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Marko Čadež, President of the Chamber of Commerce and Industry of Serbia

Innovative Companies Raise the Bar

I’m confident that Serbian-German cooperation will be defined by new partnerships between Serbian and German companies in the years ahead, with a focus on creating joint high-tech and innovative products

Srbija’s cooperation with Germany is undoubtedly one of the most successful examples when it comes to the scale of foreign direct investment, as well as its impact on employment and exports. As president of the Chamber of Commerce & Industry of Serbia, Marko Čadež believes that boundaries will continue to shift and that the bar will be raised in Serbian-German economic cooperation, particularly with the introduction of new high technologies.

“The activities and influence of the more than 900 companies with majority German capital that have invested and operate in Serbia are no longer measured solely by the amount of capital invested, which is estimated to have far exceeded three billion euros; nor by the 82,000 people they employ, excluding those employed indirectly by Serbian companies in their supply chains; nor even by the value of total trade in goods and services, which last year reached a record 11.25 billion euros and was notably balanced, with 5.6 billion euros on both sides,” says Čadež.

The CCIS President believes that Serbian- German economic ties will be measured increasingly by the quality brought to the Serbian economy through transfers of knowledge, business and management models, new technologies and innovations from German high-tech companies.

“These companies are no longer just building factories, employing people and exporting from Serbia. In their research and development centres here – like those of ZF, Continental, Brose, Draexlmaier and Muehlbauer – they rely on local expertise in creating the future of their industries globally,” notes Čadež. “In the coming years, I am certain that our cooperation will be characterised by new partnerships between Serbian and German companies in the creation of joint high-tech and innovative products.”

Serbia’s cooperation with Germany is among the most successful examples in terms of FDI and its effects on employment and exports. Would you agree?

— Indeed, Serbia’s cooperation with Germany is one of the most successful examples of foreign direct investment, employment creation and exports. And the limits of this economic cooperation will continue to expand, especially with the introduction of new high technologies.

The impact on the Serbian economy of the activities and influence of the more than 900 companies with majority German capital that have invested and operate in Serbia is no longer measured only by the amount of capital invested, which is estimated to have far exceeded €3 billion, or by the 82,000 people they employ – not to mention the employees in Serbian companies within their supply chains.

In representing the interests of the economy, the CCIS advocates improving dual education by making it industry-driven and led by companies

Nor is it measured solely on the basis of the value of total trade in goods and services, which last year reached a record €11.25 billion and, importantly, was balanced, at €5.6 billion on each side.

These companies are no longer just building factories here, employing local people and exporting from Serbia. In their research and development centres in Serbia, such as those of ZF, Continental, Brose, Draexlmaier and Muehlbauer, they also rely on domestic talent to create the future of their industries globally. In the coming years, I am confident that our cooperation will also be characterised by new partnerships between Serbian and German companies in the development of joint high-tech and innovative products.

With German investors shifting their focus to more complex technologies and seeking partners in Serbia, which areas do you see as the most promising for future German investments?

— Despite the challenges confronting the German economy and its automotive industry, German companies remain among the most numerous in the approximately one hundred foreign investors with which Serbia is negotiating concrete investment projects.

The strongest interest is still in the automotive sector and related industries, as confirmed by the latest German investment in Serbia: PWO Group in Čačak. The focus is now shifting increasingly towards the segments of e-mobility, further stimulated by the signing of strategic partnership agreements with the EU on sustainable raw materials, battery production chains and electric vehicles, confirming the intention to establish an e-mobility value chain in Serbia.

In this context, the announcement that Mercedes-Benz will be part of the production chain in Serbia is a significant signal for other investors – not only its suppliers, but also companies from other industries.

In parallel with the establishment of climate partnerships and Germany’s support for Serbia’s energy transition, interest from individual German companies in investing in energy, particularly in renewable energy sources – solar, wind and hydrogen – is also growing. Discussions with major German companies, organised by the CCIS in Berlin during the July visit of the President of the Serbian Assembly, confirmed German investors’ interest in projects within the Bio4Campus, the pharmaceutical industry and health tech, as well as investments in preparation for EXPO 2027, particularly in the development of railway infrastructure.

Cooperation in the ICT sector, with a focus on the application of artificial intelligence, has become an unavoidable topic in discussions with German partners. How is Serbia positioning itself in this regard?

— ICT cooperation, particularly in AI applications, is now a key topic in discussions with German partners. By the end of this year, we plan to present Serbian IT companies and start-ups, especially those working on AI-based solutions, to German companies and funds interested in investing in start-up projects, in collaboration with the Frankfurt Chamber of Commerce.

A recent report from Munich’s IFO Institute for Economic Research noted that Germany’s automotive industry is struggling with a lack of new orders, particularly from abroad, and exporters’ expectations are very low. How might this trend affect Serbian businesses and German companies operating in Serbia?

— The challenges facing Germany’s automotive industry, caused by a combination of factors, pose a risk to both Serbian and German companies operating in Serbia, reducing the potential for Serbia’s export growth to Germany and the global market. Ultimately, 14% of Serbia’s total trade and 15% of our exports are linked to Germany. The automotive parts and components industry is among our largest export sectors – not just to Germany, but to the whole world.

For now, apart from the expected slowdown in export growth to the German market, which was around 3% for the first seven months of this year compared to the same period of last year, we haven’t encountered any major problems. It seems that nearshoring processes have managed to overcome the negative effects of the economic slowdown in our key partner’s economy.

We are encouraged by recent meetings with Integra Europe and Schaeffler, which are planning to expand their presence in Serbia and the region

Although growth is much slower than last year, exports of key products to Germany’s automotive industry continue to rise. Exports of ignition wire sets increased from January to July by 2.6%, while exports of tyres for new passenger vehicles grew by 5.3%, with a significantly higher percentage increase in exports of tyres for buses and trucks. Exports of wiper blade components jumped 37.5%. The latest data from August indicates a return to double-digit export growth for some of the car parts manufacturers whose output was almost halved in the first half of the year.

In the long term, if the crisis in Germany’s automotive industry – as the main buyer of automotive parts and components from Serbia – deepens, the consequences for Serbia’s economy and German companies operating here would be more severe. I’m confident this won’t happen, given the strength of the largest and strongest European economy and the recent demonstration of the German state’s willingness to support its automotive industry, help it through the transition and restore its former competitiveness.

Are there any new German companies interested in investing in Serbia, in addition to those that are already present?

— Serbia is undoubtedly a destination that companies operating here count on for the long term, with the latest survey of the German-Serbian Chamber of Commerce showing that 78% of respondent companies plan to increase or maintain their investments this year. While their confidence is vital, it’s equally important that Serbia is on the radar of companies that have no prior experience in the country and that are restructuring their supply chains and operations to adapt to new circumstances.

Those companies approaching us for information on investment opportunities and supplier contacts, even on a global level, include many new companies from the metalworking, processing and machinery industries.

We were further encouraged by recent meetings with their Integra Europe association and with Schaeffler, a leading global manufacturer of bearings for the automotive, aviation and machinery industries, which announced plans to expand and strengthen its presence in Serbia and the region this summer.

We also receive confirmation of interest in Serbian suppliers and products at German trade fairs—ranging from the food and wine industry to industrial technology and IT—which we attend each year in cooperation with Development Agency of Serbia (RAS). We are this year exhibiting at six major German trade fairs, including Automechanika in Frankfurt and Electronica in Munich for the first time. We also support Serbian gaming companies at Gamescom in Cologne. The CCIS organised the third InterConnect B2B event in Belgrade this April, bringing together 17 major European buyers from the automotive, metal, electrical and plastics industries, allowing them to find suppliers here, with German companies always the most represented.

A recent survey of German companies revealed dissatisfaction with Serbia’s dual education system. What’s causing this, and how is the CCIS addressing the issue of shortages of skilled labour?

— Dual education has alleviated the skills shortage somewhat over the past decade, with nearly 1,100 companies taking advantage of the opportunity to hire the right people. However, there are limitations to the solutions applied in Serbia, which German companies have pointed out. These can be overcome by amending regulations and practices to align more closely with the models of the countries we look to, and by better meeting the needs of both local businesses and investors.

In representing the interests of businesses, the CCIS advocates the improvement of dual education in such a way that it becomes the property of the private sector, with companies in charge. This would include changes like allowing companies to select students so that they first enrol with the company and only then with the school, and in the future – as in Germany – students would spend more time at companies than in classrooms. It is also necessary to revise educational programmes to align them with industry needs and ensure that dual education curricula are more narrowly focused on specific professions or result in more specialised qualifications. Moreover promoting dual professions and early career orientation for students should begin earlier, as early as the sixth year of primary school. We are working to shape these proposals with leading international experts, in constant communication with companies and the education authorities.

In addition to simplifying legal procedures for employing foreigners and the creation of a joint labour market under the Open Balkan initiative, which allows companies to hire workers from neighbouring countries without having to overcome bureaucratic hurdles, we’ve agreed with the National Employment Service to establish a single database of available jobs in the economy. This will help us create training plans through non-formal education for the workforce needed by companies.

SYNERGY

German investors are focusing increasingly on the e-mobility segment, spurred by the announcement of a strategic partnership with the EU regarding sustainable raw materials, battery production chains and electric vehicles

REFERENCE

The announcement that Mercedes-Benz will be part of the production chain in Serbia is a strong endorsement – not just for its suppliers, but for companies from other industries as well

BALANCE

Apart from a slowdown in exports to the German market, we haven’t faced major issues. Nearshoring processes have mitigated the negative effects of our main partner’s economic slowdown