SIS Eastern Europe Research Center

Pitfalls in researching Eastern European Markets

SIS International Research — Fri, 06 Jun 2008 22:01:57 GMT

Eastern Europe is often thought of in researching global markets. A reason for this is often the lack of information and the lack of familiarity with such markets. Those who do research in Eastern Europe need to be aware of pitfalls that precede the research process and that can ultimately impact the intelligence yield.

Market Research is Lacking

Market research is not abundant

Published Information Often Misleading

Researchers may often find conflicting information or inflated details that fit a particular viewpoint or agenda.
Published information is often missing key information and statistics
Leads to biased publications and rankings for statistics and industry information
It is the researcher's imperative to determine the efficacy of information based on the source of information and the quality of data

The need for Market Intelligence and Competitive Intelligence

Market Intelligence is lacking, limiting a comprehensive view of the market. Instead, anecdotes and preconceptions can guide business leaders in decision making.

In some situations, a way to avoid some of these pitfalls is carefully conducted primary research. Indeed, the situation itself will dictate the proper remedy to avoid problems in data collection.

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Copyright (C) 2008. SIS International Research, Inc.
Disclaimer: Under no circumstances will SIS, it affiliates, successors or assigns be liable for any loss or damage caused by anyone's reliance on information contained in this web site. Refer to this website's disclaimer page for full description of limitations.

Lithuania's Economic Snapshot

SIS International Research — Fri, 06 Jun 2008 21:22:45 GMT

Lithuania boasts high economic growth but has a sizeable current account balance affecting its economic landscape.

Economic Structure

Rapid growth following 1998 Russian financial crisis
GDP: $28.57 billion

Real GDP Growth: 8%

Unemployment: 3.2%
Rapid Real Wage Growth
Inflation: 2.4% (2007 CPI est.)
Current Account Balance: -9.2%

Demographic:

Median Age

Male: 36.4 years

Female: 41.6 years

Sex Ratio

Under 15 years: 1.05 male(s)/female

15-64 years: 0.96 male(s)/female

65 years and over: 0.53 male(s)/female

Income per Capita: $16,700
2008 population growth estimate is -.284%
Literacy rate: 99.6% (for men and women)

Lithuania By Sector:

Agriculture

Changes from collectivization to private to capital-scaled farms

Construction

15% annual growth

Almost completely privatized

Shift from Russian to domestic contracts

Manufacturing

Leather and Textiles are biggest manufacturing sectors

Wood and Furniture growing the fastest

Export to UK and Sweden (60% of exports to Sweden are for IKEA)

Financial Services

Consolidation: 9 commercial banks, 90% foreign capital

Falling interest rates fuel strong growth

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Copyright (C) 2008. SIS International Research, Inc.
Disclaimer: Under no circumstances will SIS, it affiliates, successors or assigns be liable for any loss or damage caused by anyone's reliance on information contained in this web site. Refer to this website's disclaimer page for full description of limitations.

Latvia and its economy

SIS International Research — Fri, 06 Jun 2008 21:09:14 GMT

Latvia, a member of the EU since 2004, is facing serious economic challenges. The economy may be overheating and the current account balance is an economic indicator many are watching.

Economic Structure

Latvia faces economic problems

Overheating? Government/Central Bank slow to respond

Current Account Balance: -$5.84 billion, 22% of GDP

High inflation: 6.5% (2007 CPI est.)

Currency is pegged to the Euro, increasing inflation

Privatization of Real Estate and Banks
WTO in 1999, EU in 2004
GDP: $27 billion

Real GDP Growth: 10.7%

Unemployment: 5.9%
Riga (capital) produces 57% of GDP

Demographic:

Median Age

Male: 36.9 years

Female: 43 years

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.95 male(s)/female

65 years and over: 0.49 male(s)/female

Income per Capita: $17,700
Ethnically diverse
Life expectancy at birth: 72 years

Latvia By Sector:

Forestry and Woodworking

Large natural supple of timber

Dependence on Russia

Hurt by Russian financial crises, major import/export partner

Russia attempting to transport goods via its own ports

Construction

14% increase in 2007, 7% of overall GDP

Strong investment and booming housing market

Population density linked with job opportunities

Fewer schools, healthcare, public services in rural areas

Best to concentrate focus on major cities

Slovenia's Economy

SIS International Research — Fri, 06 Jun 2008 21:03:13 GMT

Slovenia is the richest nation in Eastern Europe. Lesser known by companies in examining Eastern European markets, we decided to analyze the current economics situation.

Slovenia's Economic Structure

Richest nation in Eastern Europe

Former trading arm of Yugoslavia

Strong ties with western trade partners

GDP: $45.9 billion
Real GDP growth: 6.3%
Inflation: 3.5% (2007 CPI estimate)
Current Account Balance: -$1.5 bn

Slovenia's Demographics:

Median Age

male: 39.8 years

female: 42.9 years

Sex Ratio

under 15 years: 1.06 male(s)/female

15-64 years: 1.02 male(s)/female

65 years and over: 0.64 male(s)/female

GDP per Capita: $27,300
Religiously diverse
Literacy rate: 99.7%

Slovenia By Sector:

Increase in light manufacturing and services

Pharmaceuticals

Electrical Engineering

Automotive

Revoz is top exporter

Slovenia division of Renault

Ideal geographic location

Transportation services for increasingly integrates nations

Heavy investment in infrastructure

Tourism

Recent increase in tourism receipts

Financial Services

Domestically grown, difficult for foreign firms to invest

Estonia's economy

SIS International Research — Fri, 06 Jun 2008 20:53:21 GMT

Estonia has long been a hot spot for Finnish businesses and vacationers. The Baltic country is receiving significant inflows from abroad as European companies view areas of potential in the economy.

Economic Structure

2004 Joined NATO and EU

Stronger economic growth due to structural funds and foreign investment

GDP: $21.2 billion
Real GDP Growth: 7.3%, projected 2.2% 2008, 3% 2009
Overheating?

Demand putting upward pressure on prices, wages

Losing competition to China

Inflation: 3.9% (2007 CPI est.)

Current Account Balance: (-$3.1 billion)

Unemployment: 5.2%

Major trade partner with Finland (16% imports, 22% exports)

Demographic:

Conflict between Estonians and Russians

Highlighted by relocating Russian statue

Median Age

Male: 36.2 years

Female: 43.2 years

Sex Ratio

under 15 years: 1.06 male(s)/female

15-64 years: 0.91 male(s)/female

65 years and over: 0.5 male(s)/female

total population: 0.84 male(s)/female

Income per Capita: $21,800

Estonia By Sector:

Freight Transport

Port of Tallinn

Dependent on Russian cargos

Fluctuates with political environment

Air freight

8-9% annual growth through 2011

Road frieght

4.5% annual growth fueled by trade with Europe

Electronics and Telecommunications

Serbia and its economy

SIS International Research — Fri, 06 Jun 2008 20:40:32 GMT

Serbia boasts strong GDP growth but faces continued political instability and corruption.

Serbia's Economic Structure

GDP: $41.44 billion

Real GDP growth rate: 7% (2007 est.)

Inflation: 11.2% (2007 CPI est.)
Current Account Balance: 8.9%
High unemployment rate: 18.8% (2007 est.)
Increase in economic growth rate after ousting Milosevic in 2000
Political instability due to unresolved Kosovo issue
Serbia has a large amount of foreign debt and a high export deficit

Country is making attempt to dramatically increase exports

Major goal is to gain admission to EU

EU is Serbia’s most important trading partner

Serbia's Demographics:

Median age

Male: 36.1 years

Female: 39 years

Sex Ratio

Under 15 years: 1.07 male(s)/female

15 – 64 years: 0.97 male(s)/female

65 years and older: 0.68 male(s)/female

Highest malnutrition rate in Eastern Europe as of 2003

9% of population undernourished, compared to 2.5% in Germany, Ukraine, Poland, United States, etc.

Serbia's Industry Sector:

Exporter of manufactured goods, food, and live animals

In last 10 years, EU has contributed money to increasing livestock inspections, food safety, and lab modernization

EU also contributing to infrastructure development

Serbia is looking to become a regional hub for air transportation

Serbia will import environmental technology to fulfill its EU admission requirements

Will see increase in unleaded gasoline, filters, etc.

Telecom is Serbia’s fastest-growing industry

Annual growth-rate of 18.3% in telecom sector

Croatia's economy

SIS International Research — Fri, 06 Jun 2008 21:04:08 GMT

Croatia is often noted for its premier tourist sites. Despite slowdowns in the global economy, Croatia is likely to grow substantially this year. We set out to study the extent of Croatia's growth.

Economic Structure

GDP: $50.96 bn

Moderate, steady GDP growth around 4-6%

Per Capita Income: $12,863
Unemployment: 11.8%
Current Account Balance: -$3.836 bn, -7.1% of GDP
Economic future: GDP growth expected around 10% for 2008-2009
Trade deficit growing: $5.07 bn in 2007, a 5-year high
Uneven regional development
Economy heavily influenced by state

Privatization often resisted by both politicians and the public

Currently furthering agenda of EU mandated reforms, though at slow pace

Especially slow in politically sensitive areas such as agriculture, fishing, ship-building, and steel

EU entry expected in 2011, at earliest

Demographic:

Median Age

male: 38.9 years

female: 42.6 years

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.99 male(s)/female

65 years and over: 0.63 male(s)/female

Largely Catholic population

Croatia's Industry Sectors:

Tourism

Tourism receipts cover about two-thirds of the merchandise trade deficit

The tourism industry accounted for almost $10.8 bn last year

Major trading partners are Italy, Germany, and Bosnia and Herzegovina

Major imports are machinery, transport and electrical equipment; chemicals, fuels and lubricants; and foodstuffs

Major exports are transport equipment, textiles, chemicals, foodstuffs, and fuels

Slovakia's Economy

SIS International Research — Fri, 06 Jun 2008 20:10:30 GMT

Slovakia has been an EU member since 2004. While growth may be lower in the upcoming months and the current account s expected to widen, the economy is still likely to expect growth. We set out to examine the Slovakian economy as it currently stands.

Slovakia's Economic Structure

Successful transition from planned to market economy
Joined EU in May 2004

Goal to adopt Euro on Jan 1, 2009

GDP growth: 5.7%

Fueled by exports and high domestic investment

Manufacturing and construction

Slovakia in the future

2008 GDP: 4.4%

Government expenditures more significant than investment

Inflation predicted to decrease from 2007 level (6.9%)

Large Current Account deficit (-6.9% of GDP)

Higher trade deficit expected for 2008

Slovakia's Demographics:

60% of Slovaks live in villages with fewer than 5,000 inhabitants

To reach consumers, far reaching marketing efforts necessary

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.99 male(s)/female

65 years and over: 0.6 male(s)/female

Median Age

male: 34.8 years

female: 38.2 years

GDP per Capita: $19,800

The Slovakian Economy, By Sector:

Growing Tourism Sector

Overnight stays above 8 million in 2007 for first time

Italian and Austrian visitors largest groups

More jobs in hotels, restaurants

Manufacturing

Advanced technology sectors growing

Automotive, Transport Equipment

Least advanced technology manufacturing sectors declining

Leather, Textiles

Banking Sector

Largely in foreign control

Major construction of highway infrastructure

The Bulgarian Economy: a Snapshot

SIS International Research — Fri, 06 Jun 2008 19:54:26 GMT

Bulgaria, receiving less press than its neighbor to the north Romania, boasts strong economic growth. Problems continue to plague the country, and time will tell whether EU membership will help to limit such corruption and inhibitions to rapid economic growth.

Economic Structure

Strong Economic Growth since 1996

Inflation (6.1% 2007 CPI est.) , Corruption still a problem

GDP: $ 39.6 billion
Real GDP Growth: 6.2% in 2007

Peak of Economic Boom Cycle

Projected 6% annual growth through 2012

Unemployment: 6.9% (down from 9.7%)
Nominal Wage Growth: 20.6%
Current Account Balance: -12.2% of GDP
Opportunity for Consumer Good Importers

Imports: EUR24bn, EUR39bn by 2012

Exports: 18 EURbn

Consumption: 88% of GDP

Demographic:

Median Age

male: 38.9 years

female: 43.4 years

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.97 male(s)/female

65 years and over: 0.69 male(s)/female

Income per Capita: $11,800
Marriage 4x as common in urban areas as in rural areas

26,658 urban marriages versus 6,843 rural marriages in 2006

Bulgaria's Key Industries

Minerals

Coal, copper, and zinc

Tourism

6% projected annual growth 2008-2012

January 2008, government announced national strategy for increasing tourism from EUR2.4bn to EUR6bn

Massive construction in hot spots (e.g. Black Sea)

Residential House Prices: 30% Increase

Largest in world for 2007

Romania's Economy: An economic snapshot

SIS International Research — Fri, 06 Jun 2008 23:37:06 GMT

Romania has received significant attention from European firms looking to lower costs and identify market opportunities. We set out to find out what is the strength of Romania's economy and what are its weaknesses.

Romania's Economic Structure

Joined EU Jan. 1, 2007
Real GDP: $168.8 billion (2007)

Real GDP Growth: 5.9%

Unemployment: 4.1%
Inflation: 9.4% (2007 CPI est.)
Current Account Balance: -9.4% of GDP

Romania's Demographic:

Median Age

male: 35.9 years

female: 38.7 years

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.99 male(s)/female

65 years and over: 0.69 male(s)/female

Income per Capita: $11,100
Has the most divorces in Eastern Europe

33,193 divorces in 2005

Industry Composition:

Occupations 41% agriculture
4 million internet users increasing (21 mil population)
Tax rate 16%
Textile and Footwear

Light machinery and Auto assembly

Italy major import and export partner

Ukraine's Economy

SIS International Research — Fri, 06 Jun 2008 19:39:16 GMT

Ukraine is continually rethinking itself and its affiliations, as it wedged between pro-democracy and pro-Russian factions. Despite this transition, Ukraine has a remarkably strong economy.

Economic Structure

Domestic Consumption

Rising Wages and Pensions

GDP: $141.2 billion (2007)

Real GDP Growth: 6.9%

GDP - composition by sector:

Agriculture: 9.2%

Industry: 32.6%

Services: 58.2%

Inflation: 9.9% (2007 CPI est.)
Steel Exports, solid growth in metals
Continual economic reforms improve business landscape

Demographic:

Median Age

Male: 36.1 years

Female: 42.5 years

Sex Ratio

Under 15 years: 1.06 male(s)/female

15-64 years: 0.92 male(s)/female

65 years and over: 0.51 male(s)/female

Income per Capita: $6,900

Projected 104% growth through 2012

Ukraine's Industry Composition:

Metals
Internet

Users grew by 17.8% in 2007

Rapid acceleration of speed and availability

Food & Drink

Projected 47% increase by 2012

Mass grocery retail is a developing market

Russia's Economy: A healthy outlook?

SIS International Research — Fri, 06 Jun 2008 19:16:39 GMT

Russia, one of the "BRIC" countries, is a formidable force in today's shifting global economy. With petrodollars and a rapidly growing economy, Russia is being eyed by companies worldwide for its opportunities in terms of both consumers and business-to-business sectors.

Russia's Economic Structure

GDP: $1,289.6 billion
GDP Growth: 8% in 2008 so far
Unemployment: 5.9%
Inflation: 12.5% (2007 CPI est.)
Heavily dependent on Oil

Fall in prices may spell trouble

Domestic Investment:

Increased at a rate of 21% in 2007

Necessary for diversification and modernization of infrastructure

Outflow of foreign direct investment increased by 55% in 2007

Russia's Demographics:

Median Age

Male: 35.1 years

Female: 41.4 years

Sex Ratio

under 15 years: 1.05 male(s)/female

15-64 years: 0.93 male(s)/female

65 years and over: 0.45 male(s)/female

Income per Capita: $14,600
Highest number of legal abortions in the world

1.8 million in 2004, down from 4 million in 1992

53.7 abortions for every 1,000 women

Income Inequality

Very high inequality in distribution of wealth

Gini Coefficient = 0.41, highest of all Eastern European countries

Russia By Sector:

State control in key sectors

Oil, Titanium (Russia produces 66% world’s titanium)

Heavy Industry concentrated in European Russia
Agriculture concentrated in warmer-climate South
Oil-fueled future growth is major concern

Official statistics hide growth because transfer prices allow profits to occur in non-energy sectors

The State of Hungary's Economy

SIS International Research — Fri, 06 Jun 2008 19:03:50 GMT

Not much is spoken about Hungary's Economy. We set out to provide an economic snapshot of this economy and the key figures on this economy.

Hungary's Economic Structure

Transitioned from Planned to Market Economy
Remarkable turnaround of budget deficit

4% of GDP in 2008 from near 10% in 2006

Low budget, low growth

GDP: $138.2 billion

Real GDP growth rate: 1.3% (2007), 2.3% 2008, 3.4% 2009

Unemployment: 7.1%
Inflation: 5.5% (2007 CPI est.)
Current Account Balance: -7.1% of GDP
Labor force participation: 57%
Private sector 80% of GDP, FDI $60 billion since 1989

Hungary's Demographics

Median Age

male: 36.8 years

female: 41.8 years

Sex Ratio

under 15 years: 1.06 male(s)/female

15-64 years: 0.97 male(s)/female

65 years and over: 0.57 male(s)/female

Income per Capita: $19,500
4.4 million Internet users in a population of 10 million
Only recent emergence of middle class

Hungary By Sector:

Industrial Growth

Mining 28.2%

Manufacturing 13.8%

From 1989-2000, 1/3 FDI into East Eur. went to Hungary
Investment concentrated around Budapest

Special initiatives for doing business in eastern Hungary

Agriculture

Land 1/10 price of Western Europe

Speculating issue as EU ascension imminent

Financial Services

Foreign companies do not need government approval

May conduct cross-border financial services

Hungary issues investment-grade sovereign debt

The State of the Czech Economy

SIS International Research — Fri, 06 Jun 2008 19:04:26 GMT

The Czech republic offers a stable, prosperous economy fueled by its exports to EU. The following is a an economic snapshot on this Eastern European country.

Real GDP: $175.3 billion
Real GDP growth forecast: 4.7% in 2008, 5.4% in 2009

Slowed by US credit crunch, will begin to expand again

The Czech Future:

Domestic demand will drive economic expansion in 2008
Led by new availability of credit cards, mortgages
In 2009, GDP boost will come mostly from trade (exports)

Unemployment: 6.6% (2007)
Inflation: 2.0% (2007 CPI est.)
Current Account Balance: -$3.8 billion
Currency: The Czech government and the central bank have reached an agreement on measures designed to stem the appreciation of the currency

Median Age

male: 38.2 years
female: 41.6 years

Sex Ratio

under 15 years: 1.06 male(s)/female
15-64 years: 1.01 male(s)/female
65 years and over: 0.65 male(s)/female

Per Capita Income: $24,400

One of Eastern Europe’s highest life expectancies

Life expectancy at birth: 79 years
Behind only Germany and Slovenia

Poland Economic Overview

SIS International Research — Fri, 06 Jun 2008 18:49:29 GMT

Poland, referred to as the New Europe in some circles, is surprising some with its strong growth and economic problems. Will it become an economic hub in Europe in the future?

Memberships: EU Membership and Structural Funds since 2004

GDP: $421.5 bn

GDP Growth Rate: 7%; Inflation: 2.0% (2007 CPI est.)

Per Capita Income: $11,057; 17% of population below poverty line

Unemployment: 12.8%

Current Account Balance: -$2.8 billion

Exports have more than doubled since 2002

Economic Forecast:

GDP growth: 5.1% in 2008, 4.3% 2009-2012
Goal to adopt Euro in 2012
Labor market problems
54% participation rate in the labor market
Wages growing faster than productivity
Need to liberalize market regulations

Median Age

male: 35.8 years
female: 39.5 years

11 million Internet users in population of 38 million

Low divorce rate compared to the rest of Europe

67,578 divorces in 2005
Country is Catholic, 90% of people define selves as “religious”

“Brain drain” worker migration to UK

Trend will reverse over long-term
Firms need to know how to attract best talent

Machinery and Transport equipment

30% of imports
38% of exports

Packaging

1.5% of GDP
Metal and Paper Packaging expected 5-10% annual growth

Foreign Investment

Driver of recent economic success
Computers
Consumer Electronics
Automobile Component Production

Agriculture

Inefficient small farms without investment

Oil, Coal, Refining (controlled by government)

Sources: culture.polishsite.us
data.un.org

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Copyright (C) 2008. SIS International Research, Inc.
Disclaimer: Under no circumstances will SIS, it affiliates, successors or assigns be liable for any loss or damage caused by anyone's reliance on information contained in this web site

Welcome!

SIS International Research — Fri, 06 Jun 2008 18:33:54 GMT

Welcome to the SIS International Eastern Europe research center, your portal to cutting-edge developments in Eastern Europe. Here you will find updates on market developments and various industries in the region, tips for effective research, as well as insights and resources in the market intelligence industry.

SIS Eastern Europe's blog is NOT your common business-issue blog. A product of SIS International—a worldwide leader in market intelligence and dynamic research services, this blog tracks market developments and allows worldwide contributors to offer their views on key issues. Contribute to and gain from SIS Eastern Europe.

Upcoming Speech on Eastern Europe Business Opportunities in Krakow

SIS International Research — Fri, 06 Jun 2008 21:30:52 GMT

New York, NY May 22, 2008 — Ruth Stanat, president of SIS International Research, will deliver a speech to the AIMRI conference in Krakow, Poland on business opportunities in Eastern Europe. SIS International has a strong presence in the region, and follows a press conference by Stanat in Bulgaria before members of Sofia’s press on Bulgaria’s economic future.

The speech will include the most current economic data, market trends and SIS’ insights into the region.

SIS International is the US coordinator and founding member of the Alliance of International Market Research Institutes (AIMRI).

This Website's Disclaimer & Privacy Statement

SIS International Research — Fri, 06 Jun 2008 18:45:47 GMT

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PRIVACY POLICY
Information We Collect:
The relationship between SIS and our clients is an important asset to our firm. We strive to maintain your confidence and trust by committing ourselves to protecting your confidential information. We have not and will not disclose any personal information to anyone unless it is, at your direction, needed to service to your account, or is required by law or necessary to protect our rights. We do not collect or store personally identifiable information on you at our website or elsewhere, unless, of course, you voluntarily provide that information to us. When you place an order, open an account, sign up for services or newsletters, communicate with the website owner or customer service, or send us an email, you provide us with information we may collect. Such information may include your name, address, email, phone number, credit card information, subscriptions and form downloads. We treat all information you provide as confidential. For statistical purposes only, the server of our Internet Service Provider collects technical (or non-personally identifying) information about when our website was accessed, the name of the website you came from before visiting our website, which pages were visited, and which browser you used. E-mail addresses and other personally identifiable information are not available to us. We do not enable "cookies" on our website.

Use and Disclosure of Information We Collect:
We do not rent, share, or sell mailing lists or information about visitors to our website to third parties (other than is reasonably required to fulfill orders, requests and process payments). All newsletters, alerts or bulletins that you are subscribed to will be sent to you individually, or as a blind copy to ensure your email address is not disclosed to other recipients. At our option we may notify you of any changes to this Privacy Policy or our other terms and conditions of this website (though you are bound by the terms of any changes we post to our website whether or not we notify you by email).

From time to time, we may be required to provide personal information in response to a valid court order, subpoena, government investigation, or as otherwise required by law. Unless prevented by law, we will notify you prior to the release of such information. Of course, this privacy policy doesnt apply to the websites of others that may be accessible though www.sisinternational.com.

Notification of Changes:
Any changes in our Privacy Policy will be posted to this website, www.respectfactor.com, and will become effective as of the date of posting with respect to information we then collect in the future, but will not be changed with respect to information that we have already then collected. It is and will be your responsibility to review our Privacy Policy from time to time to make sure you are aware of any changes.

Effective Date:
This Privacy Policy is effective with respect to all data that we have collected since the date we started collecting data, which was September 5, 2000.