Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc
Some of Bulgaria’s large hypermarkets and supermarket chains are merging, new entities are being rebranded, others are closing down, and a few others are opening new outlets.
There are approximately 90 shopping malls in Bulgaria. See Http://gutenberg.us/articles/list_of_shopping_malls_in_bulgaria
Bulgaria’s distribution channels include these sectors and brands:
- Grocery-store hypermarkets:
- Kaufland: 58 stores
- Lidl: 108 stores
- Billa: 122 stores
- METRO Cash & Carry: 11 stores
- T-market: 74 stores
- Hit: 2 stores
- ProMarket: 22 stores
- Plus (acquired by Lidl) 23 stores
- CBA: 136
- Dar: 5
- DIY hypermarkets:
- Praktiker: 11 stores
- Mr. Bricolage: 11 stores
- Bauhaus: 9 stores (acqured by BauMax)
- Local food supermarket chains:
- Fantastico: 41 stores
- 345 chain: 16 stores
- Consumer electronics hypermarkets:
- Technomarket: 45 stores
- Technopolis: 33 stores
- Zora: 37 stores
- Furniture and household goods hypermarkets:
- Aiko: 5 stores
- Como: 1 store
- Other retailers include:
- Decathlon: 5 stores
- ProMarket: 21 stores
- Densi: 2 stores in Sofia, 1 in Veliko Turnovo, 1 in Elena
Using an Agent to Sell US Products and Services
Large U.S. companies and U.S. SMEs alike are strongly encouraged to identify a reliable, vetted and proven agent or distributor when doing business in Bulgaria.
the Bulgarian Chamber of Commerce and Industry (https://www.bcci.bg/english) and many other industrial associations that can be resources.
As most EU regulations and legislation apply in Bulgaria, additional information can be found in the European Union’s Commercial Guide developed by the U.S. Mission to the EU.
Establishing an Office
A representative office is not a legal entity in Bulgaria and may not carry out commercial activities. However, a company can establish a representative office for performing sales promotions, exhibitions, demonstrations, training, and advertising products by registering with the Bulgarian Chamber of Commerce and Industry (BCCI). See https://www.bcci.bg/english/
Тhe representative office of a foreign company must register in the BULSTAT within seven days of registering with the BCCI. The representative office receives the funds for its maintenance from the foreign entity but cannot make a profit nor have its own revenue.
For a representative office to be registered with the BCCI, it is necessary that the legal representative of the foreign entity personally or explicitly authorized by a notarized power of attorney from the entity to apply for registration and to provide the necessary documentation.
- A branch of a foreign entity can be registered in Bulgaria as:
- a limited liability company called an ‘OOD’ which is popular with foreign investors, or,
- a one-person owned limited liability company called an ‘EOOD’
- Bulgaria operates under the Law on Encouragement of Investments which has the following key elements:
- defines an office’s activities
- defines various forms of economic associations and regulates their foundation, organization, and termination
- offers advantages for foreign and local investments, which are determined depending on the investment amount, i.e. Class A, Class B and Class C (Class C is only for municipalities)
- identifies priority investment projects, and
- offers new amendments designed to ease procedures for obtaining a certificate for investment (anticipated soon).
- Recent amendments encourage investments and identify categories of aid compatible with the market.
To learn more, access Bulgaria’s ICS, visit the U.S. Department of State Investment Climate Statement website.
The first international franchisors, Sheraton Hotel (currently Sofia Hotel Balkan), Hertz, Novotel and Coca-Cola, appeared in Bulgaria over 40 years ago during the communist era. While the total number of international and domestic franchise units increased in recent years, the Bulgarian market for international franchises still offers many opportunities in multiple sectors. Spurred by an increase in disposable income and growth of the middle-class lifestyle, as well as the increasingly Western orientated taste of the consumer, Bulgarians recognize, embrace and want more “western” franchises.
This emerging market is ripe for franchises as Bulgarian consumers seek retailers that can provide a consistent selection of quality products, reasonable prices, and good service. Bulgarian entrepreneurs are eager to obtain marketing and management expertise. Currently, there are no franchise laws or specific regulations pertaining to this business model and no specific registration or government approval is required to establish a franchise enterprise.
Many U.S. fast-food franchises operate in all of Bulgaria’s major cities, dominated by such iconic franchise brands as Domino’s Pizza, KFC, and Burger King, to name a few. Domino’s Pizza entered Bulgaria in 2010 and has expanded its business to 25 dine-in and takeaway restaurants in 3 major cities, where McDonalds’s has 42 restaurants in 9 cities throughout Bulgaria.
The best sub-sector prospects for U.S. franchise include the following:
- Senior care and services
- Dine in and Takeaway Restaurants
- Coffee shops
- Lodging (hotels, motels, and chalets)
- Laundry and dry-cleaning
- Hotel management
- Real estate brokerage
- Nutrition and supplement industry products
- Employment/educational/training services
- Cosmetics services and brands.
Good franchise opportunities also exist for: convenience stores, ice cream/yogurt stores, hardware stores, marketing/public relations agencies, specialty retail stores, supermarket chains, commercial and residential cleaning entities, baked foods, hair/nail care salons, as well as candy and snack establishments.
Direct marketing through catalogs, telemarketing and the Internet from the U.S. to Bulgaria is relatively underdeveloped, and difficult due to Bulgaria’s low purchasing power, the high cost of shipping, and the lack of security for packages. Bulgarians use debit and credit cards, but cash is still more prevalent than in other EU countries.
- Some Central European companies offer direct marketing of U.S. products in Bulgaria, and use television home shopping “infomercials” to sell kitchen tools and fitness equipment not available in local shops
- Home demonstrations are not popular and have generated little success; however, Avon and Oriflame (Swedish) have gained traction with the direct sale of cosmetics.
- For EU regulations and legislation on direct marketing, please see:
Joint Ventures (JVs)/Licensing
U.S. enterprises can establish their own companies or invest in existing companies:
JVs with state-owned companies (wholly owned by the Bulgarian State), must be approved by the Council of Ministers or by the relevant Minister
JVs are evaluated for their existing assets and the contribution the foreign partner will provide either in cash, long-term assets (i.e. existing equipment and facilities), and/or in-kind
JVs with private companies do not require government involvement or approval. After negotiations are complete the new legal entity must register with the Commercial Registry. JVs are subject to the provisions of Law on Protection of Competition, which regulates the concentration of economic activity.
Bulgaria has a robust express delivery system dominated by numerous domestic, U.s, and European express delivery companie. The major companies are”
Flying Cargo Bulgaria Ltd. (FedEx Authorized Contractor): http://flyingcargo-bg.com/
Using experienced and well-known delivery services is important to make sure packages make it safely to their final destination. Receiving deliveries from the USA, one must pay a 20 percent VAT, and if the item is more expensive than EUR 150, an additional duty is charged. Sometimes postal costs are also added to the final sum. Any technical equipment, such as computers, tablets, and smartphones, is exempt from duty regardless of the value. For alcoholic products, perfumes, toilet waters, as well as tobacco products, regardless of the price, both VAT and a duty have to be paid. In the case of parcels from a non-commercial individual, such as a gift from a relative, a duty and VAT is not owed if the shipment is worth less than EUR 45.
Sofia’s U.S. Commercial Service/Foreign Commercial Service office strongly recommends that all U.S. companies acquire a recent due-diligence report on potential partners. The Commercial Service Sofia offers the International Company Profile (ICP) service, a 10-15-page, fee-based report that evaluates potential business partners. The due diligence report includes answers to nine questions, an interview and photos of the executives and office of the potential Bulgarian company. See Let Our Experts Help (trade.gov)
Additional local due diligence sources and services include:
Credit Reform Bulgaria. See http://www.creditreform.bg/en/index
DAXY provides information on official court and tax documents, address registration for Bulgarian companies, major shareholders, balance sheets, direct and indirect connections between and among managers and other Bulgarian companies and other public information
Dun and Bradstreet is utilized, more and more, by Bulgarian companies. See https://www.dnb.com/
Bulgaria’s Special Administrative Directorate Financial Intelligence (SADFI) receives, saves, examines, analyses and discloses to law enforcement bodies information connected with the suspicion of money laundering or the financing of terrorist activities.
A Bulgarian company’s financial situation can be reviewed at the Ministry of Justice Commercial Register’s site: https://www.registryagency.bg/bg/.