Creative Industries Bulgaria

Population: 7,101,510 (July 2017 est.)
Capital: Sofia
Internet country code: .bg

Flag Bulgaria | Creative Industries BulgariaFlag description:
three equal horizontal bands of white (top), green, and red; the pan-Slavic white-blue-red colors were modified by substituting a green band (representing freedom) for the blue the national emblem, formerly on the hoist side of the white stripe, has been removed
note: the national emblem, formerly on the hoist side of the white stripe, has been removed

Government:
Official website: government.bg
Official Tourism Portal of Bulgaria: bulgariatravel.org

Republic of Bulgaria / Република България / Republika Bǎlgarija

The Bulgars, a Central Asian Turkic tribe, merged with the local Slavic inhabitants in the late 7th century to form the first Bulgarian state. In succeeding centuries, Bulgaria struggled with the Byzantine Empire to assert its place in the Balkans, but by the end of the 14th century the country was overrun by the Ottoman Turks. Northern Bulgaria attained autonomy in 1878 and all of Bulgaria became independent from the Ottoman Empire in 1908. Having fought on the losing side in both World Wars, Bulgaria fell within the Soviet sphere of influence and became a People’s Republic in 1946. Communist domination ended in 1990, when Bulgaria held its first multiparty election since World War II and began the contentious process of moving toward political democracy and a market economy while combating inflation, unemployment, corruption, and crime. The country joined NATO in 2004 and the EU in 2007.

Economy

Bulgaria, a former communist country that entered the EU in 2007, has an open economy that historically has demonstrated strong growth, but its per-capita income remains the lowest among EU members and its reliance on energy imports and foreign demand for its exports makes its growth sensitive to external market conditions.

The government undertook significant structural economic reforms in the 1990s to move the economy from a centralized, planned economy to a more liberal, market-driven economy. These reforms included privatization of state-owned enterprises, liberalization of trade, and strengthening of the tax system – changes that initially caused some economic hardships but later helped to attract investment, spur growth, and make gradual improvements to living conditions. From 2000 through 2008, Bulgaria maintained robust, average annual real GDP growth in excess of 6%, which was followed by a deep recession in 2009 as the financial crisis caused domestic demand, exports, capital inflows and industrial production to contract, prompting the government to rein in spending. Real GDP growth remained slow – less than 2% annually – until 2015, when demand from EU countries for Bulgarian exports, plus an inflow of EU development funds, boosted growth to more than 3%. In recent years, strong domestic demand combined with low international energy prices have contributed to Bulgaria’s economic growth approaching 4% and have also helped to ease inflation. Bulgaria’s prudent public financial management contributed to budget surpluses both in 2016 and 2017.

Bulgaria is heavily reliant on energy imports from Russia, a potential vulnerability, and is a participant in EU-backed efforts to diversify regional natural gas supplies. In late 2016, the Bulgarian Government provided funding to Bulgaria’s National Electric Company to cover the $695 million compensation owed to Russian nuclear equipment manufacturer Atomstroyexport for the cancellation of the Belene Nuclear Power Plant project, which the Bulgarian Government terminated in 2012. As of early 2018, the government was floating the possibility of resurrecting the Belene project. The natural gas market, dominated by state-owned Bulgargaz, is also almost entirely supplied by Russia. Infrastructure projects such as the Inter-Connector Greece-Bulgaria and Inter-Connector Bulgaria-Serbia, which would enable Bulgaria to have access to non-Russian gas, have either stalled or made limited progress. In 2016, the Bulgarian Government established the State eGovernment Agency. This new agency is responsible for the electronic governance, coordinating national policies with the EU, and strengthening cybersecurity.

Despite a favorable investment regime, including low, flat corporate income taxes, significant challenges remain. Corruption in public administration, a weak judiciary, low productivity, lack of transparency in public procurements, and the presence of organized crime continue to hamper the country’s investment climate and economic prospects.

Textile and Clothing Sector Market Trends

In the coming years, European retailers will be forced to import the majority of large order, commodity clothing from Asia in order to remain competitive. But remaining competitive for these firms will also mean reducing opportunity costs of lost sales resulting from mid-season stock- outs, particularly for higher quality items. Asia, due to its slow delivery and inability to ship in small quantities, will not be an option for retailers and buyers to respond quickly to unexpected fluctuations in demand. European retailers must look closer to home for these solutions.

Bulgaria is Europe’s quick response solution. Bulgarian firms are rapidly developing the internal capabilities to manage all aspects of their supply chains to European partners, including sourcing, design, transport/logistics and own branding. These capabilities, combined with Bulgaria’s strategically favourable location, make working with Bulgaria a critical and valuable component to your company’s strategy.

The predominant part of the companies is export orientated. Bulgarian textile companies have specialized in the production of high quality apparel in relatively small series.

The Bulgarian fashion industry has experienced positive developments during the years before the economic crisis – constant increase in production, winners at design competitions, awards and distinctions at prestigious foreign forums and participation in fashion weeks in the world capitals of style. The industry has experienced low production levels in 2009 however the years after are of stabilization.

Presently, Bulgaria is Europe’s most resilient market for the production of apparel. The local companies are developing their production taking into consideration specific niches of international markets where demand is characterised with preference to smaller series of apparel products with a complex design. At the same time, Bulgarian companies are heading towards mid and upper-mid price segments of the
European confection market. These are the positions that the Bulgarian apparel producers are targeting and expect to explore further in the years to come.

One of the major advantages of Bulgarian apparel and textile producers is the ability to make fast deliveries to the European market. Compared to the industry in China and India, Bulgarian companies are able to respond in a shorter time frame to unexpected fluctuations in the demand. Moreover Bulgarian textile producers have already specialized in production of high quality products, implementing orders for famous international brands, which give them advantage in this segment of the world textile market.
Source: The Danish Trade Council in Bulgaria