Georgia Market Entry

Georgia 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

Entering the Georgian market is not a simple matter and often does not depend only on the quality and price of the product or service. Private distribution companies are still developing and there are not yet sufficiently reliable and up-to-date overviews or catalogs of local distributors and points of sale. Most distributors are rather smaller entities with experience limited to large cities. Therefore, the most effective tool to penetrate the market is still the establishment of a local agency that will sell goods directly to local wholesalers and retailers, or it is good to have a local partner here.

Recently, the retail network has been developing, the number of small shops and supermarkets of various business chains (Goodwill, Spar, Carrefour, Europroduct, AgroHub) is growing in Tbilisi, the supply of which is at a decent level. Although during the Covid-19 pandemic there were, among other things, restrictions on the functioning of shops, the online sale of goods is still underdeveloped in Georgia and there is a minimum of online shops, as we know them from the Czech Republic.

According to cheeroutdoor.com, imported goods are subject to 18% VAT. Alcohol, ethyl alcohol, tires, cigarettes, caviar are also subject to a consumption tax of between 5 and 100%. Both taxes apply to imported and domestic goods. Georgia receives positive reviews from investment agencies for its customs system. Basic import documents include customs declaration, invoice and certificate of origin and other documents proving quality, safety and technical standards. All pharmaceutical, cosmetic, chemical, food products must have a sticker with the Georgian text, alcohol and tobacco products must have an excise stamp. The Georgian Customs Code is in line with European standards and simplifies customs procedures in order to simplify the export and import process as much as possible. It is prohibited to import into Georgia products that threaten health and safety, including narcotics, pornography and nuclear material. Weapons and ammunition must have a license issued by the Ministry of Defense or the Ministry of Internal Affairs of Georgia. Georgia does not apply any quantitative restrictions (quotas, tariffs). There are no export tariffs and most import tariffs have been abolished or radically reduced. Some products (medicines, weapons, explosives, radioactive substances, industrial waste and some agricultural chemicals) must have an export/import license. Information regarding customs issues is available on the website of the Tax Officewww.rs.ge

The promotion of Czech goods in Georgia is helped, among other things, by the pro-export actions of the Ministry of Foreign Affairs of the Czech Republic, the Ministry of Foreign Affairs of the Czech Republic, the Ministry of Foreign Affairs of the Czech Republic and the MMR of the Czech Republic or the Chamber of Commerce of the Czech Republic. Business missions organized by the Embassy of the Czech Republic in Tbilisi have an irreplaceable place in the development of regional cooperation, i.e. in “opening doors” to Czech manufacturers and exporters. At the beginning of 2021, the Czech-Georgian Chamber of Commerce also resumed its activities (address: Nino Mchedlidze-CEO, mob: +420 724 88 00 99).

The PaulTrade State Agency for Export Promotion opened its office in Tbilisi on May 2, 2022, on the premises of the Embassy of the Czech Republic. Its director, Mr. Štěpán Jílek ([email protected], mob: +995 595 51 21 87) provides assistance services, consultations in the field of business, establishment of a company based on the specific requirements of companies, or conducts marketing market research, and can also search suitable business partners and possibly verify their interest in the offered product. PaulTrade also focuses on economic presentation with state support at selected exhibition events not included in the category of official participation.

Forms and conditions of operation on the market

Thanks to the simplification of the Tax Code and the Business Act, the registration of business activity is currently simple and fast. Company registration is carried out by the National Agency for Public Register (NAPR) (www.napr.gov.ge – the website is only in Georgian), whose services are provided by administrative centers, the so-called houses of justice and its regional branches. To register a company, a potential applicant must first pay a registration fee, register the company in the business register and obtain an identification number and a state and tax registration certificate. Registration fees are 100 GEL (around 30 USD) for normal next-day registration, 200 GEL (60 USD) for expedited same-day registration and 1 GEL (bank fees). After that, they have to open a bank account (free). Personal information about the founder and main partners is required for registration, field of business activity and proof of share capital. Other documents depend on the type of company. The entity must register with the relevant local tax authority. After that, the company is registered in the Unified Register of Entrepreneurs, which is maintained by the Tax Department of the Ministry of Finance of Georgia (www.mof.gov.ge ).

In Georgia, joint ventures operate in many sectors, e.g. in the production and distribution of electricity, banking, the dairy industry, the oil industry, brewing, construction, etc. They are registered as joint stock companies or limited liability companies

The Foreign Investment Act prohibits foreign investment in certain sectors (production and testing of nuclear, chemical and bacteriological weapons, production of narcotic substances, etc.). According to the Licensing Act of July 2005, investment in certain sectors and activities requires the approval of the relevant government agency.

Marketing and communication

According to the Advertising Law, advertisements must be in Georgian. Trademarks in a foreign language must be accompanied by Georgian text. Advertisements in certain industries (pharmaceuticals, weapons) must be authorized by the relevant ministry. Advertising has become an integral part of doing business in Georgia. It is common on television, radio and in the press. Large-scale banners are beginning to spread near roads and on buildings and in means of transport. Advertising can be placed through an advertising agency as well as by direct contact with the advertising department of the respective media.

In Georgia, one state channel (First Channel) and several private TV companies are now broadcasting. Only some of them broadcast throughout the territory (První kanal, Rustavi2, Imedi), some have a regional character (Adžara TV) or are accessible via cable broadcasting. The most famous newspapers include Resonanci, Akhali Taoba, 24 Saati/24 Hours (GJ and AJ), Sakartvelos Respublika, The Georgian Times (AJ), The Messenger (AJ), Georgia Today (AJ). Periodicals include The Georgian Business Week (AJ, RJ). The American Chamber of Commerce in Georgia publishes the quarterly AmCham News. Face Book is very popular and widely used in Georgia.

Issues of intellectual property protection

Georgia acceded to the WTO and TRIPS agreements in 2000. In 2004, the Parliament ratified the Rome Convention for the Protection of the Rights of Artists and Producers of Phonograms and the Lisbon Agreement on Appellations of Origin. Georgia is also a party to the Copyright Agreement, etc. Intellectual property protection in Georgia is ensured by six laws, including the Patent Law, the Law on Trademarks, the Law on Copyright and Related Rights. However, in practice, the protection of intellectual property is insufficiently implemented in Georgia. A large number of very cheap pirated copies are available in markets and in some brick-and-mortar stores, starting with DVDs, CDs, clothes, electronics, software, etc. Unfortunately, Georgia does not have a developed control system, the responsibility for compliance with WTO obligations now rests with the Ministry of Economy, which does not have a built-in sufficient capacity.

Public procurement market

Public procurement is governed by the State Procurement Act, according to which tenders exceeding 5000 GEL are published on the website of the State Agency for Public Procurement ( www.procurement.gov.ge). Due to the impractical setting of the Public Procurement Act, the relevant state officials are forced to choose the cheapest offers, which over time, after taking into account other ancillary costs (e.g. for service), are not the cheapest. Public contracts announced by the Ministry of Defense of Georgia are particularly problematic. Information about announced tenders is sent by ZÚ Tbilisi to MPO, MFA and PaulTrade. More detailed information on all announced tenders is available on the website of the Georgian Ministry of Economy, on the website of the Georgian State Procurement Agency and on the websites of individual ministries. However, the problem is often the short time for preparing the offer after the tender announcement, which sometimes gives the impression that the tender was “prepared” for a certain company and is only announced “for form”.

Payment terms, payment ethics and resolution of commercial disputes

Payment transactions are basically the same as in Europe. Due to Georgia’s susceptibility to global and regional shocks, especially in times of crisis (such as a pandemic), the exchange rate of the local currency GEL (lari) often fluctuates. That is why it is good to hedge against these fluctuations, either with standard banking instruments or by trading directly in foreign currency. However, this carries certain risks, namely the possible insolvency of the partner in the event of a drop in the GEL, or a reduction in the competitiveness of Czech production compared to other products, e.g. from Turkey, China, etc. When dealing with small and medium-sized companies, a thorough examination of the partner’s solvency or the provision of supplier credit is necessary.

When entering the Georgian market, foreign business partners and investors are advised to include a potential arbitrator of trade disputes in advance in the concluded contracts, on which both parties agree. The judicial system in Georgia is not completely transparent and independent, and any legal disputes can take years to resolve.

Visas, fees, specific conditions for traveling to the territory

In 2006, Georgia unilaterally abolished the visa requirement for EU member countries, or member countries of the Schengen area for all types of travel documents. Citizens of these countries are hereby allowed to enter and stay in the territory of Georgia without a visa for a period not exceeding 365 days, both during tourist trips and during trips for earning purposes. No mandatory vaccinations are required for travel to Georgia, however, Tbilisi Health Authority recommends vaccinations against jaundice, tuberculosis and rabies. Georgia is a safe country, but as in any other country, it is important to follow the basic principles of safety, i.e. do not show unnecessary money, do not go to remote parts of cities at night, etc. Increased caution is necessary when staying in remote mountainous areas, their vastness and isolation are sometimes underestimated. For up-to-date information, we recommend following the warnings/recommendations published on the website of the Ministry of Foreign Affairs of the Czech Republic. ZÚ Tbilisi warns against trips to Abkhazia and South Ossetia. The areas are controlled by separatist regimes. Georgian institutions do not operate here, and the embassy of the Czech Republic cannot provide effective assistance in an emergency. The situation in both areas is unclear. Security risks due to criminal activities are high. Crossing border crossings from the Russian Federation into Abkhazia and South Ossetia are considered illegal from the point of view of Georgia and are classified as a violation of the laws of Georgia. In the case of using these crossings, the traveler faces deportation from Georgia, or in the worst case, imprisonment. The areas are controlled by separatist regimes. Georgian institutions do not operate here, and the embassy of the Czech Republic cannot provide effective assistance in an emergency. The situation in both areas is unclear. Security risks due to criminal activities are high. Crossing border crossings from the Russian Federation into Abkhazia and South Ossetia are considered illegal from the point of view of Georgia and are classified as a violation of the laws of Georgia. In the case of using these crossings, the traveler faces deportation from Georgia, or in the worst case, imprisonment. The areas are controlled by separatist regimes. Georgian institutions do not operate here, and the embassy of the Czech Republic cannot provide effective assistance in an emergency. The situation in both areas is unclear. Security risks due to criminal activities are high. Crossing border crossings from the Russian Federation into Abkhazia and South Ossetia are considered illegal from the point of view of Georgia and are classified as a violation of the laws of Georgia. In the case of using these crossings, the traveler faces deportation from Georgia, or in the worst case, imprisonment. Crossing border crossings from the Russian Federation into Abkhazia and South Ossetia are considered illegal from the point of view of Georgia and are classified as a violation of the laws of Georgia. In the case of using these crossings, the traveler faces deportation from Georgia, or in the worst case, imprisonment. Crossing border crossings from the Russian Federation into Abkhazia and South Ossetia are considered illegal from the point of view of Georgia and are classified as a violation of the laws of Georgia. In the case of using these crossings, the traveler faces deportation from Georgia, or in the worst case, imprisonment.

Employment of citizens from the Czech Republic

For Czech companies interested in employing their workers from the Czech Republic (EU) in Georgia, the process of obtaining a permit does not represent any great bureaucratic burden. Detailed information on obtaining a work permit can be found on the website of the Ministry of Economy and Sustainable Development at www.economy.ge or at www.investingeorgia.org.

Fairs and events

The main organizer of trade fairs of regional significance in Georgia at the Expo Georgia Exhibition Center in Tbilisi is ExpoGeorgia ( http://www.expogorgia.ge / – as of 24/04/2022, the site is under construction).

The following fairs and their dates are with question marks:

Winexpo Georgia – International Wine and Spirits Fair (??? October 2022);

Agro+Food+Drink+Tech Expo Georgia – International Exhibition for Agro, Food and Beverage and Food Processing Equipment (??? November 2022);

Batum Build – International Specialized Trade Fair for Building Materials and Technologies (Sheraton Hotel Batumi, ??? December 2022);

Elcomm Caucasus – International exhibition of energy, electrical engineering and control, telecommunications, information technology and office equipment (??? December 2022);

Expo Batumi Travel – International Fair of Tourism and Hospitality (Sheraton Hotel Batumi, ??? May 2023);

International Education Fair Georgia – International Fair of Higher and Vocational Studies, Study Abroad and Student Services (???? May 2023).

Georgia Market Entry