Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
U.S. companies seeking to distribute and sell their goods will find a considerable number of merchants, agents, middlemen, wholesalers, and retailers available in North Macedonia. Most of the typical distribution channels are available, although they often lack the sophistication found in EU markets.
Since North Macedonia is a land-locked country, sea fright arrives primarily from the port of Thessaloniki in Greece, and less frequently from the ports in Piraeus (Greece) and Durres (Albania). Air freight arrives at one of North Macedonia’s two airports in Skopje and Ohrid. Information about cargo operations at Skopje’s airport can be found at http://skp.airports.com.mk/default.aspx?ItemID=487. Goods also arrive overland mostly by truck and more rarely by rail.
Most consumer goods are imported by distributors who resell to retailers. A few retailers import goods directly for sale in their own outlets.
North Macedonia’s retail sector is dominated by small shops. There are a few shopping malls in North Macedonia, including Skopje City Mall opened in 2012, and East Gate Mall, which opened in 2021.
Two large foreign supermarket chains are present in the market: Vero (part of the Greek Veropoulos Group) and Turkish Ramstore. Germany supermarket chain Lidl is also in the process of establishing operations in the country. Local grocery retailers include Tinex, Kam Market, and Kipper Market.
Using an Agent or Distributor
Use of an agent or distributor is not legally required. When doing business in North Macedonia with agents and distributors, U.S. companies are strongly encouraged to identify reliable, vetted, and proven individuals. Typically, one agent or distributor can cover the entire country effectively. Because of the relatively small size of North Macedonia, potential partners may want to cover other countries in the region.
U.S. companies can consult business associations such as the American Chamber of Commerce (AmCham) in North Macedonia for advice on identifying a trustworthy agent or distributor.
Establishing an Office
U.S. companies wishing to establish a presence in North Macedonia have several options. The Trading Company Law authorizes local and foreign individuals or companies to establish the following types of business entities: general partnership (JTD), limited partnership (KD), limited liability company (DOO or DOOEL), joint-stock company (AD), limited partnership by shares (KDA), and sole proprietorship (TP). In addition, foreign-domiciled companies and foreign sole proprietors can open branch offices.
The Central Registry registers new local companies and branch offices of foreign companies. It has a single window (one-stop-shop) system, simplifying the process of establishing business entities.
A foreign company may also establish a representative office to conduct market research and gather information by registering with the Central Registry. A representative office is not a legal entity in North Macedonia and may not carry out commercial activities.
It is highly advisable to work with a reputable local business consultant, attorney, and accountant.
Go to the State Department’s Investment Climate Statements website for information on investment and business environments in foreign economies pertinent to establishing and operating an office and to hiring employees.
Franchising is legally permitted but continues to be a relatively unexploited concept in North Macedonia. Several international franchises are present, especially in the retail, hotel, and food and beverage sectors. Given North Macedonia’s small size, investors may wish to buy franchise licenses for several markets in the region and not just for North Macedonia.
Direct marketing is not well developed in North Macedonia. Facebook advertising is the most successful channel; techniques such as direct mail, telemarketing, and television sales are less popular. Home demonstrations and door-to-door sales are not used; however, Avon has reported success with direct sales.
Direct marketing and sales from the United States to North Macedonia is still quite difficult due to North Macedonia’s low purchasing power, the high cost of shipping, and lack of security for packages. Citizens in North Macedonia still prefer to pay with cash; debit and credit card usage is growing yet lags behind other European countries. North Macedonia is behind in access to electronic payment systems and innovative payment solutions.
North Macedonia’s Law on Personal Data Protection requires that customers be given the opportunity to object to processing their personal details and to opt-out of having their personal data used for direct marketing purposes.
North Macedonia permits but does not require joint ventures. Joint ventures, including between foreign and local investors, are increasingly common. Joint ventures are subject to the provisions of Law on Protection of Competition, which regulates the concentration of economic activity.
Licensing is not widely used in North Macedonia outside of the pharmaceutical industry.
Major express delivery service providers, such as FedEx, UPS, DHL, and EMS (operated by Post of North Macedonia) serve North Macedonia. Express shipping from large U.S. cities generally takes from three or four business days (FedEx, UPS, and DHL) to a week (EMS).
International postal traffic is subject to customs supervision in accordance with local customs and postal laws and international postal regulations. Customs procedures are sometimes unduly burdensome. Goods that pass through customs are released only after required duties are paid. Currently, the de minimis threshold for goods that pass through customs is about 1,350 denars (per National Bank of the Republic of North Macedonia [NBRNM – the Central Bank] June 2022 average exchange rate: US$23.00).
Few companies in North Macedonia have Dunn & Bradstreet or other internationally recognized business ratings. There are some credit rating agencies in the country. The best source of in-depth analysis of a business partner in North Macedonia is through one of the professional associations listed under Principal Business Associations. This should not be considered an exhaustive list. U.S. companies selling to companies in North Macedonia for the first time should consider using instruments such as irrevocable letters of credit until a solid relationship of mutual trust is established. Contract enforcement and court judgments remain slow. Collecting delinquent payments from customers in North Macedonia is difficult and expensive due to complex collection processes and the overloaded court system.
U.S. companies can also find assistance in appropriate due diligence by visiting Perform Due Diligence (https://www.trade.gov/perform-due-diligence) or by working with a U.S. embassy to prepare an International Company Profile (ICP) background report on a specific foreign company.