Last April, 28th, Belén García from Packnet, gave us a talk about doing business in Eastern Europe. This talk, included in the MaDI Talks “Doing Business in“, allowed us to understand the peculiarities of this region. In the following paragraphs you can find more details!
Eastern Europe General Overview
The group of countries that are often considered to belong to Eastern Europe have some common characteristics regarding the way they do business which are not very different to those of Western European countries. As in the majority of countries, there are several basic rules that need to be followed in order to obtain the best outcome, such as: observing carefully, avoiding judging, working on developing confidence or being aware that body language can differ.
Likewise, it is complicated to generalise when speaking about the Eastern Europe region, as the political situation is very different depending on the country; think of the example of Poland and Bulgaria. Based on this idea, and being aware of the specific situation of some of the most relevant countries in Eastern Europe, it will be easier to analyse the region as a whole and go into detail about certain countries. In this article, we present a more thorough analysis on 5 of the most important countries in Eastern Europe: Bulgaria, Belarus, Czech Republic, Hungary and Poland.
Doing business in Eastern Europe
Bulgaria faces a great political uncertainty, after an inconclusive election in March 2016, when the strongest party (CEDB) did not get enough allies to form a coalition. The country is expected to grow 4% in the next 4 years. Although Bulgaria’s population is not remarkably high, with 7.5 million people, it has the most favourable tax regime in Europe, and prices are very low, which makes it an attractive and competitive country when doing business globally. However, settling in the Bulgarian market can be difficult without the necessary local support. Even if Bulgaria does not belong to the Eurozone, it is a member of the European Union and its currency depends on the euro. Some interesting taboos when doing business in Bulgaria:
- Do not nod for saying yes, it means the opposite
- Do not use “Ciao” for saying “hello”
- If you are going to be less than 20 minutes late, give a call to the person you are meeting to let them know; if the delay is going to be over 20 minutes, call another meeting.
As far as politics are concerned, Alyaksandar Lukashenka has governed the country since 1994, keeping a very close relationship with Russia. Regarding its economy, the country needs external funding, and the lack of structural reforms to meet the IMF requirements to receive a loan has provoked high levels of inflation, close to 12%, with a real GDP of around 3%. Despite the political situation, Belarus offers one of the most favourable business environment in Eastern Europe, according to the 2014 Doing Business Index, where it holds the highest position in terms of potential to build a profitable business. Here are some tips to do business in Belarus:
- Having a local partner is highly advisable.
- Do not delegate negotiations to third parties.
The Czech Republic has a population of 10 million people, who prioritise family instead of work. Their currency is Czech Koruna (CKZ), but they are planning to adopt the euro in the foreseeable future. Punctuality is essential when doing business in the Czech Republic, formality and serious behavior are considered signs of respect. For that reason, work meetings take place in a private and impersonal environment. However, more open negotiation types such as work meals are increasingly gaining ground. The country has a leadership structure and vertical hierarchy. These are our tips for successful meetings:
- Do not ask about other people’s health.
- Avoid asking about personal issues related to money.
- Shake hands firmly while keeping eye contact.
The differences between Poland and the rest of the EU are not as remarkable as those of other Eastern European countries. After their accession to the European Union in 2004, doing business in Poland has become a much easier task. Please have a look at some details you should bear in mind:
- Polish business people tend to be quite reserved, so you need to be aware that it is important to develop a good relationship for them to feel more comfortable and obtain better results.
- They don’t beat about the bush, so do not get offended by their direct language. As opposed to other cultures such as Japanese one, Polish do not try to sugar-coat the information when it is negative, as they consider this could lead to misunderstandings and prefer to make things simpler.
- For Polish people, working life is something serious, so if you want to regain their trust, you must have a formal attitude, behaviour and expression.
- In addition, if you want to do business in Poland you need to be aware that they think that business is something very formal so you need to reflect it in your attitude, behaviour, communication… in order to build trust.
It is located in the heart of Europe, with a population of 10 million people and its currency is the Hungarian forint. Hungarians have a pretty good perception of the public administration if we compare them with other previously analysed countries. The European Central Bank and the IMF ranked Hungary as one of the worst 50 countries in terms of electric connection. Starting up a business in Hungary can be complicated without the support of a local partner. We will now give you some tips for an informal meal, and other factors to bear in mind in negotiations:
- Avoid saying “Cheers” when making a toast
- Do not speak about business during meals
- Consider Hungary as part of Central Europe in conversations
After this analysis, we can conclude that doing business Eastern Europe is not easy as it is not the most stable region. Political uprisings and uncertainty have an impact on firms, and if these problems are not solved, it is obvious that the market will also be affected. Besides this, Brexit will also have an influence on trade between the UK and some Eastern European countries.
For the moment, Eastern Europe offers some opportunities for companies to export to or import from the region, as its markets are growing. However, before the global financial meltdown, it was home to some of the fastest-growing markets in the world. It currently has a population of 300 million inhabitants, a very high GDP and a significant culture mix. Therefore, it still is home to the greatest players in the market.