narodne novine” (NN) under No. 120/16. Ministries, other state institutions (including state-owned enterprises) and local self-government bodies are obliged to purchase goods and services, if they are paid for from the state budget, within the framework of a public tender (“Javno nadmetěna, Javni štovče”) in accordance with the Croatian “Law on Public Tender “. The law defines individual categories as contracting authority, goods, services, most acceptable offer. A public tender must be announced by the contracting authority if the orders of the contracting authorities for goods and services exceed 200,000 in the budget year. HRK (value without VAT). In the budget year, the contracting authority may not divide its orders with the aim of avoiding a public tender. According to the decision of the Croatian Ministry of Finance, an exception may be granted from the mentioned rules in the case of public or private aid or purchases agreed according to international agreements or in the case of a military-strategic or state interest. Foreign applicants can also participate in public tenders in the field of goods and services in Croatia.

The contracting authority is obliged to take the following steps within the framework of the public tender:

  • Publish the facts about the public tender in the domestic daily press or in the official gazette “Narodne Novine” in the Croatian language, if the value of the contract is higher than 200,000. EUR also in the official EU Journal (in English)
    · Prepare documentation for the public tender including the conditions of the tender · Set
    a deadline for the participants of the tender to obtain the tender and documentation
    · Set the date, place and time of publication of accepted tenders and create a committee of at least three members for evaluation offers.

The value of the offer is expressed in HRK and in the international press in USD or EUR. If at least 3 participants do not register for the public competition, the competition is repeated. International tenders financed by the World Bank, EBRD, EIB, UNHCR, Croatian contracting authorities (state institutions, ministries, state companies) are obliged to publish in the domestic press and in the National Gazette in both Croatian and English. Information about public contracts can be obtained on the website “Oglasnik javne nabave” (https://eojn.nn.hr/Oglasnik).

Payment terms, payment ethics and resolution of commercial disputes

According to Croatian legislation, payments with foreign countries are made in foreign currencies (mostly in EURO, USD) or in the domestic currency kuna (HRK). Receivables and liabilities arising from relations with foreign countries are settled through payment transactions with domestic banking institutions with international authorization. Payment transactions are carried out using the usual methods of international payment transactions, i.e. documentary letter of credit, documentary direct debit, bank cheque, bill of exchange, bank guarantee. Due to expensive loans and a lack of capital in the private sector, the insolvency of some Croatian private entities is still a problem. Therefore, it is recommended to conclude business with new partners on the basis of a letter of credit. Croatian customers often request payment delays of 30 to 90 days under standard payment terms.

When resolving commercial disputes and debt collection, an out-of-court settlement or the Croatian Chamber of Commerce (legal aid section) can be recommended in the first stage. The actual legal proceedings are lengthy, expensive, and the domestic entity is often favored. There is a legal regulation for the resolution of commercial disputes: “Act on Civil Procedure” (Act on Procedural, Judicial Procedure – NN 53/91 and 91/91) and “Act on Riješavanju travačná zakona s presprems drugih zemljami u odreženim zamaním s drugim zemljam” ( The Act on the Resolution of the Conflict of Laws with the Regulations of Other Countries on Certain Issues – NN 53/91.

Visas, fees, specific conditions for traveling to the territory

A citizen of the Czech Republic does not need a visa or a residence permit to enter the territory of Croatia (Article 21 on the functioning of the EU applies). You can travel to Croatia with either a valid passport or an ID card. If a citizen intends to stay in the territory of Croatia for more than 3 months, he is obliged to register his stay at the police station no later than 8 days after the end of his 3 months of stay. Based on this, the police will issue a certificate of temporary residence. Citizens of the Czech Republic do not need a work permit to work or work in Croatia. If you work or are employed for more than 3 months, you must obtain a certificate of temporary residence for the purpose of employment based on registration with the police. Payments for goods and services are made in cash (in Croatian kuna) or by credit card (all types of cards that are common in the Czech Republic are accepted). Obligation to register In the Republic of Croatia, foreigners, including citizens of the Czech Republic, are required to register within 48 hours after crossing the state border. When staying in a hotel, campsite or private accommodation, the accommodation provider ensures the registration of tourists within 24 hours. In other cases, each tourist must register individually through the municipal tourist association (“Turistička zajednica”). These associations are in every larger municipality. The registration document must be kept carefully until leaving the territory of Croatia, as it may be required by the Croatian authorities upon departure from the country. A missing registration document is considered by the local police as a misdemeanor, which is dealt with by the Misdemeanor Court. Since July 1, 2013, when Croatia joined the EU,

Employment of citizens from the Czech Republic

Since July 1, 2013, when Croatia became a member of the EU, citizens of the Czech Republic do not need a work permit to work in Croatia. Partial and additional information related to residence and employment in Croatia is provided by the Croatian Embassy in Prague (V Průhledu 9, 162 00 Prague 6, tel.:: +420-235-090-800, https://cz.mvep.hr). Health care is also provided on the basis of the same rules as in other EU member countries. As regards the scope of health care, with the consent of the relevant Czech health insurance company, it is possible to receive health care beyond the scope of necessary and urgent care during your stay in Croatia. In particular, the situation comes into consideration when it is clear that the insured will need this care during the stay in Croatia, e.g. dialysis, treatment of the consequences of an accident.

Claims for health care based on an international contract can only be made in Croatia with contracted doctors of the Croatian “Zavodu za zdravstvo osiguranje” (Croatian Health Insurance Authority is the only provider of public health insurance in Croatia). The Zavod’s contracted doctors and pharmacies are practically in every larger village (90% of doctors in Croatia are contracted) and can be found by the name “Ugovorna zdravna utstuna”, or “Ugovorni lječnik privete praxe”, or “Ugovorni zdravnej svladnik”.

All health centers and all hospitals are contracted. If necessary, we recommend looking for the so-called “Dom zdravlja” (health center), which is in every larger residence. In the case of dentists, the situation is different and most dentists are private. If it is necessary to provide urgent care at a dentist without being paid in cash, it is again necessary to contact the “Dom zdravlja”, where there is always a contracted dentist. However, the above-mentioned mechanism does not cover the costs of transporting the insured to the Czech Republic in the event of a serious injury or his bodily remains in the event of death. Given that these costs can be considerable (in urgent cases, patients are transported by air), we recommend citizens of the Czech Republic to take out additional insurance for such a case before traveling to Croatia, if they do not already have such additional insurance.

Fairs and events

In Croatia, several different types of fairs and exhibitions are organized every year (despite its small area), mainly at the regional level. The biggest fair organizer in Croatia is the Zagreb Fair(“Zagreba Fair”). An important fair focusing on the food and agricultural sector takes place twice a year in the town of Bjelovar-Gudovac (www.bj-sajam.hr). Another regional event, usually held at the end of February or March, is the business and agricultural fair in Virovitica (www.viroexpo.hr). The Czech Republic has presented itself at these fairs several times in the past. Also at the Conference on Environmental Protection (supplies, protection and treatment of wastewater, water management). Specialized fairs and exhibitions focused on construction, welding technology, medical technology, and tourism are held throughout the year in Croatia (not only in Zagreb). Relatively well-known are the GRAĐENJ E and OPREMANJE fairs – international construction fairs, AMBIENTA – international furniture fair, SASO – fair of building materials and tools, woodworking and processing technology, BIAM & Welding – welding technology, Vinivita – wine fair and wine processing technology, Energy Fair – renewable energy technology fair, Intergrafika – printing technology fair. The calendar of all fairs and exhibitions held in Croatia throughout the year, including contacts, can be found on the website Croatian Chamber of Commerce (HGK), or on the website of the Zagreb Fair (www.zv.hr). More information about possible official participation of the Czech Republic in international exhibitions and fairs abroad can be obtained at the address of the Ministry of Industry and Trade of the Czech Republic (www.mpo.cz, phone: +420-224-852-805, +420-224-853-044 ). However, many Croatian business partners prefer to participate in prestigious specialized international fairs, mostly in Germany.

Croatia Market Entry