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FOREIGN COMPANIES AMONG 100 LARGEST EXPORTERS By dividing the largest exporters according to their country of origin into group of companies owned by foreign companies and exporters whose majority shareholders are domestic privately-owned or state-owned companies, we note a strong dominance of foreign countries both in terms of their number (63) and their share in the total export (77.1%). Foreign companies’ share in the export realised by 100 largest exporters in 2014 was 77.1% i.e. € 4.8 billion euro, employing 49,313 workers i.e. 71.8% of the group’s employees. This group also includes large net exporters, for example in the area of car spare parts industry, which came to Serbia primarily because of high government subsidies and low labour costs and partially due to presence of FIAT company. The next group includes home appliances and machine manufacturers – three Gorenje factories 1 Table 1: Ownership structure of 100 largest exporters Number of of which: Ownership structure exporters net exporters Total number of exporters 100 67 a Owned by foreign companies 63 40 bOwned by domestic companies 30 20 c. Owned by state 7 7 of which in restructuring 4 4 Source: Republic of Serbia, Customs Administration, summarised by author Though there had been plenty of off-target and unnecessary government subsidies, the effects are visible in cases where foreign investors oriented to exports and new technologies were attracted to Serbia. However, the issue here is that the economic climate was not further improved but, on the contrary, macroeconomic flows and the business conditions were dramatically aggravated so the subsidies were necessary to attract the investors because without such subsidies we would have obtained lesser level of foreign investments. However, attracting foreign investors with subsidies, as a compensation for poor economic environment, with employment of unqualified and poorly paid labour force, cannot be used as a permanent model to increase export and the solution should be sought in improvement of the business and investment climate and reduction of subsidies can then go hand in hand with such improvement Table 2: Export, Import (in EUR Millions) and Number of Employees Net No. of Companies Export Import export empl. a. Owned by foreign companies 4.780,1 5.828.7 -1.048,6 49.313 b. Owned by domestic companies 838.1 5738 2623 10.422 c Owned by state 587,1 2518 3181 8.955 Total 6.203,3 6.654,3 4682 68.690 Source: Republic of Serbia, Customs Administration, and Agency for Business Registers, data processed by author In addition to their high concentration among top 100 exporters, the growth of the group of 5 to 7 largest companies is conspicuous and they also record the largest growth of export. The general trend in export shows that the concentration of large companies is growing as they are more competitive and better prepared to face the interational competition whereas smaller companies have issues with emerging on the foreign markets and maintaining their market position. Large exporters are also large importers, with third of exporters having higher import than export. These are vital facts. For this reason, we will identify the most significant net exporters, from the standpoint whether they are owned by foreign or domestic companies, as well as what industry they operate in. Net exporters namely have significantly higher contribution to the newly added value of gross domestic product and more significantly improve the country’s balance of trade and the balance of payments 15. Foreign Domestic State 8.052 8377 5829 4780 3.550 2479 2417 810 998 836987 574 835 619 197 74 24 Export Import Assets Capital Income Profit Figure 2: Foreign, Domestic and State-Owned Exporters (in EUR Millions) Source: Republic of Serbia, Customs Administration, and Agency for Business Registers, data processed by author 3. COMPANIES OWNED BY DOMESTIC LEGAL ENTITIES AND NATURAL PERSONS Out of 30 companies owned by domestic legal entities and natural persons which are among 100 largest exporters, 15 are agricultural produce processing companies (sugar beet, soya, oils, meat, animal feeds, and dairy products). This group also includes one company which is a successful metal-processing company, one furniture company and one bankrupt company while the rest are mainly involved in the export of primary agricultural products and in food import and processing for their own needs. So, export of primary and secondary agricultural products is dominant while export of other industrial products is on a minimum level. Largest agricultural produce processing companies include 4 sugar-processing companies, 4 fruit-processing companies, 2 animal-feed processing companies and one soya and one milk-processing company. The largest exporters were 4 sugar processing companies which are also the largest net exporters as import plays a very small role in their business. The structure dominated by agricultural produce manufacturing and processing companies reveals that it is difficult to be competitive and to penetrate the foreign markets in other non-agricultural industrial sectors. This observation particularly applies to the medium and small size companies, with 90% of them having recorded no export at all and having no potential to expand to foreign markets. They can find their chance for export if connected to exporting companies which are competitive on foreign markets 4. STATE-OWNED EXPORTERS The group of large exporters owned by the state is dominated by factories operating in military industry such as Prvi Partizan, Užice and Zastava oruzje, Kragujevac. The broad list of exporters includes several factories which carry out their export via Jugoimport SDRP. Having in mind their export potential, we may expect further growth of export in military industry. HIP-Petrohemija is also an important exporter but for the time hain there is no clear solution on sitt for its stratenir partner