Slovenia is a member of the EU since July 1st, 2013 and as such is a member of the EU Customs Union. The Republic of Croatia has signed agreements on free trade with the countries of former Yugoslavia: Albania, Turkey, Moldova, and Macedonia.
Non Tariff Barriers
In order to integrate the WTO (entry: November, 2000), Croatia greatly liberalized its economy. For most goods, customs duties are nowadays the only protective measures. There are some exceptions, for instance, qualitative restriction measures as well as quotas authorised by the WTO rules (in case of a deficit in the balance of payments or in case of a strong threat to the local industry). These quotas (for farm products, above all) are assigned by open tendering. The import of certain goods needs a license, which is delivered by the Ministry of Economy. Finally, the import of second-hand motorcars being more than 7 years old is forbidden in Croatia.
In accordance with its European Union membership since July, 1st of 2013, Croatia applies the European Union trade policy such as antidumping or anti-subsidy measures.
Customs Duties and Taxes on Imports
Croatia is a member of the EU and fully accepts its foreign trade policy. Operations carried out within the EEA are free of duty. The Common Customs Tariff of the European Union applies to goods originating outside Europe. Generally the duty is relatively low, especially for industrial products (4.2% on average). Tariffs for EU origin can be found on TARIC Consultation Website.
Croatia applies the Harmonized Customs System in line with the EU regulations.
A Croatian importer is responsible for providing the required import documentation, which consists of common trade, transport, and customs documents, as well as certificates required for quality control and licenses where appropriate. The Single Administrative Document (SAD) that is used by the EU and most other countries is the key customs document in Croatia as well.
As part of the "SAFE" standards set forth by the World Customs Organization (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Program eCustoms, has been in effect since 1 January 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.
Croatia is a member of the CEFTA (Central European Free Trade Association) as well as the WTO (World Trade Organization) and has signed agreements of free trade with the countries of CEFTA and Turkey.
With a GDP per capita of USD 16,250 (IMF, 2021), the Croatian consumer is less wealthy than their Western European counterparts but also richer than all other nations in the Balkans except for Slovenia. The Croatian population is ageing and shrinking slightly with a median age higher than the EU average (43.9 years as opposed to 43.1 years) and a net growth rate of -0.48% (CIA World Factbook, 2020 and 2021 est.).
Croatians spend as much as 18.3% of their budget on food, one of the highest rates among EU member states (Eurostat, 2019 latest data available). On the other hand, housing expenditure is less significant than the EU average (16.2% as opposed to 23.5% - Eurostat, 2019 latest data available).
The income inequality within different regions and social groups is somewhat greater than the EU average, but not too high within the global context, with the country having a Gini index of 29.3 points according to the World Bank's latest data available.
While Croatia is one of the wealthiest countries in the Balkans, Croatian consumers remain price-sensitive and are not particularly open to new brands entering the market. After struggling with years of recession, Croatian consumers are now able to increase their spending and have renewed optimism in their economy. The Economic Sentiment Indicator (ESI) hit its highest level (118.8 out of 100) in February 2018 since the European Commission has been monitoring this indicator for Croatia.
Croatian consumers prefer local brands when shopping from traditional retail stores, however, they have a strong preference for international online retailers (40%f Internet users buy mostly from foreign websites) (ITA, 2019 latest data available). Nonetheless, e-commerce is far from reaching maturity as enterprises only generate 14% of their revenues through this medium (EU average 20%) (Eurostat, 2020).
With over 20% of the nation’s population and its central location, the capital city of Zagreb is the primary distribution center for the country. The port cities of Split and Rijeka are also important distribution points, and the eastern city of Osijek is the largest and most important distribution point in that region of the country. Croatia’s geographic location, access to seaports, and well-developed road (but not rail) transportation system give the country distinct advantages as a regional distribution point, particularly to countries located within the geographic area of the former Yugoslavia.
There are an estimated 7,500 retail outlets in Croatia (including kiosks, small shops, and open markets). The privatization of the distribution sector has been very successful and the sector is now almost completely privately owned, with many “green-field” investments made in the past decade. In recent years, newly developed shopping centers (such as Importanne, King Cross, Kaptol Centar, Avenue Mall, City Centar One, West Gate, Garden Mall, and Arena Centar in Zagreb), modernized or newly-established domestic supermarket and retail chains (such as Konzum, Dinova-Diona, Prehrana, Plodine), and foreign chains (such as Billa, DM, Mercatone, Metro, Bauhaus, Baumax, Kaufland, Lidl, and Interspar) have become dominant players in the marketplace. When the most important domestic retail chain Konzum and its parent company Agrokor faced severe financial difficulties in early 2017, the Croatian government intervened to prevent bankruptcy and appointed a commissioner to help the creditors restructure the company. The company is currently undergoing restructuring that could affect its distribution channels and footprint in the region.
Croatia's distribution system is formalized by the Law on Trade which regulates the activities of wholesalers and retailers.
There are an estimated 7,500 retail outlets in Croatia (including kiosks, small shops and open markets). Recently, newly developed shopping centres (such as Importanne, King Cross, Kaptol Centar, Avenue Mall, City Centar One, West Gate, Garden Mall and Arena Centar in Zagreb), supermarkets and modernised national retail chains newly established (such as Konzum, Dinova-Diona, Prehrana, Plodine) and foreign chains (such as Billa, DM, Mercatone, Metro, Bauhaus, Baumax, Kaufland, Lidl and Interspar) have become dominant players in the market. (ITA, 2019 latest data available) In early 2017, the largest chain store Konzum, whose parent company is Agrokor, faced major financial difficulties. The Croatian government intervened to prevent bankruptcy and appointed a commissioner to help creditors restructure the company. There is an increasing trend towards internationalisation and concentration in the sector, including the development of shopping centres, department stores and the establishment of international hypermarket chains.
Croatia has a population of 4.17 million people, and it has an internet penetration rate of 74.2%. The share of monthly active smartphone users is estimated to be at 60.4% (Statista). Croatia ranks 22nd out of the 28 EU Member States in the Digital Economy and Society Index (DESI) 2018 published by the European Commission. Overall, it has made good progress over the last few years. Croatian citizens are above average internet users and enterprises are also keen to employ digital technologies. An estimated 20% of Croatian businesses are active in e-commerce (U.S. Gov). According to data by Statista, 100% of Croatian internet 16-24 year-old users connect daily, the rate is 97% for those between 25-34 years, and 93% for the 35-44 years-old group. People between 45-54 years and over 55s have a 85% and 77% daily penetration rate, respectively. The most popular web search engines in Croatia are Google (96.6%), Bing and Yahoo (1.7% and 1.3% respectively).
E-commerce in Croatia has been growing steadily in recent years, especially since the country joined the EU in 2013. Market research agencies estimate that the e-commerce market value in Croatia reached US$ 446 million in 2017 (U.S. Gov). The average revenue per user is currently estimated at US$ 166. According to recent research by the Croatian daily Poslovni Dnevnik, there were approximately 1.75 million e-shoppers in Croatia at the end of 2017 (out of a population of 4 million). 2017 saw a growth rate of 18% in terms of online shoppers, with roughly 250,000 Croatians who started to buy online. Reportedly, 60% of internet users in Croatia purchase online, and between 6% and 10% of them make online purchases on a monthly basis (a 9% increase from the previous year). Only 6% of online users have never purchased online (U.S. Gov). An estimated 40% of Croatian online shoppers order from stores outside of Croatia, mostly from China and the EU. The main focus is on the media and electronics sectors, with a market value forecasted at USD 181 million in 2018. Online shoppers also buy clothing, shoes, fashion accessories and food. About 40% of Croatian online retailers serving the Croatian market exclusively, while another 40% are open to foreign markets (especially the EU). Amazon, eBay, and Extreme Digital are the most popular sites in Croatia, along with locally-developed platforms eKupi and Abrakadabra. Almost 90% of Croatian internet users actively look for information about the product or service before purchase, often using different channels. When it comes to online payment methods, 21% of buyers use credit cards, whereas PayPal and similar services are used by only 10% of buyers. Smartphone payment applications issued by banks -currently used by 13% of buyers – are growing. However, the majority of e-shoppers still prefer to use direct bank transfers (31%) or Cash on Delivery (25%). Most internet users (more than 74%) in Croatia use the internet for social media. The most popular social networking site is Facebook, with an estimated 1.9 million users (over 70% are aged 18-44). Instagram has 760,000 users, of which 54% are women. Viber is the most used messaging service in Croatia, ahead of WhatsApp and Messenger.
Organizing Goods Transport
Main Useful Means of Transport
Approx. half of all transported goods in Croatia is done by roads. Since Croatia is a maritime country the second largest fraction of goods is transported by sea (almost 30% of all transported goods). The rest of approx. 20% of transported goods is more or less equally divided by railway and pipelines.
The transport share of GDP is 8.3% and in total employment around 7.3%.
The industrial sector contributes approximately 20% of GDP. Manufacturing employs nearly 25% of the workforce. In terms of the value added, leaders are manufacturing of food and beverages, electricity, gas and water supply; manufacturing of chemicals and chemical products; refined petroleum products and fabricated metal products. Traditionally, Croatia is also strong in shipbuilding, construction industry and tobacco products.
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