Marko Čadež, President Of The Chamber Of Commerce & Industry Of Serbia

At the start and the end of the day, our biggest ally in attracting new German investors are precisely the German companies that already operate in Serbia, and their successful operations serve as the best recommendation for those who have yet to decide whether and where to invest

The annual survey conducted by AHK Serbia indicates that 60 of the participating German companies that operate in Serbia plan new investments in the expansion of their capacities. Such results testify to expectations that the far from negligible trade exchange records achieved to date will be quickly surpassed.

“It isn’t only that Germany has been, and remains, our number one foreign trade partner in the exchange of both goods and services, but also that our trade exchange has been marked by above-average growth over the past two and a half years,” says Serbian Chamber of Commerce & Industry President Marko Čadež. “We could this year reach and exceed the record of 10 billion euros in mutual trade in goods and services for the first time”.

When it comes to the exchange of goods that dominates our trade, we awaited the pandemic with a result of 5.3 billion euros, in 2020, which remained at the same level as the previous year despite the closed borders during the first half of the year, while in 2021 it increased to 6.5 billion euros.

That growth continued in the first half of the year, creating great prospects of reaching a total of around 8.5 billion euros in 2022. That would be a result 60 per cent better than 2019, the last pre-crisis year.

Further illustrating the importance for the Serbian economy of continuously increasing trade with Europe’s strongest economy is the fact that around 11,500 domestic and foreign companies that operate in our country, employing more than 660,000 people, export their goods to Germany and import from Germany.

The exchange of services plays an increasingly important role in our trade. It exceeded 1.3 billion euros last year, with a surplus on the Serbian side, and increased by an additional 34.7% in the first half of this year, and we thus expect this year to end with a total services exchange of almost 1.8 billion euros.

And how has the Serbian economy’s export performance on that market been over the past two and a half years?

Germany is the first export market for Serbian products, where Serbia sells about 13 per cent of its total exports. Despite closed borders in Europe from the spring of the first year of the pandemic, as well as all the logistical and transport problems that our exporters faced, in 2020 we maintained our exports to Germany at roughly the same level as the previous year, only to return to the path of growth by as early as last year. Our manufacturers sold goods worth 2.74 billion euros on the German market, which is half a billion euros more than in the year prior to the outbreak of the pandemic. Serbian exports have increased this year by as much as 39 per cent compared to the first six months of last year, which leads us towards achieving the best ever export performance on the German market – exceeding three billion euros.

A great contribution to growing Serbian exports and the shifting structure of the offer of Serbian export, which favours goods with a higher level of processing and high-tech products, is again being provided by German companies that have invested here, produce in Serbia, export from Serbia and feature on the lists of our country’s largest exporters, both to Germany and the rest of the world. As an example, we this year exported to Germany more – in terms of both quantity and value – train wagons, electric motors and generators, as well as ignition sets, which are actually manufactured by German companies, which also testifies to the importance of German investments to the Serbian economy and their impact on increasing trade and exports.

Nearshoring processes have created a chance for Serbia and the economies of the entire Western Balkans to entice new investments, and a chance for our companies to join the supply chains of international corporations

Above-average export growth also contributed to reducing our trade exchange deficit with Germany and increasing the coverage of imports by exports by around 10 per cent. Even though our goal is to reduce the deficit, it is positive that this reduction isn’t a result of the importing of consumer goods that are produced here. The fact that imports from Germany increased by approximately 25.5% in the first six months of this year is the result of the import of diagnostic reagents for laboratory materials, household appliances, cars and the raw materials required for wind generators that are produced in, and exported from, Serbia.

How did the two and a half years of the pandemic reflect on the pace of German investments in Serbia?

German companies have invested more than three billion euros in Serbia, and they continued investing even during the pandemic, while Germany remains the undisputed leader in terms of the number of projects implemented in our country. Over the previous two and a half years, German investors opened around 20 new factories and production facilities, development centres, logistics and distribution facilities, which began being constructed before or during the pandemic, while implementation has commenced on more than ten new investment projects by German companies. Re-appearing on the investment map of Serbia are companies that already operate here and are expanding their capacities, such as Leoni Continental, ZF, Henkel, Bosch, Wacker Neuson or Lidl, but also new investors like Brose, Boysen, MTU, Bizerba and Haix.

With a view to the global circumstances, how do prospects look when it comes to attracting new investments from Germany in the period ahead?

When it comes to the future investments of foreign companies in Serbia, and German companies in particular, I remain an optimist for several reasons, despite everything. Although investors worldwide are restrained due to the uncertainty and problems that were brought by the pandemic and then by the war in Ukraine – despite the energy crisis, inflation, rising interest rates, recession knocking on the doors of the strongest economies, Serbia – as a relatively new investment destination – is still it holding its own. This is thanks, among other things, to the sense of security it provides investors, the preserved stability of the economy and the economy’s capacities over past years, a business climate that’s friendly to investors and encouraging for investments, and the new opportunities that are being created with the establishing of the Open Balkan common market.

After last year’s inflow of 3.9 billion euros of foreign direct investments, which was a record for us, it is also encouraging that the latest data show that we attracted 2.66 billion euros in the first eight months of this year, despite the start of the year having not been promising. To date, there have been no cancellations or postponements of investments planned for this year, with announcements of new projects arriving from around the world and no shelving of discussions regarding future investments. The state continues to negotiate with more than ten potential major German investors, among which – in addition to companies already present here – are also companies that are new to us and haven’t previously invested in Serbia.

What kind of impact did the pandemic and global disruptions have on value chains and what sorts of changes did they bring for the Serbian companies aspiring to become suppliers of those companies?

Large European corporations, having been taught by the experiences of previous years about the risks of doing business a long way from home and relying on a small number of suppliers, have an increasing tendency to relocate their operations from more distant destinations and are seeking suppliers in markets closer to their home countries, thereby reducing logistical and transport costs and ensuring supplies.

Re-appearing on the investment map of Serbia are companies that already operate here and are expanding their capacities, such as Leoni, Continental, ZF, Henkel, Bosch, Wacker Neuson or Lidl, but also new investors like Brose, Boysen, MTU, Bizerba and Haix

Nearshoring processes have created a chance for Serbia and the economies of the entire Western Balkans to entice new investments, and a chance for our companies to join the supply chains of international corporations. Since the outbreak of the pandemic, and additionally following the outbreak of the Ukraine crisis, the number of companies contacting us in search of suppliers from these areas has increased significantly. Over the past two and a half years, the Chamber of Commerce & Industry of Serbia has received and responded to hundreds of inquiries related to the hunt for suppliers from international companies, the majority of which have been German, and primarily from the metal and electrical industries. With some of them – such as Siemens Mobility, Thyssenkrupp, Bode/Schaltbau – we also organised Supplier Days events that included in their scope specific B2B meetings, as well as visits to the production facilities of local companies that meet the requirements for inclusion in their networks of suppliers.

Did the InterConnect Executive Summit regional networking event, held in late September under the organisation of the Chamber of Commerce & Industry of Serbia and the Western Balkan Chamber Investment Forum, meet your expectations?

In short – it was worth the effort. With the aim of connecting companies from the country and the region with international corporations that are seeking new suppliers, and enabling attendees to hear about the experiences of major companies in overcoming the challenges that are confronting the global economy, we brought together in Belgrade more than 200 participants from the country, the region and the world, including around 40 top managers of multinational companies from various sectors, from manufacturing to IT, which have an annual turnover exceeding 50 billion euros. For leading businesspeople from Serbia and the Western Balkans, this provided the best way to establish contacts with potential customers here at home, and to do so through direct communication at the highest level – with general managers and executive directors for the most important business segments: procurement and supply chain management, research and development, marketing and digitalisation.

The summit was simultaneously also a unique opportunity and a place where managers of our companies could inform themselves and find out about new business models and trends in global business, primarily in two areas that are focal points of business strategies today: digital transformation and supply chain management, experiences and the ways people who run multinational businesses overcome problems caused by tremors to the global economy, their view of current developments on the world economic scene and their expectations and predictions of future happenings.