Exporting to Serbia

Serbia is a state in the Balkans that is not part of the European Union, although it has been a candidate for membership for many years.

A significant part of the country's population and business community maintains its loyalty to Russian products and everything Russian in general. Is it really that simple to work with Serbia and export your products there? This and more are briefly covered in the article.

Trade Relations between Russia and Serbia

As is known, the Russian Federation and the Republic of Serbia do not share a common border. If using land transport, one must cross the borders of several countries, including those that are part of the European Union. Serbia also has no access to the sea, although a multimodal route involving sea transport could theoretically bypass the Eurozone via Montenegro. Also, under the existing agreement on the status of the Danube (a free zone for trade and civilian vessels), Serbia has access to the Black Sea via this river artery. The only direct logistical channel is air transport; however, its use is limited not only by traditional constraints related to high cost and a restricted list of goods for transport but also by the small number of flights between Russia and Serbia since March of this year.

At the same time, the noted logistical nuances, while complicating trade between our countries, do not represent an insurmountable barrier.

Thus, according to 2021 data, Russia is the fourth country in the list of exporters to Serbia. In total, last year Serbia imported goods worth 33.8 billion US dollars. The TOP-5 exporting countries included Germany – 4.5 billion USD, China – 4.3 billion USD, Italy – 2.7 billion USD, Russia – 1.8 billion USD, and Turkey – 1.7 billion USD.

Serbia's trade balance with the Russian Federation is negative and amounts to -0.8 billion USD, meaning the flow of goods from Serbia to Russia can be estimated at around 1 billion USD.

What goods does Serbia mainly import from Russia?

Half of all import volume, as expected, consists of fuel and energy resources, which are practically absent in the country (except for coal) and are therefore purchased on the external market.

The second item of Russian exports to Serbia is fertilizers (151 million USD), among which complex (70 million USD) and nitrogenous (65 million USD) fertilizers predominate.

If we exclude the "secret" 99th group from consideration, the third place is held by products of the tobacco industry – 86 million USD. Despite the relatively small population, Serbia is a fairly large market for tobacco products, as a significant part of the population smokes, and in large quantities. This is impossible not to notice when visiting Serbia, especially evident in restaurants, which rarely prohibit smoking on their premises.

The fourth import item from Russia is iron ores and concentrates (77 million USD), imported for the needs of the local steel industry, whose products are mainly further exported to EU countries.

In fifth place are plastics and articles thereof (63 million USD), mainly primary forms of polymers of propylene, ethylene, carbonates, and styrene, as well as plates, sheets, and films.

Among other goods, one can note carbon compounds, turbines and boilers, various industrial equipment, synthetic rubber, electrical equipment, pharmaceutical products and dietary supplements, paper, cardboard, wood and wood articles, products made of ferrous metals and aluminum.

As we can see, Russia mainly exports industrial products to Serbia, i.e., intended for B2B markets. Although this does not at all exclude the demand for a wide range of mass consumption goods, among which tobacco products, pharmaceuticals, and a number of items in the meat and fat food products category, etc., stand out.

In the reverse direction, i.e., to Russia, different product categories flow.

The most capacious product group is fruits, berries, and nuts, including processed ones. The main type of fruit is apples; for berries, it's strawberries.

The second item is pumps and refrigeration equipment. The third category of Serbian exports is tires and inner tubes.

Other important product groups in the structure of Russian imports from Serbia include clothing, pharmaceutical products, paper and cardboard laminated or impregnated with plastic, polymer pipes, hoses and fittings, synthetic detergents, and dairy products.

The volumes of both direct and reciprocal goods flows to Serbia in recent years have been quite stable in gross figures, although for individual items, redistribution certainly occurs, including due to the entry of new players and the opening of promising niches for cooperation. Working in this direction implies a good knowledge of the Serbian market, which is not large enough to attempt entering it unprepared.

How to Conduct Marketing Research of the Serbian Market

The Republic of Serbia is a small country even by European standards. The state's population is 6.9 million people, ranking 106th in the world among all countries. The area of Serbia is also small – only 88.5 thousand km² (111th place in the world).

However, when conducting marketing research for various commodity markets, one must remember that within the country there are certain differences in socio-economic development between territories and specifics of settlement, uneven distribution of industrial facilities.

The main business activity is concentrated in the capital of Serbia – Belgrade. About 1.2 million people live there, meaning almost every fifth Serb. At the same time, there are other large cities in the country with consumption potential, primarily Novi Sad (approximately 250,000 people), located relatively close – 100 km north of the capital. Also worth mentioning are Niš (over 180,000 people), located in the southeast of the country, Kragujevac (over 150,000 people), located in the center of Serbia, about 100 km south of Belgrade, and Subotica (105,000 people) – almost on the border with Hungary (the center of the autonomous Vojvodina). In total, there are 29 cities in the country.

The income per capita in Serbia is at an average level, classifying the country's economy as developing. At the same time, Serbia has a very low birth rate (less than 1.5 children per woman), which causes negative demographic processes associated with an aging population and increased burden on the working-age part of society. Many young Serbs migrate to countries more attractive in terms of standard of living, primarily the Eurozone. In this regard, goods for the middle-aged and older population, for example, dietary supplements and pharmaceuticals, have better sales prospects in the medium and long term.

For companies focused on industrial markets, it will be important to know that Serbia has certain specialized industries that can become consumers of Russian goods.

Serbia has large reserves of coal, predominantly lignite, which is actively mined. It has little oil of its own, production is small, but the petrochemical sector is developed, as indicated by the aforementioned export of tires and inner tubes. The steel-rolling industry is of great importance, using both local raw materials and imported ones, including from Russia.

Serbia's specialization in agriculture and food production is widely known in Europe and Russia. The quality of food products in Serbia is very high, which is also due to strict regulatory production standards remaining from the times of Yugoslavia. At the same time, work on obtaining EU membership status has been ongoing for over ten years, so the local system of certification norms is being harmonized with the European one.

When searching for information about Serbian markets, several nuances should be kept in mind.

As a rule, companies just discovering Serbian markets and trying to collect some data on their own resort to internet browsing.

As in Russia, Serbia has national domains in both Latin and Cyrillic scripts. And although the Cyrillic domain (.срб) is much less popular than the Latin one (.rs), both should be considered when searching for information. At the same time, two alphabets and, accordingly, variants of text information display are used – in Cyrillic and Latin.

In general, the quality and level of website content among companies in Serbia is average. A certain amount of information can be gathered, but often this may not be enough, especially for B2B markets. Furthermore, usually, the website presents information only in Serbian. Although it has some similarity with Russian, reading Serbian without preparation is not possible. So, it will be necessary to correctly formulate search queries in Serbian, and then pass the found information to a linguist specialist, although for a superficial familiarization with the website's content, using automatic translation directly in the browser or using electronic translators might be sufficient.

Also, for conducting marketing research on Serbian markets, one can turn to state resources. They almost always duplicate information in English, which is convenient for Russian users. First and foremost, it is recommended to use the website of the Statistical Office of the Republic of Serbia (https://www.stat.gov.rs), which contains up-to-date statistically recorded information. The data structure has moved quite close to Eurostat registries, so for analysts who are well-versed in the European Statistical Bureau's website, there will be no major problems in finding information on this resource.

Nevertheless, for conducting marketing research on most commodity markets in Serbia, especially if we are talking about the B2B segment, it is unlikely possible to manage only with online sources. And the same retail sector in Serbia largely exists offline, as noted above, the country has a large share of an aging population with conservative habits and lifestyle. So, field research, as well as census tools, are no less relevant for Serbia than desk marketing, and sometimes are the only alternative formats for working with the market. Potential exporters must definitely take this into account.

If a company, for certain reasons, cannot conduct marketing research on its own, then it is advisable to turn to professionals on this matter. This can be either a Serbian organization or a Russian one, if it has experience and references of working with the Serbian market. Outsourcing marketing research services can also be assigned to individuals in the territory, but this may be associated with certain difficulties in payments, building communications, but, most importantly, will require the Russian client to have a certain level of market expertise to be able not only to correctly set tasks for the performers but also to control their implementation.

Business Communications with Serbian Businessmen

The success of export activities is impossible without correctly building the communication process with the local business community. And every country has its own specifics for conducting business negotiations. Of course, Serbian businessmen are quite close to Russian ones; after all, these are not negotiations with representatives of Japan or even Uzbekistan, but some points should be considered.

In Russia, people know about the high loyalty of Serbs to our country and everything Russian. This, to a large extent, corresponds to reality. The events of spring 2022 show this especially clearly, as Serbia remained the only country in Europe (if we don't count Turkey, which is territorially almost entirely in Asia) that maintained direct air communication with our state. Nevertheless, the youth in Serbia are increasingly turning towards Western Europe, especially people born after the events of 1999. They know English and even German much better and do not feel particular affection for Russians.

Therefore, loyalty is an important factor in the relations between the business communities of the two countries, but it cannot significantly determine the success of concluding a deal on good terms – one must make efforts independently and be oriented in local specifics. It is difficult to cover all of them within one article, but what should be mentioned first is the low speed of decision-making.

In Serbia, there is a concept or approach to doing business that a matter "must lie down" (treba da odleži), meaning decisions are not made quickly, let alone immediately. This must be considered in terms of time lags between certain actions and the results from them. The pace of life of Serbs is much lower than in Russia, especially outside Belgrade. Very few businessmen are ready to devote themselves entirely only to business matters – it is important to devote time to family, children, their hobbies, and friends. Therefore, a good aid in doing business with Serbs will be reducing the distance (taking into account European business etiquette norms) in communication, which is much easier to do in face-to-face communication.

This underscores the importance of visiting Serbia and communicating on-site. At the same time, remembering the low speed of decision-making, trips should be carefully prepared so that in the host country, it is not the first contact, nor even the second, but at least the third or fourth. Certainly, a basic commercial proposal should be sent to the potential partner in advance. This will increase the likelihood of concluding a deal and positively influence its terms for the Russian side.

To solve such issues, it may be advisable to visit exhibitions in the country, as well as participate in business missions. Regarding exhibition activities, they are not very developed in Serbia due to the country's small size. This path is suitable for companies from a limited set of industries. Another matter is business missions, which are actively organized, including with state support. By participating in them, one can both activate their own contacts with the Serbian side and use the connections and existing contact databases of the organizers of such events.

Finally, it is worth reminding that in the current conditions, Serbia is the only country in Europe that accepts Russian business. At the same time, for many years, Serbia has served as a transit corridor for Russian products to the countries of the Balkan Peninsula and Eastern Europe. This should also not be forgotten when choosing Serbia as a country for organizing export activities.