Can you give us some background information about the history of your company?
The company is the oldest existing private company in Bulgaria. It was established in 1894 by my great grandfather. It was a trading company, one of the most important trading companies in the country, with lands, factories, and so on. That was before the war. Then it was completely nationalized in '47, all our belongings were nationalized by the communist power. My grandfather died in '67 and in '89 we reactivated the company with my father. It is still a 100% family company, owned by the members of the family. So we started in '89 with $3 000, importing the foreign press in Bulgaria. Before that the communist regime did not allow free distribution of foreign press. Then we immediately, very quickly, started also other activities, following the market and we have always followed the potentials of the market since then. We have always been the first. We were the first to break the monopoly of the state-owned company for distribution of gas, oil and gasoline in Bulgaria, starting the import of gas and gasoline and creating the first private gas stations in the country. This is an activity we are still holding, having a network of gas stations at the border points of the country. There we are selling the product on a duty-free basis mainly to trucks leaving the country, which is very profitable and makes our product the cheapest on the road between London and Calcutta, at the borders of Turkey, Romania and Yugoslavia. Then we also started importing foreign cars to Bulgaria in '91. We were the importer of Peugeot for several years. Around '95 we decided it was the right time to go and invest in the industry of the country, so we have been interested in the privatization process and invested in the industry. We bought and are now holding 96% of the only factory producing refrigerating compressors and refrigerators. We are investing and developing the industry.
Of course, we are participating in other sectors, like the financial sector servicing parts of the foreign debt or debt of different countries to Bulgaria. We have been also the first company, which was allowed by the Section's Committee of the United Nations to export crude oil from Iraq for the several stages of the Memorandum of Understanding between UN and the Iraqi government. It is something we stopped when the market began switching up and down. So we are still involved in different activities inside and outside the country.
How many people work in your Group?
We have around 600 people in 6 companies
How do you see the future of Mraz with the amount of foreign investments coming to your country?
Well, it's very good. We have Liebherr - the world's biggest producer of refrigerators - invested in Bulgaria. They built a factory near Plovdiv but this doesn't bother us because the market is open, the market needs refrigerators and there is a place for both of us. And if someone else would want to come, let him come and check the situation here. But we are very strong in another field - we are one of the very few factories in Europe producing refrigerating compressors from 1/3 to 2 horsepowers. This factory was the only one in the Warsaw Pact countries allowed to produce and distribute compressors among these countries. We have produced more than 3 million compressors sold in the ex-Soviet Union and in the countries of the former Warsaw Pact. We are still keeping the market. The technology is up to date. It was upgraded about 2 years ago with substantial support of the World Bank and a lot of efforts. We have invested a lot of money and were very much helped by the World Bank to upgrade the technology of our compressors. So we are able now to sell worldwide. We have very good markets in the Middle East, in the Far East, Russia and the republics of the ex-Soviet Union, as well as in the countries of South-East Europe. We have a very good market for our refrigerators especially among the countries of the EU and we have been selling to several of these countries for several years. Our main markets are Germany, Greece, Belgium, Netherlands, France, and of course there is a good potential to develop these markets. We are also looking at the American market with a lot of interest. Among the new products we are developing nowadays are the mini-bar refrigerators for hotels, which are absolutely noiseless. This is a product that has been upgraded this year to reach the 5 star world hotels' standards. This allows the consumer to take a bottle of beer or coke from the refrigerator and his bill at the reception is immediately upgraded with $3.5. This is done through a software system and a system of sensors inside the refrigerator. Immediately, when you take your cold beer, you don't have to go to the reception and declare there is one beer less in your refrigerator - they already know it. We know our competitors on the American market and we think we are in a very good position because of the trade agreements between Bulgaria and the US and because of the competitiveness of this product. It is small in size and the transportation costs are very low. So we can reach Oakland for $7 per unit, which is very good. We have different markets. Of course, it is not easy to keep them and to develop them but that's my job.
You are one of the founders of the Bulgarian Employers' Association. What is the philosophy behind it?
The Bulgarian Employers' Association was born when private capital became rather important in Bulgaria, when the growth of private companies was rather substantial. Meeting with each other one day we decided it was the right time to create an association, which will defend our interests, which will present our position concerning government policy and all questions that are interesting and important for us; the main idea is to defend the interests of the members of the Association and we think we are doing this pretty well till now.The Association was born only 1.5 years ago. Its members are the most important private Bulgarian companies and their total turnover for the last year was exceeding $2.3 billion. At the moment, we have the most important private Bulgarian companies like Lukoil, Neftochim, Kremikovtzi, all big pharmaceutical companies like Balkanphara, Sopharma and other private factories. You can be a member of the Association if you are a private company and if you have more than 100 employees, which in our standards is considered a big company, unlike American or European standards, where a company with 100 people is considered medium-sized. Of course, we also have several international companies that are members of our Association and we do not make a difference between Bulgarian capital, foreign capital, or mixed capital. Among our members are Pricewaterhouse Coopers and their branch in Bulgaria or other subsidiaries of international companies, or pure Bulgarian companies created entirely with Bulgarian capital.
Do you think they can develop the economy by themselves or do they need foreign investors as well?
Of course we need foreign investors and I want to stress that especially we, the members of our Association, are looking for foreign investors in order to upgrade our level. We need those investors to create joint ventures, to use the new technology and develop the potential of our companies to participate in the globalization process, to work better in better marketing conditions worldwide.
We are saying it is easier to invest in our companies
because the dirty job has already been done. You
know in ex-communist countries it was not easy to
participate in privatization because there was a
lot of corruption, a lot of bureaucratic obstacles,
which were not very desirable to attract foreign
investors. We have removed all these obstacles.
The companies are here, they are clean, you don't
need to pay bribes to anyone, and you don't need
to overcome bureaucratic obstacles. And it is not
only in our companies. We should say we are creating
conditions and helping the government to attract
more and more foreign investments because this is
the way economy in general and we in particular
will be helped. |
Don't you think there should be more incentives for Bulgarian companies than for foreign investors?
No, there should be no difference between Bulgarian and foreign. They are all investors. Their money is the same throughout the world. If $5 million are looking for a good investment opportunity, it doesn't matter if they are with western origin or Bulgarian origin, or British origin, or New Zealand origin - they are $5 million. No distinction should be made for the capital. But the conditions should be so attractive and good to take the attention of the foreign capital and suggest opportunities. And I think the country has a great potential, which has not been developed yet: in industry, in agriculture, in the service sector, in particular - the tourist sector.
Do you foresee any difficulty for Bulgarian companies to access the EU?
No. We can say that we are already partly in the European Union because we are free to export to the EU. The most important part of the government program is to create the real conditions in order to make the country attractive in those different fields. We are speaking about one of the niches in the world market, which has not been used so far by Bulgaria - production and trade with organic food products. You can find a market everywhere - in the US, Europe, Canada or Japan. At the same time in Bulgaria you have, if not the only one, one of the very few countries in Europe where you can find industrial proportions of land capable of producing organic food. For so many years the peasants and farmers have been so poor that they have not been able to buy fertilizers. And when you are using fertilizers and stop using them, the period for cleaning the land is 10 years in order to be able to produce organic food. So, this is an important issue in the European market.
We can export organic food with no limits, no quotas, no objections; we just need to produce it. And in order to make industrial production, we need important foreign partners and investors. So, we do not have obstacles. If we do, we are asking the government to remove them in the negotiations with the EU and they do that. As close as we go to the EU, some of the sectors that are not competitive, of course will suffer. But the most competitive sectors will win; will feel better from the association. For instance, the sector of refrigerators: the production of refrigerators in the EU is moving east because of different reasons. France has no more factories producing refrigerators. This is not trouble. France is producing a lot of nice things; French technology is so upgraded that they can afford not to produce a simple product like a refrigerator. They are producing other things. And we are producing the refrigerators. So are Poland, Romania, and Ukraine. And we are exporting to Europe more and more. This is one example how parts of Bulgarian economy will be involved in the European integration if not globalization.
You were talking about this interesting organic food market that has not been developed yet. Is that a challenge for your company?
We have been working for several years on this project, but now with the mad cow disease and so on this is becoming a really sensitive issue and a really hot market. Because more and more people are abstaining from industrially produced food and switching to organically grown, the market is growing, the prices are going up and there is no potential to produce real organic food. For example, in France only 2% of the land is capable of producing organic food. In Sweden the percentage is 15 and in Bulgaria it is over 50%. According to some estimates it is 80% but probably the most reasonable figure is 55%. So we are working to help the government policy in this field and to attract foreign investors. We have been discussing with the Prime Minister this particular subject, and I know how interested he is in developing that because it might be one of the new faces of Bulgaria - exporting organic food, and not only food but also all products related to that.
You are the manager of an important company, do you think you have a social responsibility?
I doubt you will find anyone in Bulgaria running a factory or a big company who will decline having a social responsibility. Of course, in the 21st century it is a must and you should feel this social responsibility, it is a heavy burden but it should be supported. We think Bulgaria is suffering from the real lack of market, in the real sense of labor. But we are working in order to make the labor market according to European and American standards. It is not yet a real market in the proper sense of the word. But we hope it will become and this is a part of our social responsibility.
We are looking much more forward on the social responsibility of companies, considering them on a national level. Of course, each one of us is working on his own level. For us, as an Association, it is most important to create the necessary conditions for social dialogue to be developed on a national level and to help this social dialogue in companies, to help employees and employers to develop this dialogue. Because only the employees and the employers of different companies know better what the problems are in their companies from the point of view of the management, from social point of view. If they discuss them, they will remove the obstacles. The dialogue is necessary.
How did you switch from journalism to business?
It is not so difficult because as a journalist I was like a politician. In business what I think is most important is the will to develop social contacts. And then you are getting information. The way you are using this information makes you a journalist, a politician or a businessman. I have used what I've learnt from journalism, what I know from the 15 years when I have been involved in that line of work, and I am still interested in it. But in another way, not in the business way - in the way that free press has developed in the years. I'm sure that free press is one of the essential pillars of a free market economy and free democratic society. Because without free press the road to the EU will be much more difficult, the road to reaching the social standards, economic development and all fields which we need to develop, the role of the free press is very essential. Especially private business has been very much helped by the existence of free private press.
So, is your next step to become a politician?
I'm not considering this possibility for the moment. My ambition is to develop the role of the Employers' Association, to stress the importance of private capital for the government and the country itself and to develop my own factory. You never know where the road goes, but I'm not considering this particular possibility.
What would be your final message to our readers?
We really believe that Bulgaria is one of the most interesting countries for foreign capital to be invested in. It is one of the most interesting not just in Europe. We have a very good strategic position, we can offer a lot of things, which might be interesting for foreign investors, and we can create such an atmosphere and environment where any foreign businessman will feel at home to develop their business. Particularly, we believe that American investments are very welcome here. The experience with American investments is very good for the country and, we believe, for them as well. Their importance is growing and there is much, much potential for their investments in Bulgaria. The country is friendly, people are friendly, while conditions are not yet as friendly as we want them to be. But when we reach this goal, American investors will really discover Bulgaria and will come the way Bulgaria deserves.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
