The old world is modernising
Although consistently popular with British holidaymakers, our businesspeople have tended to attribute a low priority to Greece as an export market.
However, with the recent rise in the Greek share of British exports and the growing sophistication of its market for consumer goods, Greece, while not an ideal starter market, offers good potential for companies wishing to expand their exports.
Several British chains have successfully established branches in the commercial hubs of Athens and Thessaloniki, despite the prevalence of family-run businesses.
Ranking among the world’s 20 most developed nations, Greece is an EU member state with a population of 11 million, over half of whom live in Athens and Thessaloniki.
EU investment
Greece, which joined the single currency in 2001, has enjoyed a stable political environment since the mid 1970s. Its growing economy has boosted business confidence over the last decade, leading to considerable foreign investment.
UK exports to Greece in the first eight months of 2004 were valued at £916.8m. They were comprised mainly of alcoholic beverages, road vehicles, telecommunications equipment, medicinal and pharmaceutical products and a range of manufactured items.
2004 saw Athens host the Olympic Games, which brought yet more investment into the area, and many infrastructure projects have been funded by the EU (€26bn was pledged for between 2000 and 2006) including highways, tunnels and bridges, railways, airports and harbours, water and sewage projects, and health and welfare projects.
With the enhancement of the country’s image, the Greek Government is keen to press on with these structural reforms and privatisation in the large state sector, and is generally supportive of foreign investment.
However, dealing with local bureaucracy can be time consuming and it is advisable to appoint a local representative in Greece before you enter the market. Most are available in the Athens area and cover the whole of Greece, but it may be necessary, in some cases, to appoint a separate agent for the Thessaloniki region.
The contacts and local knowledge these representatives have will be vital to your success, especially if you are applying for public sector tenders. Once appointed, it is advisable to visit your representative at least twice a year, as personal contact is very important in Greek business.
It is also a must to consult appropriate legal, financial and taxation specialists before setting up in business to avoid expensive mistakes.
Low labour costs
British products and services generally have a good reputation in Greece and should do well as long as they are competitive on price grounds.
For British companies wishing to penetrate the Balkan market, Greece offers a sound base as it is the EU’s largest investor in this region.
Staff recruitment is not generally a problem in Greece as the labour force is highly educated and most Greek businesspeople speak English. Unemployment levels run at 12% and Greece has the second lowest labour costs in the EU.
Deregulation, modernisation and a series of mergers and acquisitions have seen the Greek banking system expand rapidly in the last few years.
A full range of services are available from both state and private Greek banks, and a number of foreign banks, including venture capital and other finance for start-ups and established businesses.
Private banks may offer greater flexibility than those in the state sector. HSBC is the only UK bank with an extensive presence in Greece.
Burueaucracy is still more of a problem for Greece than for many of its European peers and it is still a middling country when it comes to tax competitiveness in the EU, according to Price Waterhouse Coopers. But the government is making an effort to be business friendly, as this year it reduced corporate tax rates from 29% to 25% (22% to 20% for general partnerships and limited partnerships). However, there is one major caveat: about half of the profits of partnerships are taxed at the personal tax rate of the general partners, which can be as high as 40%.
The Greek government has passed developmental legislation which aims at providing investment incentives to promote regional development, environmental protection and energy saving and increase employment and competitiveness.
Incentives include investment grants, interest rate subsidies, tax allowances and special incentives for significant industrial mining and large tourist projects.
