An interview with the President of the Bilateral Chamber of Commerce Bulgaria-Romania about the current activity of his organization, about the record figure in trade between the two countries in 2021, about the balance between cooperation and competition between the economic sectors of both countries and about the changing mentalities and the keys to mutual trust between Romanians and Bulgarians
Vladimir Mitev
Doru Dragomir is the President of the Bulgaria-Romania Bilateral Chamber of Commerce which has offices in Sofia and Bucharest. He worked for over 20 years in the private sector, experiencing the great inflation of 1996 in Romania and the international crisis that hit South-East Europe in 2008-2009. Dragomir graduated EMBA from Asebuss & Michael J. Coles College at Kennesaw State University in Georgia USA in 2007 and law school in Romania.
The Chamber of Commerce has over 45 members from both countries, who come from 25 different economic sectors. It is one of two bilateral chambers with a special focus on Romanian-Bulgarian economic relations.
The interview can be heard here with subtitles in English:
Mr Dragomir, we start our discussion with the fact that you have held and continue to hold several events to promote economic ties between Romania and Bulgaria. And please tell us what has happened so far and what will happen soon!
Yes, this year the Bilateral Chamber of Commerce Bulgaria Romania launched a series of events in Bulgaria, the purpose of the events being to present the economic life in Romania. This is taking place in the current context where we are discussing a period of more than two years where we have been affected by the medical crisis which is only now over or about to end.
Today we have a new crisis in Ukraine.
In this context we decided to launch this series of events.
First, we started with the idea of organising six events in the main cities or regions of Bulgaria. We have already held two of the events in the Stara Zagora region and in the Yambol-Sliven area which we consider a success both in terms of the people present and the companies that were present in the hall with us. In terms of the interest of these companies in what is happening in Romania – it is an interest that we see from the networking discussions at the end of the presentations. An event that would normally have lasted say two hours in Stara Zagora lasted almost four hours. At Yambol we spent three hours and a bit with company representatives, each of them having very concrete questions about their field and the sectors they come from. And we’re not just talking about questions about how to sell on the Romanian market obviously. Bulgarian companies have understood for some time that the Romanian market can be the first step in internationalization for Bulgaria, but they are also interested in buying from Romania raw materials or finished products that are needed on the Bulgarian market.
Next week we will be in Lovech and we will cover the Lovech region with a new event of this kind. And very interesting for us is that we already have questions and proposals from regions that we did not think of in Bulgaria to increase the number of events. This means that from six events as we had initially proposed we have increased to eight. At the moment we are planning to organise ten events by the end of the year. Why is this happening?
I think that after two years of working online people want to see each other, they want to have face-to-face discussions. We as humans are social animals, we want to feel each other’s warmth and look each other in the eye when we can. When we want to do business or when we want to get information. Online is good and it’s obvious that it’s worked very well over the last couple of years and has grown sensationally in terms of commerce in general. At least that’s my personal opinion and that’s the reality that we’re dealing with in these events. It is not enough. People want to make things concrete by working with other people. These events for us are somehow a first step only, because in them we just give information and take information from Bulgarian companies.
For us the work is just starting because for all the requests that we have at the Chamber level my colleagues in our offices in Sofia and Bucharest are working concretely to answer questions, to identify potential partners, to cover the needs for which the companies that we have met are asking us for help. Also in the context of these events this year we will open a third Chamber office. The office will be in Silistra because it is an important point of connection between Romania and Bulgaria, as there is quite a large trade exchange at the border in the north-eastern part of Bulgaria and the south-eastern part of Romania. And because we had a lot of requests from that area for support at the Chamber level and so we decided to be closer to people and companies. By the way, this idea of being closer to the people is somehow coherent with the idea of the events. We go to the regions of Bulgaria to meet with companies that maybe don’t have a national presence in Bulgaria, that don’t come to our office in Sofia, but are interested in working with Romania or at least are interested in understanding a bit more about what Romania is all about. And then we go to be with them.
And another sign of the growing economic contacts between Romania and Bulgaria is that last year trade reached a record €6 billion.
I would even say almost 7 billion euros. It is also very good for Bulgaria that out of this 7 billion euro Bulgaria has an extra 1 billion euro export to Romania. So out of almost 7 billion we are talking about almost 4 billion euro export from Bulgaria and 3 billion euro export from Romania which is a clean bill of health for Bulgarian producers.
How can this be explained? What kind of analysis can you make of this development?
I would say that it makes sense and this is something that we have always supported and tried to present further. Bulgaria has some tax incentives that help production. On the other hand Romania is a much bigger market almost four times bigger than Bulgaria with a higher purchasing power than Bulgaria. And then there is a logic to say that the main production area should be Bulgaria and the main market should be Romania.
Why has trade increased so much in recent years? I think we have finally managed to understand in the region that the easiest way to do international business is to do it with those who are close at hand. We have a lot of international companies that are at the top of this trade. Statistics show that a rather high proportion of the trade between the two countries is between multinational companies in the two markets and less between Romanian and Bulgarian national companies. But I think this is absolutely normal and the global economy makes this happen all over the world. And it’s good for Romania and Bulgaria because it increases the level of trade because invariably people start to get used to products coming from the other side of the Danube. They begin to appreciate the qualities of these products even if they have international brand names and on the back you can see that they are produced in Romania or Bulgaria. And then this increase in trade with international products will sooner or later also lead to an increase of national companies in the import and export area. And to make you understand more than that how much we believe in this, in the middle of May we are organizing in Bucharest a meeting between the 16 main Bulgarian manufacturing companies in the “food” area and the main Romanian distributors on the market in relation to retail. For exactly the same reason, we want Bulgarian national producers to have direct contact with Romanian distributors and to be able to enter the Romanian market at a level that allows them to be valuable in the market.
What can be said about the economic sectors in both countries which are complementary?
Unfortunately we are still at the level where very many industrial sectors are in competition. We have in Romania and Bulgaria pretty much the same production sectors. Basically, Romania has developed a lot in the last few years in a few industries, and here we are talking about agriculture, we are talking about machine building and obviously all the companies that support machine building. We are talking about the IT area. If we look a little bit in Bulgaria in this area of machine building, we will see that the Bulgarian economy for a more or less subjective reason has not entered the list of major manufacturers. In Romania we have two big manufacturers Ford and Renault. Bulgaria still doesn’t have any manufacturer or well maybe we can talk about the Chinese car manufacturer in Bulgaria…
…but that went bankrupt.
Or has already gone bankrupt. I don’t know much information about what is happening there but Bulgaria like Romania has a quite developed industry in the support area i.e. companies providing raw materials or subassemblies for the car industry.
And here I would say that we are probably complementary because in Romania and Bulgaria there are suppliers for the construction of cars but the products are different. That is to say, the sub-assemblies produced in Romania are not the same as the sub-assemblies produced in Bulgaria and that is good.
In the IT area, again we are somewhat in competition but I would say that we can see things as complementary because we are not talking about the same markets. In principle, foreign investors or markets where IT products produced in Romania are sold are not the same as the markets where Bulgarian products are sold. As well even if it looks like a competition and it is an example that I constantly give to the outsourcing industry. The outsourcing industry in both countries accounts for quite a large percentage of the GDP of both countries. They see themselves in competition but in fact they can be seen as complementary because the kind of projects that the outsourcing industry in Bulgaria has are different from the kind of projects that the outsourcing industry in Romania has. Both are called outsourcing and they seem to be competition but the reality is that when we go into a bit more detail in the discussions with them we will realize that they are not really competition but complementary.
We’re talking in the context of the war in Ukraine which has led to sanctions against Russia and actually in a way isolated both countries from the markets here. How does this war affect Romania and Bulgaria in an economic sense?
I think the main effect we feel in both countries is related to the fact that quite a lot of the raw materials used by the industries of both countries came from that area. Even though Russia in recent years has been subject to an embargo. Or let’s not say embargo, but restrictions by the European Union. These restrictions have been respected by Romania and Bulgaria. So somehow the level of trade with Russia has been significantly reduced. Yet a lot of raw materials came from that area. The new restrictions imposed on Russia by the European Union will make it even more difficult for the two industries to obtain raw materials. Ukraine by the nature of the situation there is prevented from exporting many of the products that would normally come to our area. We saw all the statistics a couple of weeks ago at the level of 2020 I think or 2021 even 50 percent of the imports of wood material from Bulgaria came from Ukraine. That means a dramatic decrease in the resource that companies in Bulgaria are using in various industries that are related to wood.
Romania doesn’t import 50 percent, but it used to be quite a high percentage of raw material coming from there to which we add the area of agriculture, food, being one of the largest global producers of raw material. Here things vary. Ukraine is the largest producer of sunflower globally. But Romania is the largest producer in the European Union. So maybe Romania is not as affected in this area in a concrete way.
But Bulgaria for example is a very big producer of oil so it needs that raw material. Obviously both economies are affected in one way or another. There is a combination of factors because, in addition to the war in Ukraine, the medical situation I mentioned earlier, there is also the energy situation in the European Union, which has led to some big price increases. There is also the problem of fuel costs. All this has made a mix that in one way or another has hit the two economies. The question is how flexible we can be at the level of private companies in the two countries and how quickly we can identify new opportunities.
The Bulgarian-Romanian Bilateral Chamber of Commerce at the moment, for almost a month now, both in the events that we organise and in such meetings that we have with various partners, is trying to promote the identification of new suppliers for the products that are needed in the two markets. At the moment we are in a very close partnership with the Bulgarian-Turkish Chamber to open a little bit more the Turkish market to supply the various raw materials that are needed. At the same time we are trying to identify those products or services that are needed in the two countries and that can be found in the other country, in particular if there is a need in Bulgaria we should identify products in Romania and vice versa. Also on the basis of the memorandum we have with one of the largest economic associations in India we have started discussions for some specific products where we had a concrete demand from Romania or Bulgaria to try to help import them from the Indian area and or South East Asia area.
To what extent can both countries or businessmen or chambers of commerce from both countries collaborate in finding replacements for these raw resources from Russia and Ukraine?
When we talk about collaboration in my view it has no limits. All we need is to want to collaborate. I think that Romania and Bulgaria lately, both economically and in other ways, are starting to collaborate more than they have in the last 30 years. We have a spectacular increase in trade – almost 40% compared to previous years. And here we’re talking about growth that is no longer comparable to 2020, which was a stagnant year where business didn’t really work, but we’re talking about growth that is comparable to 2019 when business was working. So if you asked me last year and you said we had a growth over 2020 of 60% I wouldn’t be impressed because 2020 was not a year where anything was working. But now when we’re talking about almost 40 percent more compared to 2019 it’s obviously a very good signal for both countries.
Talking about the chambers of commerce, again we are talking about their willingness and the Chamber of Commerce like any other organizations can be more active or less active can have strategies that go into the concrete area of helping through the connections they have through their communication channels that are specific to say or not. From our point of view as the Bilateral Chamber of Commerce we are doing everything in our power to unbundle and further develop the business. How can we help? We can help in many ways because through our network of partners, and here I’m not only talking about the network of chambers of commerce, I’m talking about the network of partners of the Bilateral Chamber of Commerce: in particular we can develop many, many relationships to help both companies and other institutions or organisations.
You have been involved in these Romanian-Bulgarian relations for many years. How is the mentality aspect evolving? So how do people’s attitudes evolve, their interest or perspective towards each other, towards dealing with each other and towards the people themselves?
I think the emphasis should be on the fact that they are evolving. Not how, but how much I think would be the question. I say things are working well. I’ve always said that to be able to do business you have to trust the other and to be able to trust the other you have to be able to communicate with the other and know the other. Those are the two things, the two most important things to be able to communicate and know.
If still at the level of language differences we have inherent problems because of the difference between Bulgarian and Romanian at the level of knowledge I think things are starting to look better and better. The number of Romanian tourists in Bulgaria – before we talk about the economic area, we are talking about the area of ordinary people travelling for holidays or simply for weekends – and that number is growing. The number of Romanian tourists passing through Bulgaria on their way to Greece, Turkey or other destinations for summer holidays is increasing. I saw a statistic. I think last year there were almost 4 million Romanians transiting through Bulgaria and what I think is very important is that the number of Bulgarian tourists in Romania is also increasing and that makes things better and better in terms of people-to-people relations. And if you ever have the curiosity to look at travel websites or hotel booking websites you will see from the comments of both Romanian and Bulgarian tourists that they are amazed at how good they can feel in the other country. And that to me is proof that we are on the right track. Once you get to know the country and start to appreciate it, you will be able to think about doing business in that country or with the people who come from that country. Moreover we are trying at the BCCBR level somehow to help the business area a bit to create a system this year. Yes, maybe we’ll talk a little bit later about our plans to identify those companies that really add value between the two markets and somehow give a greater sense of confidence to partners when these companies come into contact with them.
And tell me about your plans for the year that is just starting. What are your plans and outlook for economic relations in the near future?
Fortunately for us we are already putting plans in motion. A month ago we were planning to do these events in Bulgaria. Now they are already a reality, we have these events. We have done two events and we have eight more in Bulgaria to present Romania and the Romanian market. As I told you, we are already organising concrete events for the month of May to present Bulgarian production companies in direct contact with Romanian distributors. As I was saying, we have a plan to identify those companies that bring added value or have a concrete commercial relationship between the two countries and to somehow give recognition to these companies at the Chamber level. And I will tell you where this idea comes from.
We have seen that we currently have 3,000 companies with Bulgarian capital registered in Romania. We have two thousand or so companies with Romanian capital registered in Bulgaria but unfortunately nobody – both state authorities and other institutions – can say whether these companies are working in the Romania-Bulgaria relationship or are simply registered and waiting for something, we don’t know what. So our aim is to be able to identify these companies, to see what is their added value from an economic point of view in the two markets and somehow give them recognition.
We thought we would create a document, let’s call it a certificate, that the chamber could make available to those companies that are interested. This certificate should give a higher level of confidence to these companies when they come into contact with partners across the Danube. So when we talk about Bulgarian companies going to Romania, the presentation of this certificate should somehow give a higher level of confidence on the Romanian side and vice versa on the Bulgarian side. Somehow the Bilateral Chamber of Commerce certifies, somehow guarantees, that the companies that are members or partners of the Chamber are companies that do things properly when we discuss business. At the level of plans we can also discuss online. Online sales that have grown a lot will not be able to be relevant at least in the short term or for certain products. We are thinking of creating a platform at the level of the Chamber of Commerce to somehow introduce to the market of the two countries the companies that are interested in internationalizing their business in order to find partners easier in Romania and Bulgaria. And probably by September we will have a few more things to discuss but at the moment we are quite busy with current activities.
We will close the discussion with a formula for trust between Romanians and Bulgarians. What would be the key to gaining or reaching trust, in short?
I think that trust both at business and personal level comes in Romania and Bulgaria from knowledge and recommendation. Both countries have this concept where recommendation is very very important. It’s probably one of the things that comes from our Eastern experience. Because we are in the middle between East and West and we have taken good things and not so good things from both East and West. The recommendation which is one of the most important things that you find when you want to do business in the east of the world versus the European Union has also imposed itself in our area and I think the recommendation is very very important. I think that this is one of the main advantages that we at the level of the bilateral Chamber can offer to companies to guarantee in a way for them and then this guarantee is the one that comes to give the first step in the relationship between two companies. Someone guarantees for company X.
Foto: Doru Dragomir (source: Doru Dragomir)
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I enjoyed this discussion – but hadn’t expected to. A Romanian educated at a US university smacks of privilege but this was a remarkably grounded interview which compared well with the rhetorical crap we get from politicians. I know so well the Bulgarian towns he visited – with their art galleries and wineries (!!)
And thereby hangs somewhere a lesson. We’re right to be cynical of the smooth rhetoric of both businessmen and politicians in the region – but business/people who have a commitment to their employees and communities are worth listening to