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Balkan companies see 'near-shoring' opportunity with global supply woes

Kitco News

SARAJEVO, May 12 (Reuters) - As supply chain disruptions caused by the COVID-19 pandemic, war in Ukraine and lockdowns in China hit Western European markets, Balkan companies are hoping to benefit from their close proximity and low labour costs.

Some businesses at a Sarajevo business forum devoted to "near-shoring" - partnerships closer to home as opposed to in markets thousands of miles away - said on Thursday interest from their European partners has been on rise in the past year.

German-owned company GS-TMT in the central Bosnian town of Travnik is opening a new plant to meet an increased demand for their mechanical parts and electric bikes from buyers in Germany and Austria.

The growth of the company, which employs 462 workers, fell 16% in 2020 during the coronavirus pandemic but rose 32% last year and is expected to rise another 42% in 2022, with revenues estimated at over 60 million Bosnian marka ($32.4 million), CEO Snjezana Kopruner told Reuters.

"A reason for the rise of our revenues is that we took over the production of part of goods that had been produced in China," Kopruner said.

A recent survey of German employers showed they considered the Western Balkan countries, including Albania, Bosnia, Kosovo, Montenegro, North Macedonia and Serbia, as desirable investment destinations due to low labour costs and taxes and geographical position, Sophia Kluge of the German-Serbian Chamber of Commerce said.

"The Western Balkans as a European region is as close as it can be," Kluge said.

She said German employers, while citing infrastructure, governance and political instability as challenges, have also stressed so-called "cultural proximity" and their positive experience with workers from the region.

"It was that gut feeling that was decisive for some to choose the region for their investment," she said.

Ekrem Turajlic, a director at Bosnia's largest pharmaceuticals company, Bosnalijek, which exports mainly to Russia, the Middle East and the Balkans, was also optimistic about expanding a network of European buyers.

"We are seeing definitely more interest from European clients to turn to suppliers who are nearer than Asia," Turajlic said.

Martin Grabe of Germany Trade & Invest said the Western Balkan countries were generally seen as stable but that they had to clearly choose the path they will take and whether they will work towards integration into the European Union.

(14 = 1.853 Bosnian marka)

Reporting by Daria Sito-Sucic; Editing by Alison Williams
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