EXPORT STRATEGY Manufacture of Chemical and Pharmaceutical ...€¦ · strategic and normative documents are taken into account, ... Share of products of chemical and pharmaceutical

R E P U B L I C O F B U L G A R I A

Bulgarian Small and Medium Enterprises

Promotion Agency

PROJECT BG161РО003 – 4.2.01-0001, “PROMOTION OF THE

INTERNATIONALIZATION OF THE BULGARIAN ENTERPRISES”

Проект № BG161РО003 – 4.2.01-0001, „НАСЪРЧАВАНЕ НА

ИНТЕРНАЦИОНАЛИЗАЦИЯТА НА БЪЛГАРСКИТЕ ПРЕДПРИЯТИЯ”

This project is financed by the European fund for regional development through

an Operational programme “Development of the competitiveness of the

Bulgarian economy” 2007 – 2013

Този проект е получил финансиране от Европейския фонд за регионално

развитие чрез Оперативна програма „Развитие на конкурентоспособността

на българската икономика” 2007 – 2013

EXPORT STRATEGY

Manufacture of Chemical and

Pharmaceutical Products

June 2012

2

LIST OF ABBREVIATIONS

EU European Union

BSMEPA Bulgarian Small and Medium Enterprises Promotion Agency

MAF Ministry of Agriculture and Food

MEET Ministry of Economy, Energy and Tourism

MRDPW Ministry of Regional Development and Public Works

CM Council of Ministers

SME Small and Medium Enterprises

ITC International Trade Centre

NCEA National Classification of Economic Activities

NSI National Statistical Institute

OP Operational Programme

OTEA Office of Trade and Economic Affairs

3

TABLE OF CONTENTS

INTRODUCTION ...................................................................................................................... 4

1. APPROACH FOR DEVELOIPING THE EXPORT STRATEGY .................................... 5

2. MAIN CONCLUSIONS FROM THE ANALYSIS OF THE CURRENT AFFAIRS ..... 11

3. SWOT AND LOED ANALYSES OF THE EXPORT PROCESS OF SMEs IN SECTOR

“MANUFACTURE OF CHEMICAL AND PHARMACEUTICAL PRODUCTS” ............... 32

4. OBJECTIVES ................................................................................................................... 35

5. STRATEGY TO PROMOTE EXPORT OF SMEs IN THE SECTOR ............................ 36

6. ACTION PLAN ................................................................................................................ 38

7. MONITORING AND CONTROL SYSTEM ................................................................... 48

4

INTRODUCTION

The export strategy of sector “Manufacture of chemical and pharmaceutical products” is

developed under Project № BG161РО003 – 4.2.01-0001 “Promoting the internationalization

of the Bulgarian enterprises”, Priority Axis 4 “Strengthening the international market

positions of Bulgarian economy” of Operational Program "Development of the

Competitiveness of the Bulgarian Economy", pursuant to contract BG-161PO003-4.2.01-001-

C00001 for providing direct grants under which the Bulgarian Small and Medium Enterprises

Promotion Agency (BSMEPA) is an institutional beneficiary.

The goal of the Export Strategy for sector “Manufacture of chemical and pharmaceutical

products” is to provide support to the Bulgarian micro, small and medium-sized enterprises

in the sector to enhance their competitiveness, degree of internationalization and entering or

expanding the market positions of the Bulgarian products and particularly of these with higher

value added.

The Bulgarian state, represented by BSMEPA, MEET and other state institutions has

identified the SME sector as particularly sensitive and at the same time as having crucial

importance for economic life, deserving special attention. The diversity in the development of

different economic sectors and the place of SMEs therein, as well as the national priorities

related to the promotion of national exports, require the development of export strategies for

particular sectors, one of them being the sector of “Manufacture of chemical and

pharmaceutical products”. Focusing of the support and defining of precise benchmarks for

state intervening through its institutions, on the one hand, and providing options for

development to other participants in the process, on the other, will strengthen in a positive

way the planning aspect of state activities and will at the end improve the performance of the

sector. The successful implementation of the Export Strategy is expected to result in

improvement of the process of going international and of the active expanding and

strengthening of market positions of Bulgarian SMEs producing chemical and pharmaceutical

products.

In developing the Export Strategy, the findings and conclusions of researches of existing

strategic and normative documents are taken into account, as well as the "Methodology for

Strategic Planning" prepared by the Council for Administrative Reform to the Council of

Ministers of the Republic of Bulgaria.

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1. APPROACH FOR DEVELOIPING THE EXPORT STRATEGY

The Export Strategy is a strategic document, which defines the medium-term goals and

priorities of the export development of SMEs in sector “Manufacture of chemical and

pharmaceutical products”. It is developed on the basis of the strategic planning approach, the

skillful implementation of which has the following advantages:

Creates an understanding among stakeholders on the trends and prospects for the future.

Establishes a common vision and consensus among stakeholders, by coordinating

different initiatives in the selected targets.

Identifies already undertaken or planned projects and actions.

Strengthens partnership between government, business and other parties to solve complex

problems.

In developing such a strategic document, it is of crucial importance to formulate properly the

"owner" of the strategy, i.e. the institution or institutions who will be responsible for the

overall implementation of the strategic document as well as for the different stages of

strategic planning.

In general, the development of strategic documents includes the following stages:

Assignment

Preparation

Development

Coordination

Approval

Implementation

Evaluation

Updating

Each of these stages contains specific activities, some of which, such as assignment,

preparation, development, coordination, approval and, at a later period, updating, are part of

the project implementation under the contract mentioned above. Therefore, the principal

“owner” of the export strategy is the Bulgarian Small and Medium Enterprises Promotion

Agency (BSMEPA). For this reason, the goals, measures and actions set in the strategic

document must first help BSMEPA improve the planning and implementation of activities

related to the support of exports of SMEs in sector “Manufacture of chemical and

pharmaceutical products”. This formal logic does not contradict to the fact that a significant

number of institutions, businesses and even the population are involved as stakeholders and

they might be influenced by means of different mechanisms, for example, the state

institutions – through the forms of coordination of strategic documents of such rank, and the

branch associations and businesses – by providing incentives to increase their export

potential. It is of extreme importance for SMEs in the sector of “Manufacture of chemical and

pharmaceutical products” to be able to see a clear and predictable export supporting state

policy, which, though in the medium run, will allow them to decide whether to benefit or not

from the created opportunities.

6

Technology of strategic planning used for the preparation of the export strategy for

sector "Manufacture of chemicals and pharmaceutical products"

The process of strategic planning includes the following steps:

Identification of interested parties (stakeholders)

Analysis of the environment

SWOT analysis

Vision

Goal setting

Selection of an alternative – development strategy

Action plan

Monitoring system

Each of these steps has its specific features, namely:

Identification and involvement of interested parties (stakeholders). Interested party is any

person or group that demands attention, may influence a certain decision, may contribute by

resources or be affected by a certain decision. Involving stakeholders at an early stage of the

strategic document can lead to a stronger consensus on goals and a greater willingness to

support decisions. Stakeholders of the Export Strategy may involve various persons and

organizations, such as companies, state institutions, producers’ associations, businesses,

consumers of the products, NGOs and experts.

In preparing the strategy for sector "Manufacture of chemicals and pharmaceutical products",

the specific rule of non-discrimination was accounted for, i.e. do not assist some businesses at

the expense of others on the basis of subjective assessments and motives. This is the reason

why there was a pursuit for equality when involving business organizations and different

branch associations, as well as a search for an opportunity that the majority of businesses

could benefit from the analysis made.

Analysis of the environment. The analysis of the environment (the conclusions of which

serve as a basis for the SWOT analysis) allows the formulation of goals and priorities for

sector "Manufacture of chemicals and pharmaceutical products" which shall align the efforts

and shall not be dissociated from time and environment.

Analyses are focused on:

Current state of affairs of sector "Manufacture of chemicals and pharmaceutical

products" in Bulgaria, trends, dynamics and growth;

Characteristics of export oriented SMEs in sector "Manufacture of chemicals and

pharmaceutical products", incl. regional distribution;

State of the exports of goods and services from sector "Manufacture of chemicals and

pharmaceutical products";

Analysis of goods and services with export advantages or export potential produced by

the sector;

Estimation of productions of chemicals and pharmaceuticals with the highest value

added growth potential in the export of goods and services in which Bulgaria has a

global market share;

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Size of the international market of sector "Manufacture of chemicals and

pharmaceutical products";

Competitiveness of exports of goods and services, for existing and for potential

foreign markets;

Share of products of chemical and pharmaceutical industry with origin from Bulgaria;

Share of the Bulgarian exports of product group “Chemicals and pharmaceuticals” in

total imports on the global market;

Leading importers in sector "Manufacture of chemicals and pharmaceutical products";

Value and volume of imports on certain foreign markets for a specified product group

“Chemicals and pharmaceuticals”;

Main suppliers on a certain market;

Identification of barriers to internationalization of enterprises in the sector and

measures for their overcoming.

Based on these analyses, the current problems and achievements of sector "Manufacture of

chemicals and pharmaceutical products" shall be clearly defined, and some forecasts,

opportunities and prospects for development shall also be motivated, such as:

Achieving a significant growth of Bulgarian goods in total, and particularly of those

with higher value added;

Identification and prioritization of target markets by commodity groups;

A forecast of exports and imports of goods and of trade balance in the next five and

more years.

Analyses are based on existing analytical and program documents, available statistical

information and information from conducted surveys – interviews and focus groups.

The analysis of the environment describes the current situation of SMEs in the sector and the

export process, establishes the reasons that cause developmental problems, and sets the

guidelines for future development.

SWOT analysis. SWOT analysis allows the identification of the main internal factors defined

as “strengths and weaknesses” and the main external factors, defined as “opportunities and

threats”, and it also assists the formulation of strategic goals, priorities and measures. Using

SWOT analysis prevents the setting of unattainable goals and priorities for export

development of SMEs in “Manufacture of chemicals and pharmaceutical products” over the

period of the Strategy.

Using SWOT analysis in the development of the Export Strategy has some specifics, as

though BSMEPA is the strategy “owner”, the analysis is focused on the export process of

SMEs in sector “Manufacture of chemicals and pharmaceutical products” and not the

institution itself.

LOED analysis. LOED analysis is an instrument used to show how to build on strengths, to

overcome weaknesses, to seize opportunities and to protect against the threats identified by

the SWOT analysis.

Goal setting. Strategic planning focuses on critical issues, opportunities and problems faced

by the export of SMEs in sector “Manufacture of chemicals and pharmaceutical products”. It

helps to distinguish really important decisions from decisions with temporary effects.

8

Goal setting, by establishing a hierarchical tree of goals, is a working tool that allows

detailing of the most common general goals to specific ones.

Defining of the general strategic goal is particularly important for the future development of

exports of SMEs in the sector as it reflects the view of institutions and business for the future.

The general strategic goal seeks to answer a single basic question: How should the export of

SMEs in sector “Manufacture of chemicals and pharmaceutical products” look like in the

long-term period according to the main institutions and stakeholders?

Reaching the level of specific goals makes it possible to answer the questions about “who”,

“what” and “when”, so as to guarantee attaining of the goals set higher in the hierarchy.

Selection of an alternative – a development strategy. Once objectives are defined, ways are

sought how to achieve them. Experience shows that this can be done in different ways, which

represent different alternatives for development and achievement of the objectives. At this

stage of strategic planning, different alternatives are evaluated from different perspectives and

criteria, and as a result, an alternative is selected which then becomes a strategy for the

development of exports of SMEs in sector “Manufacture of chemicals and pharmaceutical

products”.

Action plan. The selected strategy shall be supported by certain actions and measures, which

are linked to terms, supervisors, performers and financial resources. The Action plan and the

related measures therein transform this strategic instrument into daily work and

implementation of the policy for supporting the export of SMEs in “Manufacture of chemicals

and pharmaceutical products”.

Monitoring system. The last stage of the strategic planning process is monitoring and

evaluation of the progress in implementing the general and specific goals set in the export

strategy and in the Action plan for SMEs in sector “Manufacture of chemicals and

pharmaceutical products”. Monitoring is important as it allows taking corrective actions,

provided that progress is unsatisfactory or conditions change. It is also important that the

progress in achieving general objectives is reported to the public and the business, so that they

can estimate the work of relevant institutions and stakeholders in the implementation of the

strategy. It should be noted that often the effects may not be visible or apparent, which

hampers their measurability. Moreover, the impact is often a cumulative effect, and this may

complicate further the analysis. This gives particular weight to monitoring, which is closely

related to all stages of implementation of the Export Strategy - preliminary (ex ante), current

(parallel with implementation) and subsequent (ex post) evaluation.

In order to exercise monitoring of the implementation of the export strategy and to evaluate

performance against the defined targets, it is necessary to use a set of indicators which should

be determined in advance or early enough regarding the implementation of the strategic

document, so as to use data received on them. In most cases, these will be targeted values

which in aggregate will correspond to the goals of the strategic document.

Monitoring provides the feedback that helps to assess the success or failure of the planning

document.

To perform the monitoring process, it is necessary to determine:

Monitoring indicators (what will be observed);

Frequency of monitoring and evaluation (when the relevant reports will be

prepared);

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Responsibilities for monitoring and evaluation (who does what) and

competences for decision-making to change (updating of the strategic

document).

INFORMATION SOURCES

The following main information sources have been used in developing the export strategy:

- National Statistics Institute

- Information provided by BSMEPA

- Information from MEET

- Eurostat

- International Trade Centre

- Experts’ publications

- Information published in connection with international forums and meetings

- Official electronic information resources

- Information published by branch organizations of the sector

- Information from the Bulgarian Industrial Association and the Bulgarian Chamber of

Commerce and Industry, and their regional divisions

- Information from a survey conducted in the period 31 October to 28 November 2011

with the senior management of 4 micro, 7 small and 9 medium (total of 20) enterprises

operating in the sector, and from a focus group.

Information is processed with the will for maximum objectivity of the findings. In many

cases, the analyzed information applies to sector “Manufacture of chemicals and

pharmaceutical products” as a whole, i.e. the information covers both SMEs and large

enterprises, based on the assumption that if a Bulgarian company has been successful on

certain markets, the same could be expected for another company as well, incl. from the

group of SMEs. These specifics are explicitly emphasized during the analysis.

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STRUCTURE OF THE EXPORT SECTOR STRATEGY FOR "MANUFACTURE

OF CHEMICALS AND PHARMACEUTICAL PRODUCTS"

The structure of the Export Strategy for sector “Manufacture of chemicals and pharmaceutical

products” is based on the strategic planning approach which sets the general parameters of the

strategic document. At the same time, a study was made of the structure of other institutional

strategic documents, and they were estimated with regard to the following criteria:

- providing opportunity for relatively easy access to the document through

understandable and logical structuring of different parts;

- presenting the content in an attractive and easy-to-understand manner accessible to

non-specialists as well;

- providing information thematically, i.e. structuring the material in a way that allows

in-depth penetration of problems and analyzes only if desired by the reader.

The above mentioned criteria were met by several of the studied strategies and they contained

two clearly distinguished separate parts, namely:

1. A main document, in which according to the above described technology of strategic

planning the separate chapters are defined.

2. Appendices that contain the complete text of the analysis, including conclusions,

transferred to the main document.

This approach was chosen in structuring the Export Strategy for sector “Manufacture of

chemicals and pharmaceutical products”. Following consultation with stakeholders, the initial

approach was slightly altered, as findings and conclusions in the main document were

supplemented with specific data and visualized with graphs and diagrams, thus relieving users

who do not intend to go in depth of the analyzes included in the Appendices.

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2. MAIN CONCLUSIONS FROM THE ANALYSIS OF THE

CURRENT AFFAIRS

This part contains the conclusions of different analyses, included in “Analysis of the

environment” in sector “Manufacture of chemicals and pharmaceutical products”, which is

one of the main steps in the technology of strategic planning. In appendix to this strategic

document, the complete text of data and analyses is presented, on which basis the respective

conclusions are drawn. The conclusions and the analyses themselves are structured in 6 parts,

namely:

STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA

EXPORT ORIENTATION OF THE SECTOR

GOODS AND SERVICES WITH EXPORT ADVANTAGES AND

POTENTIAL

COMPETITIVENESS OF EXPORT OF GOODS AND SERVICES ON

FOREIGN MARKETS

EXPORT PRIORITY PRODUCT GROUPS AND MAIN MARKETS

BARRIERS TO THE INTERNATIONALIZATION OF SMALL AND

MEDIUM ENTERPRISES AND MEASURES FOR THEIR OVERCOMING

Conclusions are clearly structured according to the scope of the analysis, as first are presented

those valid for the whole sector, incl. large (according to the classification) enterprises, and

second come the conclusions regarding small and medium-sized enterprises in the sector.

STATE AND DEVELOPMENT OF THE SECTOR IN BULGARIA

General for sector "Manufacture of chemicals and pharmaceutical products”

Note: December of the year, 2005=100; Source: NSI.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Index of Industrial Production

Manufacturing 71,7 79,3 92,8 106,5 118,2 131 132,6 114,4 96 103,3

Manufacture of chemical

products

72,5 72,4 81,3 93,7 108,7 104,6 116,8 90,6 90 93,6

Manufacture of medicinal

substances and products

107,9 107,6 116,6 109,6 107,1 135,2 94,8 103,9 93,4 91,2

Turnover Index on the domestic market

Manufacturing 75,6 82,5 88,8 110 122,4 144 155,7 157,4 135,6 136,9

Manufacture of chemical

products

79,0 76,7 81,9 111,0 110,3 132,6 179,9 177,1 172,3 176,7

Manufacture of medicinal

substances and products

86,1 107,5 93,7 120,6 108,9 147,7 111,6 131,2 107,2 120,0

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The dynamics of industrial output and turnover of enterprises in the sector, measured

by the indices of industrial production and turnover, shows an overall positive trend

during the period 2001-2010.

The index of turnover on the domestic market shows an entirely upward tendency,

while in sub-sector "Manufacture of chemical products” the turnover growth exceeds

substantially the average levels in manufacturing. This shows that despite the negative

effects of the economic crisis opportunities for realization of the output of the sector

on the domestic market remain stable.

According to data of MEET, firms in sector “'Manufacture of chemicals and

pharmaceutical products” are over 700, as almost 90% of them operate in sub-sector

"Manufacture of chemical products" and 10% - in sub-sector “Manufacturing of

medicinal substances and products".

Regarding the regional distribution of enterprises and employees, relatively uniform

presence by regions (except for the low concentration in Northwest and Southeast

regions) is observed in sub-sector “Manufacturing of chemical products", while in

sub-sector "Manufacture of medicinal substances and products" there is a high

concentration of companies and employees in the Southwest region, followed by the

South Central region, and very weak presence in the other four regions.

Regional distribution of enterprises producing chemical products

6,8%

14,2%12,8%

30,5%

23,8%

11,98%

3,4%

25,5%

16,8%18,8%

26,6%

9,1%

0,0%

5,0%

10,0%

15,0%

20,0%

25,0%

30,0%

35,0%

% of companies in the sector

% of employees in the sector

Source: Database 'Amadeus', MEET, 2011

13

Regional distribution of enterprises producing medicinal substances and products

4,3%

10,6%7,4%

56,4%

14,9%

6,4%8,2%5,7%

3,3%

56,9%

25,4%

0,5%0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

% of companies in the sector

% of employees in the sector

Source: Database 'Amadeus', MEET, 2011

SMEs in sector "Manufacture of chemicals and pharmaceutical products"

In 2010, SMEs in sector "Manufacture of chemicals and pharmaceutical products"

represent 2% of all SMEs in the manufacturing industry.

Within the sector there are diverse changes in the number of SMEs in 2010 compared

to 2009, namely: an increase of 3.4% in the manufacture of chemical products and a

decrease of 3.6% in the manufacture of medicinal substances and products, which is

below the average level for the manufacturing industry - 4.6 percent.

The share of employed in SMEs in the sector of all employees in SMEs in the

manufacturing industry in 2010 is 2.8%. Compared to the negative tendency of

reduction of employment in SMEs in the manufacturing industry in 2010 compared to

2009 (- 7.5%), the sector registered a lower decline in the manufacturing of chemical

products (- 3,3%) and an increase (6.5%) in the manufacture of medicinal substances

and products.

In 2010, SMEs in the sector formed 5.6% of the turnover and 5.3% of the added value

generated by SMEs in the manufacturing industry. The growth in turnover (20% in

chemicals and 14% in medical substances and products) in 2010 compared to 2009

exceeds substantially the average level in manufacturing industry (1.8%). The same

positive trend is observed in added value, as the growth of 17.6% in medical

substances and products is one of the highest among the analyzed sectors.

The high level of added value of goods produced in the sector is a proof for the

presence of significant high-tech and innovation components.

The above conclusion is also confirmed by data on the level of labor productivity in

2010. They show that labor productivity in sub-sector "Production of medicinal

substances and products" measured as the ratio of value added produced per 1

employee (29,418 BGN) is the highest among all examined sectors. The value of this

14

indicator is high in sub-sector "Production of Chemicals" (20 372 BGN) as well, and

exceeds significantly the labor productivity of SMEs in manufacturing industry (11

421 BGN).

In terms of number of enterprises, number of employees and turnover, SMEs in

“Manufacture of basic chemicals", "Manufacture of soap and detergents, perfumes and

toilet detergents" and "Manufacture of other chemical products” are of structural

significance for the sector.

The financial analysis of companies included in the sample of the survey shows that in

2007-2010 the majority of SMEs operate on profit and steadily increase their financial

independence, as only micro enterprises recorded losses influenced by the negative

effects of the economic crisis.

The sector has a skilled workforce that knows and applies the traditional good

practices in manufacturing. This estimate stems from the relatively low priority that

participants in the survey give in the evaluation of measures for improving the

qualification of personnel.

EXPORT ORIENTATION OF THE SECTOR

General for sector “Manufacture of chemical and pharmaceutical products”

Export growth is a continuous trend for the period 2001-2008. This trend breaks in

2009 and the export level was restored in 2010.

The volume of exports in 2010 (213 452 thou. BGN for chemical products and 19 808

thou. BGN for pharmaceutical products) ranks the sector third among the 18 analyzed

sectors by share in total Bulgarian exports. A conclusion can be therefore made that

the sector as a whole is relatively little affected by the global crisis, since this position

is one of the best over the analyzed 10-year period.

In the period 2001-2010, exports of the sector increased by more than twice (225%).

The high starting level of exports of sector “Manufacture of chemical and

pharmaceutical products” is the main reason for the lower growth rate compared to

both the average for the 18 sectors (245%) and total national exports (272%).

The share of exports in total national exports increased since 2005 (7.06% in 2010)

but has not yet reached the level of 2001 (8.55%). The decrease in the period 2001-

2005 due to the restructuring of the sector is catching up relatively quickly in times of

economic crisis, which shows prospects of the sector for the national exports and the

economy as a whole.


SMEs account for 10% of the total export of sector "Manufacture of chemicals and

pharmaceutical products" in 2010. This share was the lowest among the sectors for

which export strategies are developed1.

1 In the framework of Project No. BG161РО003 – 4.2.01-0001 “Promoting the internationalization of the

Bulgarian enterprises”, export strategies are developed for other 17 sectors in Manufacturing considered to have

15

Exports by SMEs in the sector in 2010 decreased compared to 2009, which, given the

increase in total exports of the sector, implies that under the conditions of financial

and economic crisis SMEs in this high-tech and scientific sector lose their market

positions.

SMEs producing chemical products have a relatively high share in total exports of

SMEs in manufacturing (1,26% in 2009 and 0,70% in 2010).

The export orientation of enterprises producing chemical products is further

confirmed by the high value of export per one employee, compared to other 17

analyzed sectors (32 860 BGN and 25 165 BGN in 2009 and 2010, respectively).

The share of SMEs in the group “Production of medicine substances and products”

in the total export of SMEs in manufacturing is very low (0,1% in 2009 and 0,07 in

2010).

The decrease in the value of the export per one employee (from 13,78 thou. BGN in

2009 to 11,41 thou. BGN in 2010) proves the weak export orientation of SMEs

producing medicine substances and products.

Despite the lack of data for most of the product classes in the sector, the conclusion

can be made that the decline in exports applies to all classes, except “Manufacture of

main chemical substances”.

According to data from the company survey, almost 90% of SMEs export their

production. Direct exports prevail without using other enterprises, trade organizations,

etc.

GOODS AND SERVICES WITH EXPORT ADVANTAGES AND POTENTIAL

General for sector "Manufacture of chemicals and pharmaceutical products"

Products subject to export from sector "Manufacture of chemicals and pharmaceutical

products" are extremely numerous. For the selection of products with export advantages to be

analyzed in detail, objective criteria were applied, namely:

Largest share in total exports of the respective product group;

Increasing share of exports in total exports of the respective product group.

Applying the selected criteria to data from the International Trade Centre allowed identifying

the following 15 product groups which have export potential and advantages:

Sensitive, unexposed and flat-format plates and films

Dextrins and other modified starches, incl. glues based on starches

Toilet products, shaving products, deodorants and others.

Hair care products

Beauty products, make-up, hair care, sun protection, manicure and pedicure products

export potential. The state, development and export orientation of the sector is compared (where appropriate) to

data for the rest of the sectors, so as to outline their positions and export potential.

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Perfumes and toilet waters

Essential oils, resinoids and terpenic products

Medicaments in dosage forms

Human and animal blood, antisera, vaccines, toxins and cultures of micro-organisms,

Antibiotics

Carbonates, peroxocarbonates and ammonium carbonate

Sulphuric acid and oleum

Nonaqueous solution of paint and varnish

Organic surface-active agents, detergents (different than those listed in № 3401)

Soap; organic surface-active preparations for soap use.

From the list above, 3 products are from sub-sector “Manufacture of medicinal substances and

products" and the remaining 12 – from sub-sector "Manufacture of chemical products".

The main findings of the analysis of Bulgaria's position in world exports, exports dynamics,

the ranking of our country in terms of value of exports for the selected product groups in the

sector are summarized in the following table (source ITC):

Product groups

Rank in

world

exports in

2001

Rank in

world

exports in

2010

Share in

world

exports in

2010

Share in

the export

of the

world's

leading

exporter in

2010, as

of 2001

Share in

the export

of the

world's

leading

exporter in

2010, as

of 2010.

Export

Growth

Rate

2010/2001

Sensitive, unexposed and

flat-format plates and

films

18 12 1,13% 1,73% 5,84% 309%

Dextrins and other

modified starches, incl.

glues based on starches 21 12 0,99% 2,29% 5,25% 463%

Toilet products, shaving

products, deodorants and

others 36 31 0,58% 1,71% 5,34% 395%

Hair care products 23 39 0,37% 4,68% 2,86% 110%

Beauty products, make-up,

hair care, sun protection,

manicure and pedicure

products 47 58 0,07% 0,30% 0,33% 176%

Perfumes and toilet waters 59 55 0,05% 0,07% 0,17% 293%

Essential oils, resinoids

and terpenic products 28 24 0,81% 2,38% 5,57% 228%

Medicaments in dosage 41 37 0,16% 0,50% 1,12% 507%

17

Product groups

Rank in

world

exports in

2001

Rank in

world

exports in

2010

Share in

world

exports in

2010

Share in

the export

of the

world's

leading

exporter in

2010, as

of 2001

Share in

the export

of the

world's

leading

exporter in

2010, as

of 2010.

Export

Growth

Rate

2010/2001

forms

Human and animal blood,

antisera, vaccines, toxins

and cultures of micro-

organisms 48 35 0,06% 0,07% 0,28% 2095%

Antibiotics 24 24 0,31% 2,96% 1,34% 163%

Carbonate;

peroxocarbonate,

commercial ammonium

carbonate 39 5 4,30% 0,27% 17,65% 6883%

Sulphuric acid and oleum 18 10 3,66% 17,95% 28,06% 502%

Nonaqueous solution of

paint and varnish 59 54 0,08% 0,32% 0,52% 230%

Organic surface-active

agents, detergents 71 65 0,11% 0,23% 0,75% 501%

Soap; organic surface-

active preparations for

soap use

71 61 0,10% 0,54% 0,95% 437%

All 15 product groups have a high degree of export orientation – their export growth

rate in the period 2001-2010 is very high.

Product groups with stable positions on the world market include "Carbonates,

peroxocarbonate and ammonium carbonate", "Sulphuric acid and oleum" and

"Sensitive, unexposed and flat-format photographic plates and films", which have the

largest shares of world exports.

The best ranking among world exporters in 2010 is reached by the groups

"Carbonates, peroxocarbonates and ammonium carbonate", "Sulphuric acid and

oleum", "Sensitive, unexposed and flat-format photographic plates and films", and

"Dextrins and other modified starches, incl. glues based on starches". World exports of

these four groups of products also grow by relatively rapid rates.

Our country increases most rapidly its share in the world exports of 6 product groups,

as all of them, except the group "Human and animal blood, antisera, vaccines, toxins

and cultures of micro-organisms" are from sub-sector "Manufacture of chemicals",

namely: "Sensitive, unexposed flat-format photographic plates and films",

“Carbonates, peroxocarbonates and ammonium carbonate", “Sulphuric acid and

oleum", "Dextrins and other modified starches, incl. glues based on starches" and

"Toilets agents, shaving products, deodorants and others”.

18

"Carbonates, peroxocarbonates and ammonium carbonate" (18%) and "Sulphuric acid

and oleum" (28%) are the product groups where the volume of the Bulgarian export

has the largest share in the share of world's leading exporter in the product group in

2010.

The Bulgarian export of the product group of antibiotics has very stable positions in

world exports (a permanent 22-25 rank among world exporters) during the surveyed

period, indicating a relatively high export potential.


The above data for the analyzed product groups refers to all enterprises in the sector,

and not only to SMEs. The lack of sufficient statistical information does not allow

identifying the share of SMEs in the export of analyzed product groups.

Some orientation is provided by the results of the conducted survey. Interviewed

companies declare that exported products in 2010 include mainly essential oils, DKF,

detergents, hair products, potassium cobalt nitrite, paints and varnishes, and ethyl

alcohol.

According to the survey, the most important factors for export success of SMEs are

the high level of technology and the high qualification of the personnel - identified by

all interviewed.

There is no variety in the forms of international cooperation of SMEs in the sector.

The main form of export of interviewed companies is direct export. One of the

respondents is a representative of a joint venture, which actually implements a specific

form of international cooperation.

Most of the company managers who participated in the survey declare a desire to

update their production by new products and thereby expand their export

opportunities.

19

COMPETITIVENESS OF EXPORT OF GOODS AND SERVICES ON FOREIGN

MARKETS

General for sector "Manufacture of chemicals and pharmaceutical products"

The main markets of the analyzed fifteen product groups are as follows:

Sensitive, unexposed and flat-format photographic plates and films

o The main markets are Germany, Italy, Spain, Hungary and Greece. For the two

years of the analyzed period the share of the Bulgarian export increased in Spain,

Hungary and Greece, and decreased in Germany and Italy.

o Products with the largest export to the leading market, Germany, are from the group

„Sensitive, unexposed and flat-format plates and films with at least one side

exceeding 255 mm".

o Our main competitors on the German market are companies from USA, Japan and

Belgium, which are among the leading exporters of this commodity group.

Dextrine and other modified starch and farina, incl. pastes on the basis of starch or

farina

o The major markets in the EU are Poland, the Netherlands, Greece, Romania and

Austria.

o The main non-EU markets are Turkey and Albania.

o Products with the largest export to the leading market, Turkey, in which Bulgaria

ranks first, are Dextrins and other modified starches (for example, gelatinised or

esterified starches); glues based on starches or on dextrins or other modified starches;

Dextrins and other modified starches or farina; esterified or etherified starches or

farina.

o Our main competitors on the leading market are the Netherlands, Germany and

Israel.

Toilet products, shaving products, deodorants and others.

o The main EU markets are UK, Spain, Italy, Germany and Romania, and Bulgaria`s

share increases on all markets during the analyzed period.

o Products with the largest export to the leading market, UK, are Preparations for

perfuming or deodorizing rooms, including odoriferous preparations used during

religious rites (excl. "Agarbatti" and other odoriferous preparations which operate by

burning).

o Our main competitors on the leading market are the Netherlands, Germany and

Israel.

Hair care products

o The main EU markets are UK, Netherlands, Romania, France and Latvia.

20

o The main markets outside the EU are Serbia, Georgia, Armenia, Russia and Ukraine,

as in Georgia and Armenia our country is among the top five suppliers of hair care

products.

o Products with the largest export to the leading market, UK, are shampoos and similar

products.

o Our main competitors on the leading markets are France, Germany, and USA.

Beauty products, make-up, skin care, sun protection, manicure and pedicure

products

o The main EU markets are United Kingdom and Romania.

o The main markets outside the EU are Serbia and Georgia.

o Products with the highest export to the leading market Romania are Finished Beauty

products or make-up products and skin care (other than medicaments), including

sunscreen products and suntan lotions (excl. medicines, make-up eyes products, lips

products and manicure or pedicure products); Products for manicure or pedicure; Eye

make-up products.

o Our main competitors on the leading market are Poland, France, and Germany.


o The main markets in the EU are Romania, Italy, Germany, Cyprus and Slovenia.

o Outside the EU, Bulgaria has a significant presence on the markets of Bosnia and

Herzegovina and Macedonia.

o Products with the highest export to the leading market Romania are Perfumes (excl.

shaving creams and deodorants) and toilet waters (excluding shaving creams,

deodorants and hair lotions).

o Our main competitors on the leading market are Poland, Germany, France, Slovenia,

Hungary, i.e. countries geographically close and with traditional trade relations with

Romania.


o The main EU markets are France, Germany, Holland, Austria, and United Kingdom.

o Outside the EU, Bulgaria has a significant presence on the markets of Japan and the

United States, and it is increasing its exports to Chinese Taipei.

o Products with the highest export to the leading market France are Concentrates of

essential oils in fats, in fixed oils, in waxes or the like, obtained by extraction or

maceration; aqueous distillates and aqueous solutions of essential oils, Essential oils

(terpeneless or not), including so-called "concretes" and "absolutes" (excl. those of

citrus fruit, cloves, niaouli and ylang-ylang) and terpene oils, incl. so-called

"concretes" and "absolutes."

o Our main competitors on the leading market are world's leading exporters like India

and China, which raised their shares on this market.

21

Medicines in dosages

o The main markets in the EU are Romania, Germany, Poland, Latvia and Denmark.

o The volume of Bulgarian exports to markets outside the EU is significantly higher

compared to markets in the EU - the main markets are Russia, Serbia, Croatia,

Ukraine, and Bosnia and Herzegovina.

o Products with the highest export on the leading market Russia are Medicaments

containing alkaloids or their derivatives not containing hormones, not containing

hormones used as antibiotics steroids in the form of doses (including those for

transdermal administration systems) or in packages; Medicaments consisting of mixed

or unmixed products for therapeutic or prophylactic uses, put up in measured doses

(including those for transdermal administration systems) or packaging (excl.

medications containing antibiotics, hormones or steroids used as antibiotics, medicines

containing alkaloids or derivatives products, but not containing hormones or

antibiotics and medications containing provitamins, vitamins and their derivatives)

containing antibiotics and medicine in the form of doses (including those for

transdermal administration systems) or in packages (except medications containing

penicillins or their derivatives with a penicillanic acid structure, or streptomycins or

their derivatives.

o Our main competitors on the leading market are world leading exporters like

Germany, France, India, Italy, and Switzerland.

Human and animal blood, antisera, vaccines, toxins and cultures of micro-

organisms

o The main markets in the EU are Germany, Belgium, Cyprus, Denmark and UK, and

the share of the Bulgarian export of human and animal blood, antiserums, vaccines,

toxins, cultures of micro-organisms is extremely low on all five main EU markets.

o Products with the highest export on the leading market Germany are Blood fractions

and modified immunological products derived from biotechnology or other human

blood (excl. Antiserums, hemoglobin, blood globulins and serum globulins); Vaccines

for Humanitarian Medicine and Hemoglobin, blood globulins and serum globulins.

o Our main competitors on the leading market are USA, Switzerland, Spain,

Netherlands, and France.

Antibiotics

o The main markets in the EU are Germany, Holland, Italy, Spain and Belgium. The

share of the Bulgarian export of antibiotics is the largest in Netherlands, but it should

be noted that the share of exports of our country does not exceed 0.5% on any of the

five leading markets.

o Products with the highest export on the leading market Germany are Antibiotics (excl.

penicillins and their derivatives with a penicillanic acid structure, salts of those

products, streptomycin, tetracycline, chloramphenicol, erythromycin and its

derivatives, and salts of those products) and tetracyclines and their derivatives; salts of

those products.

o Our main competitors on the leading market are Switzerland, China, Italy, Spain,

Austria, which are traditional manufacturers in this commodity group.

22

Carbonates, peroxocarbonates and technical ammonium carbonate

o The main EU markets are Italy, Slovenia, Romania, Austria and Greece. With the

exception of Austria, on all other markets Bulgaria is among the top five suppliers of

the market.

o Products with the highest export on the leading market Italy are Sodium carbonate

(calcinated soda); sodium bicarbonate and carbonate; ammonium carbonate and other

ammonium carbonates (except Disodium carbonate), sodium bicarbonate, lithium

carbonate, calcium carbonate, barium carbonate and strontium carbonate.

o Our main competitors on the leading market are Turkey, Germany, and France.

Sulphuric acid and oleum

o The main markets in the EU are Romania, France, Greece, Spain and Slovenia.

Bulgaria ranks among the top five suppliers in Romania, France and Greece, and on

the Greek market our country is the leading importer in 2010 with a share of 78%.

o The volume of Bulgarian exports on markets outside the EU is significantly higher

than that on the EU markets - leading markets for Bulgaria are Turkey, Brazil, Cuba,

Chile and Morocco.

o The leading market for the exports of sulfuric acid and oleum is Turkey, where our

main competitors are Germany, Ukraine, Algeria, and Belgium.


o The main markets of Bulgaria in the EU are Romania, Britain, Italy, Greece and

Slovakia.

o Products with the highest export on the leading market Romania are Paints and

varnishes based on polyesters, dispersed or dissolved in a nonaqueous environment;

Paints and varnishes based on synthetic polymers dispersed or dissolved in a

nonaqueous environment (excl. Those based on polyesters, acrylic or vinyl polymers)

and Paints and varnishes based on acrylic or vinyl polymers, dispersed or dissolved in

a nonaqueous environment.

o The main competitors of Bulgaria on the leading markets are Germany, France, Italy

and the Netherlands.

Organic surfactant substances and detergents

o The main markets of Bulgaria in the EU are Romania, Greece, Holland, Austria and

Italy.

o The main non-EU markets are Ukraine, Moldova, Macedonia, Serbia and Armenia,

and the volume of the Bulgarian export to markets outside the EU is larger than that

on the EU markets.

Soap; organic surface-active preparations for soap use

o The main markets of Bulgaria are in the EU - Romania, Greece, Germany, Belgium

and Hungary.

o Products with the highest export on the leading market Romania are Soap in paste

form or in aqueous solution "liquid soap"; Soap, organic surface-active products and

preparations of molded pieces or shapes and paper production, wadding, felt and

23

nonwovens impregnated, coated or covered with soap or detergent and organic

surfactant products and products for washing the skin, liquid or in cream form and

prepared for retail sale, whether or not containing soap.

o The main competitors of Bulgaria on the leading markets are Germany and Poland.

The Bulgarian exporters in the sector are oriented mostly to the large world markets of

the examined product groups which are traditional importers of the respective product

group.

The EU countries are the main market, current and with potential for development, for

Bulgarian products from the analyzed sector. The Balkan countries make another

important market due to the factor of geographical proximity, as well as the former

Soviet countries, due to traditional trade relations with them.

The volume of exports to countries outside the EU is similar to that in EU countries.

Russia is among the main markets for the sector in 10 of the 15 product groups. The

scale of the Russian market and lasting traditions for trade with the country (market

knowledge, customer requirements, etc.) make Russia one of the most promising

markets for sector "Manufacture of chemicals and pharmaceutical products".

Bulgaria is among the top five importers on the relevant markets for commodity

groups with the largest share in the export of the sector: sensitive, unexposed flat-

format photographic plates and films (1); carbonates, peroxocarbonates and

ammonium carbonate (4); Sulphuric acid and oleum (3).

Estimates of development by 2015 are prepared for each of the analyzed product

groups. Simulations of the trend lay on establishing the analytical form of the function

through which regularities in the development of exports of each product group in

2001 - 2010 are expressed, and estimating the values of the parameters of the function

used. In modeling exports, linear or logarithmic regression is used depending on the

regularities manifested in the output period. Regressions are calculated by using the

values for each year, not just in the first and last year of the period. The obtained

results are presented on the following figure.

24

Development forecast by product groups up to 2015

Source: International Trade Centre and own calculations

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

450 000

500 000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Photographic plates & film, flat, sensitized, unexposed

Dextrins & other modified starches; glues based on starches Toilet products

Hair preparations

Beauty products


Essential oils

Medicaments in dosage

Human & animal blood; antisera, vaccines, toxins, micro-organism cultures Antibiotics

Carbonate; peroxocarbonate, commercial ammonium carbonate Sulphuric acid and oleum


Organic surface-active agents, detergents Soaps

25

Pharmaceutical and chemical industry in Bulgaria has stable growth rate and good prospects.

Data of the Bulgarian Industrial Association for 2010 show that despite the negative effects of

the global economic crisis on almost all industries in the country, the sectors of information

technologies, energy, and pharmaceutical and chemical industry are with the highest

potential for growth in a difficult environment.

According to forecasts for 2011, the value of the pharmaceutical market worldwide is

expected to grow by 5-7%. For comparison, the rates of development during the preceding

2010 were within 4-5%. According to experts in the branch, a slight increase can be expected

in the dynamics of the pharmaceutical markets, but the main reasons that limit their growth

will remain, including patents and reduced expenditures on pharmaceuticals, incl. in the EU.

Nevertheless, experts expect their permanent stabilization.

Manufacturers of chemical products are with stable positions, too. According to official data

published by Capital Market, a significant increase (by 9.3%) in the exported volumes of

perfumery and cosmetic products from Bulgaria is registered in 2010 compared to 2009. In

value terms, the annual increase is even greater, by 20.3%. The positive trend continues also

for the products of so-called ‘heavy chemistry’.


Data from the survey of SMEs indicate that the main destination is the EU, Romania

and Greece ranking first and second, respectively.

SMEs export also to countries outside the EU - Serbia, Macedonia, Turkey and

Russia. It can be concluded that exports of SMEs are oriented mainly towards

destinations from the near geographic region.

The opinion of the managers of surveyed companies is that production capacity is

sufficient for export production. Bulgarian exports are considered competitive, with

potential for higher quality.

SMEs face problems caused by shortage of skilled professionals with foreign trade

expertise and knowledge.

The competitiveness of Bulgarian products is determined by the fact that according to

the interviewed companies the majority (95%) of enterprises with export potential in

the industry have a clear and well reasoned export strategy, they have realized a new

product on the market after 2007 (60%), have international certificates and own brands

(70%). A relatively high percentage of companies have R&D activities (63%).

The main advantages of the EU competitors on the markets where SMEs export their

products are high quality and large number of registered trademarks (when it comes to

pharmaceutical companies). Next indicated are already gained positions and traditions

in production. For competing countries outside the EU, lower commodity prices and

state subsidies are pointed out as more important advantages.

26

EXPORT PRIORITY PRODUCT GROUPS AND MAIN MARKETS

The analysis of commodity groups in the sector allows determining the leading export priority

product groups and specific markets. The choice is made on the basis of the following criteria:

share in the export of the sector, growing exports in the period 2001-2010, global market

share and concentration of SMEs in the sub-sector.

For each of the selected product groups the main markets for 2010, main suppliers and their

market share are presented.

UK

Ukraine

Georgia

• France (21.10%)• Germany (20.20%)• USA (18.80%)• Belgium (8.55%)

• Spain (5.82%)

• Bulgaria (1.48%)

• Russia (31.60%)

• France (22.47%)• Poland (14.94%)

• Germany (12.58%)

• Belgium (3.13%)


• Czech Republic (25.75%)• Ukraine (20.40%)• Germany (13.12%)• Bulgaria (12.58%)

Source: International Trade Center

Accounting for the specifics of the product, an appropriate model for entering new markets is

the use of approved distributors of products from the branch, followed by the creation of a

developed and independent distribution network.

Hair care products

27

France

Japan

Germany

• India (8.79%)• China (8.15%)• Italy (7.90%)• Ireland (6.86%)

• Morocco (5.88%)


• USA (26.90%)

• India (12.30%)• France (9.08%)

• Brazil (8.37%)

• China (8.09%)


• France (28%)

• India (20%)

• China (8%)• USA (8%)

• Italy (7%)



Accounting for the specifics of the product, an appropriate model for entering new markets is

the use of approved distributors of products from the branch, followed by the creation of a

developed and independent distribution network. In turpentine products, production

cooperation and establishment of joint ventures are also adequate.

Russia

Romania

Serbia

• Germany (19.27%)• France (11.04%)• India (6.62%)• Italy (6.04%)

• Switzerland (5.85%)

• Bulgaria (13%)

• Hungary (18.30%)

• Germany (14.82%)• France (12.12%)

• Switzerland (7.49%)

• The Netherlands (7.25%)


• Germany(19.34%)

• France (13.6%)

• Italy (8.59%)• UK (8.22%)

• Macedonia (4.29%)




Medicaments in dosage forms

28

Romania

UK

Serbia

• Germany (22.20%)• The Netherlands(14.13%)• Italy (13.70%)• France (10.80%)

• Turkey (5.57%)


• Germany (21.42%)

• The Netherlands (12.36%)• Italy (11.16%)

• France (10.88%)

• Belgium (9.15%)


• Italy (25.14%)

• Germany (21.30%)

• Greece (13.97%)• Slovenia (11.22%)

• Croatia (9.01%)



Suitable model for entering new markets for this product group is both the use of approved

distributors of products of the sector, as well as production cooperation and establishment of

joint ventures.

Ukraine

Romania

Moldova

• Russia (37.79%)

• Poland (11.36%)• Germany (10.43%)• USA (5.82%)


• Poland (12.56%)• Czech Republic (12.44%)

• Hungary (11.02%)• Serbia (9.70%)

• Germany (7.07%)


• Romania (36.66%)• Turkey (10.72%)• Bulgaria (10.68%)



Soap; organic surface-active preparations for soap use

.

29

Suitable model for entering new markets for this product group is the use of approved

distributors of products in the sector.

The main importers on the above identified markets for chemical and pharmaceutical products

are international companies which rank among the world leading manufacturers and

exporters.

In conclusion, the main markets of product groups manufactured by sector "Manufacture of

chemicals and pharmaceutical products" are in Europe. Among them, the most important

markets are Romania, Germany, Great Britain and Russia, as geographical proximity and low

export costs are of great importance.

BARRIERS TO THE INTERNATIONALIZATION OF SMALL AND MEDIUM

ENTERPRISES AND MEASURES FOR THEIR OVERCOMING

Based on the conducted survey, focus group, and interviews and received additional written

statements and opinions of leading experts in the sector, the barriers to internationalization of

SMEs in sector "Manufacture of chemicals and pharmaceutical products" are identified and

analyzed, as well as the measures preferred by companies for their overcoming and export

promotion.

Assessment of the severity of barriers to the export of enterprises in the period

2007-2011 (in %)

Barriers Very

serious

obstacle

Serious

obstacle

Not a serious

obstacle

Not an

obstacle

High production costs of goods and

services

30 40 10 20

High export realization expenditures 15 35 35 15

Not high enough quality of the goods

and services

10 40 20 30

Lack of qualified staff to ensure quality

over a longer period

5 50 5 40

Lack of experience in the foreign trade

activity

10 20 40 30

Language barriers 35 25 40

Unfavorable business environment in

Bulgaria

25 25 25 25

High risk on the various foreign

markets

15 55 20 10

Customs and non-customs restrictions

imposed by other countries

10 40 30 20

Lack of support by the Bulgarian state

for the export

10 50 25 15

Source: Survey conducted with representatives of SMEs in the sector, 2011

The managers of surveyed SMEs declare that the significant obstacles are related to

external factors, mainly the risks on foreign markets and the lack of sufficient support

30

by the Bulgarian state. The most significant obstacle to exports of SMEs in the sector

is the high production costs of products made in Bulgaria.

Companies in the sector clearly realize the necessity of modernization of production in

order to improve their competitiveness, incl. on the international market. This is

confirmed also by the fact that in the classification of priority measures for support,

the highest weight is given to the support for technological modernization of

production.

Other measures with high priority involve improving the access to finance, promotion

of the export of companies, support for covering the EU standards, financing of

innovative projects to develop new products, technologies and services.

Most of the measures for overcoming barriers to exports are expected to be taken by

the state. The need in creating normal business climate in Bulgaria is most often

specified. Moreover, respondents focus on a business environment which should be

adequate to the present severe economic crisis.

Companies rely most of all on their own efforts for obtaining the necessary export

information and to a much lower degree on administrative structures like BSMEPA

and branch associations.

Priority

Very high and high

priority

Average priority Low priority and

no priority

until 2013 2014 -

2020

until 2013 2014 -

2020

until

2013

2014 -

2020

Promotion of the export

companies

85,0 89,5 5,0 5,3 10,0 5,2

Support for the technological

modernization of production

95,0 94,7 5,0 5,3 0,0 0,0

Support for meeting the EU

standards

85,0 78,9 15,0 21,1 0,0 0,0

Financing of innovation

projects

85,0 68,4 15,0 31,6 0,0 0,0

Training and improving the

qualification of employees in

SMEs

55,0 57,9 40,0 42,1 5,0 0,0

Attracting foreign direct

investment

65,0 63,2 35,0 31,6 0,0 5,3

Business cooperation and

participation in clusters

35,0 31,6 45,0 36,8 20,0 31,6

Consultancy and information

services

40,0 31,6 35,0 42,1 25,0 26,4

Improvement of the access to

finance

90,0 78,9 5,0 10,5 5,0 10,6

Source: Survey conducted with representatives of SMEs in the sector, 2011

All this gives grounds to suggest the following measures to reduce barriers to export of SMEs

in sector "Manufacture of chemicals and pharmaceutical products":

Updating the export strategy for sector "Manufacture of chemicals and pharmaceutical

products"

31

Creating a profile (catalog) of export-oriented SMEs in sector “Manufacture of

chemicals and pharmaceutical products", starting with companies in sub-sectors

"Manufacture of soap and detergents, perfumes and toilet preparations" and

"Production of pharmaceutical in dosage forms"

Creating an adequate information database for SMEs, assisting the decision making

process for the sector (incl. data on foreign markets, potential foreign partners,

international fairs, exhibitions and other promotional events on the web-site of the

National Export Portal)

Maintenance on the National Export Portal of database on foreign markets, potential

foreign partners, international fairs, exhibitions and other promotional events

Improving the awareness of SMEs in sector "Manufacture of chemicals and

pharmaceutical products" for the available funding opportunities from national and

foreign financial sources (excluding trade credits)

Create and implement programs for improving the qualification of export specialists in

SMEs

Create and implement a training program for participation in international exhibitions

as its implementation starts with sub-sectors "Manufacture of soap and detergents,

perfumes and toilet preparations" and "Manufacture of medicaments in dosage forms"

Financial support for the certification of enterprise in quality management,

environmental management and introduction of safe and healthy working conditions

Increasing the weight of the assessment of export orientation of enterprises in the

overall assessment for financial support under EU financed programs

Support the creation/further development of organizations/clusters to support export of

SMEs in the sector

Creating a mechanism for financial support of participation of foreign partners in local

fairs and exhibitions, starting with subsectors "Manufacture of soap and detergents,

perfumes and toilet preparations" and "Manufacture of medicaments in dosage forms"

Development of working procedures for the Bulgarian trade representatives abroad in

favor of small and medium enterprises in the sector

Promotional measures for chemical and pharmaceutical products - cosmetics and other

beauty products on EU markets

Promotional measures for chemicals, cosmetics and other beauty products on non-EU

markets

Promotional measures for chemicals - not cosmetic and other beauty products, on EU

markets

Development of models for new market entry of SMEs in sector "Manufacture of

chemicals and pharmaceutical products" starting with sub-sector products

"Manufacture of soap and detergents, perfumes and toilet preparations"

32

3. SWOT AND LOED ANALYSES OF THE EXPORT PROCESS OF

SMEs IN SECTOR “MANUFACTURE OF CHEMICAL AND

PHARMACEUTICAL PRODUCTS”

SWOT ANALYSIS

The SWOT analysis is based on the idea of splitting the object of the strategic analysis from

the environment in which it operates. The object of the strategic analysis is viewed in its

"strengths and weaknesses”. The environment in which the object of the strategic analysis

functions shall be differentiated to "opportunities and threats."

Strengths. The strengths are the resource, the skill or some other advantage, which the sector

has as feature. The strength is a distinctive competence that gives a comparative advantage.

Weaknesses. The weaknesses are constraints or lack of resources, skills and abilities that

seriously hinder the development of the sector.

Opportunities. The opportunities are the most favorable elements of the external environment.

These are favorable external factors, of which the sector benefits or could benefit.

Threats. The threats are the worst segments of the external environment. They put the biggest

barriers to the present or future (desired) state of affairs.

Strengths Opportunities

o Availability of the necessary raw

materials and resources for the

manufacture of chemical and

pharmaceutical products

o Availability of experts with higher

education working in the sector

o Traditions in the production of products in

sector "Manufacture of chemicals and

pharmaceutical products"

o Increase of the volume of production and

added value in most product groups

o High labor productivity in SMEs in the

sector

o Availability of resources for financial

support of SMEs by the EU

o High share of enterprises with certificates

and own trademarks

o The sector is identified by the state as one

with export potential

o Access to the EU markets

o Bulgarian production of chemical and

pharmaceutical products is well-known on

the markets in Russia and the Middle East

o Successful experience in cooperation with

foreign partners, incl. establishment of

joint ventures in the sector

o Existence of branch associations

(Bulgarian Chamber of Chemical

Industry, Bulgarian National Association

Essential oils, Perfumery and Cosmetics,

etc.)

o Availability of resources for financial

support of the Bulgarian participation in

international fairs and exhibitions

o Existence of higher schools for training of

qualified technical personnel

33

Weaknesses Threats

o Lack of modern and resource effective

technologies and equipment

o Insufficient level of qualification of high

technical staff, mostly in chemical

production

o Lack of foreign trade staff

o Lack of knowledge for the Bulgarian

production/the Bulgarian mark on foreign

markets

o Low level of awareness of SMEs about

available funds for supporting their

activity

o Lack/undeveloped cluster structures for

export (export unions)

o Impeded procedure of registration of the

products on foreign markets

o Lack of adequate information assisting

informed management decision-making

for the sector

o Reduction of consumption on national and

world level, mainly of chemical products

o EU has significant trade surplus in the

manufacture of chemical substances

o Support of the business by EU funds is

not focused on investments for

technological modernization and

implementation of new products in sector

"Manufacture of chemicals and

pharmaceutical products"

o Expiry of the patents of traditional

medicinal products (for production of

medicinal substances and products)

LOED ANALYSIS

LOED analysis is an instrument that helps identifying how to strengthen the positive effect of

the examined process and neutralize the negative effects. The word is an acronym of the

words in English – lever, overcome, exploit, and defend. LOED analysis shows how strengths

can be levered, weaknesses – overcome, and how to exploit the opportunities and defend

against the threats identified by the SWOT analysis.

Build on strengths Use of opportunities

o Implementation of structure projects and

strategies for promoting exports of SMEs

in the sector

o Improving the material base in schools

and universities training staff for chemical

and pharmaceutical production

o Control on production and reduction of

environment polluting emissions

o Applying specific facilitated credit terms

for exports of SMEs in the sector

o Policy of integration between the local

and foreign markets

o Development of international partnerships

both for manufacturing and distribution of

products

o Effective and quick realization of

production through developed sale

channels by establishing unions/co-

operations for export

o Organization of trade exhibitions and

events for introduction of the Bulgarian

chemical and pharmaceutical products

o Development of current production and

encouraging the implementation of

innovation technology and new products

o Development of product assortment and

specialized products for export.

o Orientation to new markets

34

o Bringing out “export orientation of

SMEs” as a main criterion for providing

financial incentives to the companies

Overcoming weaknesses Protection from threats

o Development of clear and simplified rules

for financial support of export-oriented

SMEs

o Reform of the administrative system

aiming at facilitating the access of SMEs

to administrative services

o Establishing connections between

statistics and business

o Organizing a program for presenting and

acquainting with foreign markets

o Training of both technical and trade

personnel of SMEs in the sector

o Raising staff qualification in SMEs in the

sector

o Development of foreign trade and

marketing specialists

o Increase awareness of the Bulgarian

products on foreign markets

o Stimulating the creation/ restoration of the

contacts between business and science

o Development of adequate database

assisting management decisions on the

three levels of management

o Orientation to new fast developing

markets of chemical and pharmaceutical

products - China, India

o Selection and orientation to a group of

partners and efforts for achieving high

levels of quality

o Avoiding dependence on a single partner

o Manufacture for export but also for the

local market, in order to guarantee the

liquidity and solvency of companies

o Development of sustainable and clear

state policy for supporting national export

35

4. OBJECTIVES

STRATEGIC OBJECTIVE

Retaining the share of SMEs in the sector in the export of the sector and in total national

exports

OBJECTIVES

1. Increasing the number of SMEs with export potential in the sector

2. Increasing the export market share of SMEs in the sector

To achieve the determined objectives, different measures shall be identified to support the

export of SMEs in sector “Manufacture of chemicals and pharmaceutical products” and to

focus on problem issues identified by the analyses. Selected measures should be clearly linked

with the potential mechanisms by which public institutions can influence the processes. Under

these conditions, three areas were identified where state institutions through commitment and

other stakeholders – through promotion and incentives, could perform actions to achieve the

objectives. For each of these areas, clear and measurable specific objectives are defined as

follows:

Specific objective 1: Development and successful functioning of information and normative

base for support of the export of SMEs in the sector.

Specific objective 2: Raising the qualification of employees of SMEs in the sector with focus

on commercial staff and departments in charge of foreign trade on company level.

Specific objective 3: Supporting the operation of enterprises and their access to foreign

markets and partners.

36

5. STRATEGY TO PROMOTE EXPORT OF SMEs IN THE SECTOR

To achieve the goals different alternatives of development are possible, in the case two

scenarios were assessed, namely:

1. Maintaining the current structure of government institutions providing business

support, including the existing relationship between them and export-oriented SMEs from the

sector "Manufacture of chemicals and pharmaceuticals"

2. Changing the structure and transfer of functions to support SMEs to units and forms

related to the financing of projects from EU funds and state budget following the model of

operational programs or program for rural development.

These scenarios were assessed by the following criteria:

1. Possibility for implementation of the selected scenario within a 5-year period;

2. Practices of supporting export-oriented SMEs in other EU member-states;

3. Estimation of the efficiency of business supporting activities performed by established

specialized structures or by existing programs supporting SMEs on a project basis.

The analysis made pointed out that:

The transition from the presently existing system to a new one on a project basis will

take more than 5 years. Moreover, according to the existing rules for the period till

2013, this is actually impossible, since all priorities and activities of operational

programs are clearly defined. Such an approach, if possible, for the next

programming period 2014-2020, should be put to negotiations, but in practice it will

again take several years for its actual launch, like the start of OP in all EU countries

for 2007-2013.

The Bulgarian model through BSMEPA is preferred by the major part of the EU

member-states and, although with varying success in different countries, there is no

tendency observed for changes in the near future.

Reported difficulties in the accomplishment of business projects under operational

programs, such as OP “Competitiveness”, indicate that the efficiency of supporting

export-oriented SMEs, regardless of being subject to critics due to lack of funds and

proper focusing, is at relatively much higher level than the results achieved by

business under project designed measures.

Given the above conclusions, the first alternative gained preference, i.e. the development of

Export Strategy for SMEs in sector “Manufacture of chemicals and pharmaceuticals” shall be

based on the understanding that all measures will be undertaken in the framework of presently

existing structures and within their present capacities.

In strategic perspective, the selected alternative will demand both common measures for the

whole SME supporting system, for example, improving the capacity of institutions,

implementation of clear and measurable indicators and criteria for assessing the efficiency of

their work and support rendered to business, etc., as well as specific changes related to sector

“Manufacture of chemicals and pharmaceuticals” in particular, like, for example, sector-

oriented approach of work. As far as this is not a subject of analysis and research of the

37

present strategic document, it will probably become a part of developing a strategy or a

program for improving the capacity of relevant state administrations.

This Export Strategy for SMEs in sector “Manufacture of chemicals and pharmaceuticals”

envisages several main steps directed at improving the support to export-oriented SMEs,

namely:

1. Creating of the basis for adequate and professional management of processes of

supporting export-oriented SMEs, by establishing an information basis for making

informed management decisions. The created data base should include information on

the number and characteristics of export-oriented SMEs, volumes and markets of their

export, and other information necessary to build a profile of SMEs, incl. of export-

oriented SMEs. The availability of adequate information will allow the establishment

of a working model of communication with the business community, studying of its

necessities, facilitating of the process of utilization of funds directed at bettering SME

export conditions, etc.

2. Development of the necessary programs, policies and measures to support SME export

on foreign markets, through measures targeted at markets with prospects to preserve or

expand the existing positions, joint work with units having direct abilities to assist

exports (for example, foreign trade representatives and the MEET), as well as routine

measures, such as (for instance) participation in fairs, trade missions, business visits,

etc.

3. Measures directed at overcoming certain deficits of export-oriented SMEs, presenting

barriers to their export development, for example, such as: support the technological

modernization of SMEs in order to improve their export positions; assist the

establishment of sector profiled export companies; organize advertising campaigns to

raise the image of the Bulgarian business, etc.

4. Measures directed at raising the capacity of SMEs, mainly by different training

programs.

Accounting for the terms of the Export Strategy for SMEs in sector “Manufacture of

chemicals and pharmaceuticals”, the envisaged steps are realistic and could contribute to

achieving real results in export supporting.

The political will to provide the funds necessary for implementing of the strategy is also an

important prerequisite for its successful accomplishment.

38

6. ACTION PLAN

Due to the mid-term 5-year horizon of the Strategy, measures in the Action Plan are

concretely formulated.

Envisaged financial resources are indicative, but they are consistent with the realistic

opportunities to increase the budget of BSMEPA. Estimated resources from Operational

Programs in the next programming period are rather contingent, as the allocation rules are not

yet finally adopted by the EU. At the same time, it is crucial that BSMEPA and MEET defend

fair requests for funds especially for this leading export sector of the country and for the

development of SMEs, which are the backbone of any economy.

In compliance with the selected model, for all envisaged measures specific actions are defined

to be implemented at micro (SME), meso (branch organizations) and macro (state) level.

On the basis of analysis of exports of different product groups, important and priority

markets for the sector are identified. However, as mentioned above, data is not available on

the participation of SMEs on those markets. Therefore, in order to suggest indicative

promotional measures on the identified markets, it is assumed that in periods of crisis efforts

should be directed both at preserving the existing market positions and entering new markets

as well but rather at. The fact that Bulgarian exports are already made on the existing markets,

allows assuming that this will be an advantage for SMEs which orient to these same markets.

39

ACTION PLAN

Objectives and measures Deadline Responsible institutions Financial

resources

Sources of

financing Expected results Implementation Indicators

Specific objective 1: Development and successful functioning of information and normative base for support of the export of SMEs in the sector.

1.1. Update of export strategy

for sector “Manufacture of

chemicals and

pharmaceuticals”

04.2013 MEET 40 000 BGN MEET - OPC Export Strategy and

Action Plan to be

implemented

Prepared documents are of good

quality

Documents are prepared and

approved within schedules

Strategy implementation has led

to achievement of stated

objectives

Micro and Meso level:

- Provision of the necessary information, incl. participation in sociological surveys, focus groups, opinions and statements

Macro level:

- Overall coordination of the process of update and implementation of the Export strategy for the sector

1.2. Create a profile (catalog)

of export- oriented SMEs in the

sector, starting with companies

in sub-sectors "Manufacture of

soap and detergents, perfumes

and toilet preparations" and

"Production of pharmaceutical

dose form"

12.2013 BSMEPA / MEET

in co-operation with

branch associations and

NSI

10 000 BGN Budget of

BSMEPA

Database with

information on export -

oriented SMEs

Prepared criteria and list

of SMEs which are

export- oriented.

Prepared criteria and list of

export-oriented companies are

uploaded on the National export

portal

Micro level:

- Providing information

Meso level:

- Encourage and assist companies to provide information on their export activity

40


resources

Sources of


- Assisting BSMEPA in the preparation of criteria for export-oriented SMEs

Macro Level:

- Obtaining regular information from the NSI for the purposes of prepared database and information system

- Development of criteria for export-oriented SMEs

- Preparing, maintaining and updating the database and profile of export-oriented SMEs in the sector

1.3. Setting up an adequate

database for SMEs in sector

"Manufacture of chemicals and

pharmaceutical products", incl.

data on foreign markets,

potential foreign partners,

international fairs, exhibitions

and other promotional events,

on the National Export Portal

12.2013 BSMEPA / MEET / NSI 50 000 BGN Budget of

BSMEPA /

MEET

Available and adequate

processed information for

the development of the

sector and SMEs on the

National Export Portal

Created and operating

information system

Easy and fast access to

information for development of

the sector and SMEs in it

Number of enterprises using

information database, uploaded

on the National Export Portal

- Micro level:

- - Providing data for the information system and database

- Meso level:

- - Providing data and analyses for the information system and database

Macro Level:

- Coordination and organization of the process of creating an information system and database for SMEs, foreign markets, potential foreign partners, international fairs,

exhibitions and other promotional events

1.4. Maintenance on the

National Export Portal of

database for foreign markets,

potential foreign partners,

international fairs, exhibitions

Permanent BSMEPA / MEET 10 000

BGN per

year

Budget of

BSMEPA

Permanently operational

and updated database

Number of enterprises satisfied

with the quality of information

available

41


resources

Sources of


and other promotional events

Meso level:

- Providing data and analyses for the National Export Portal

Macro Level:

- Coordination of the process of maintaining on the National Export Portal of database for foreign markets, potential foreign partners, international fairs, exhibitions and other

promotional events

1.5. Improving the awareness

of SMEs about available

funding opportunities from

national and foreign financial

sources (excluding trade

credits)

Permanent BSMEPA 5 000 BGN

per year

Budget of

BSMEPA

Increase of the number of

firms applying for

financial support

Number of enterprises applying

for financial support

Micro level:

- Participation in organized events about promotion and dissemination of information on available funding opportunities from national and foreign financial sources

Meso level:

- Participation in and dissemination of information about organized events about promotion and dissemination of information on the available funding opportunities from

national and foreign financial sources

Macro level:

- Organization and coordination of the process of informing SMEs about available funding opportunities from national and foreign financial sources (excluding trade credits)

Specific objective 2: Raising the qualification of employees of SMEs in the sector with focus on commercial staff and departments in charge of foreign trade on

company level.

2.1. Development and

implementation of programs

for raising the qualification of

export specialists in SMEs

2014-2020 BSMEPA, Universities

and branch associations

50 000 BGN

annually

Budget of

BSMEPA and

Operational

Programs

Trained over 1000 export

specialists from SMEs for

the program period.

Number of trained export

specialists

Micro level:

- Provision of information on the needs of training and participation in the trainings

42


resources

Sources of


Meso level:

- Development of training programs and conducting trainings

Macro level:

- Organization and coordination of the process of development and implementation of programs for raising the qualification of export specialists in SMEs

2.2. Development and

implementation of training

program for participation in

international exhibitions,

starting with sub-sectors

"Manufacture of soap and

detergents, perfumes and toilet

preparations" and "Production

of pharmaceutical dose form"

12.2017 BSMEPA 20 000 BGN

annually

Budget of

BSMEPA

Trained experts from

minimum of 400 SMEs

Number of trained experts for

participation in international

exhibitions

Micro level:

- Provision of information on the needs of training and participation in the trainings

Meso level:

- Participation in the development of training programs and assistance in conducting of trainings

Macro level:

- Organization and coordination of the process of development and implementation of programs

Specific objective 3: Supporting the operation of enterprises and their access to foreign markets and partners

3.1. Financial support for

certification of enterprises in

quality management,

environment management

and implementation of

system for safe and healthy

Permanent MEET 500 000 BGN

annually

MEET - OPC Increased number of

enterprises which

obtained certificates

Number of enterprises which

obtained certificates

43


resources

Sources of


working conditions

Micro level:

- Development of proposals for financing of activities for creation of quality management systems and putting the systems in operation

Meso/Macro level:

- Support the evaluation of proposals

- Managing the entire process of financial support and performance monitoring

3.2. Increase of the weight of

the assessment of export

orientation of enterprises in the

total assessment for financial

support.

12.2013 MEET, MRDPW, CM OPs for business support

are oriented at

supporting SMEs with

export potential.

In the assessment criteria of

project proposals, the export

potential is explicitly specified.

Micro/Meso level:

- Active participation in the development of proposals for increasing the weight of the assessment of export orientation of enterprises in the total assessment for financial

support.

Macro level:

- Development of proposals for increasing the weight of the assessment of export orientation of enterprises in the total assessment for financial support.

3.3. Assistance in the creation /

further development of

organizations/clusters for

supporting the export of SMEs

12.2017 BSMEPA, branch

associations

100 000 BGN

annually

Operational

programs

Created export

organizations/clusters for

supporting the export of

enterprises.

At least 2 export clusters created

Micro level:

- Participation in export clusters in the sector

44


resources

Sources of


Meso level:

- Participation in creation and development of export clusters

- Encouraging the participation of SMEs in export clusters

Macro level:

- Assistance in the creation /further development of organizations/clusters for supporting the export of SMEs

3.4. Development of

mechanism for financial

assistance of the participation

of foreign partners at local

fairs and exhibitions, starting

with sub-sectors "Manufacture

of soap and detergents,

perfumes and toilet

preparations" and "Production

of pharmaceutical dose form”.

12.2012 BSMEPA, branch

associations

30 000 BGN

annually

Budget of

BSMEPA; funds

of branch

associations

Concluded contracts for

export due to the

participation of foreign

trade partners.

Increase on annual basis of

export contracts with invited

foreign trade partner.

Micro level:

- Provision of information about potential partners and concluded contracts

Meso level:

- Development of draft mechanism and support for its application.

Macro level:

- Coordination of the process and support for its application

3.5. Development of working 12.2012 BSMEPA/ MEET /CM Approved decision on CM Increase in the number of export

45


resources

Sources of


procedures for the Bulgarian

trade representatives abroad in

favor of SMEs in the sector

level and developed and

implemented working

procedures for the trade

representatives

contracts for products from the

sector, produced by SME, as a

result of implementing the

working procedures

Macro Level:

- Study the needs of SMEs in the sector of information and services that are provided by the Bulgarian trade representative

- Development of procedures for operation of Bulgarian commercial representations in favor of SMEs in the sector

3.6. Promotional measures for

chemical and pharmaceutical

products - cosmetics and other

beauty products on EU markets

2014 - 2020 BSMEPA

Branch associations,

companies

150 000 BGN

annually

OP for the next

programming

period;

companies,

branch

associations

Improving the image of

Bulgarian products and

awareness of foreign

customers for them

Increased number of export

contracts as a result of 1 event

(average per one event)

Organization of participation in fairs and exhibitions, organization of events and contacts with professionals – technologists, cosmetologists, etc. information activities.

Well-known and high-attended international exhibitions include: Exhibition of Hairdressing, Beauty and Wellness in Barcelona - Spain; WORLD OF BEAUTY & SPA JARO -

Czech Republic; COSMETICS BEAUTY HAIR - Beauty Expo - Bucharest, Romania; INTERCHARM MILANO - Exposure for cosmetics and hairdressing - Italy, Milan

Micro level:

- Participation in events

- Preparation of promotional and presentation materials

- Preparation and distribution of product samples during the events

- Preparation and presentation of materials on product qualities

- Organization of demonstration sessions on the use of products

Meso level:

- Supporting the organization and participation in events

- Organization of meetings with experts, journalists, doctors, cosmeticians, dealers, distributors, wholesalers, importers and other participants - influencing consumer attitudes

Macro Level:

- Overall coordination of the organization and performance of information activities at sale spots:

- Organization of meetings with experts, journalists, doctors, cosmeticians, dealers, distributors, wholesalers, importers and other stakeholders - influencing consumer attitudes.

- Organization of demonstration sessions on the use of products

46


resources

Sources of


- Organization of demonstration days in big retailers on the respective market (offering promotional bags / other promotional materials / samples of products, projections of

short commercials in the respective language, etc.).


chemical products, cosmetics

and other beauty products on

non-EU markets

2014 – 2020 BSMEPA,


companies

150 000 BGN

annually

OP for the next

programming

period;

companies,

branch

associations




customers for them

Increased number of export

contracts as a result of 1 event

(average per one event)

Organization of participation in fairs, events and contacts with professionals - technologists, cosmetologists, etc. information activities.

Well-known and high-attended international exhibitions include: Beauty World Middle East - Dubai, UAE; Beauty Eurasia - Exhibition of cosmetics and hairdressing -

Istanbul; DODIR PARIZA - Exhibition of cosmetics, wellness and spa - Serbia, Belgrade; InterCharm, Dental Expo - Moscow, Russia

Micro level:

- Participation in exhibitions

- Preparation of promotional materials and samples

- Preparing and delivering specialized presentations

- Organization of demonstration sessions

-

Meso level:

- Assisting overall organization and facilitation of companies during the events

Macro Level:

- Overall coordination of the organization of the Bulgarian participation

- Organization of specialized meetings during exhibitions


chemical products, excl.

cosmetic and other beauty

products, on EU markets

2014 – 2020 BSMEPA


companies

200 000 BGN

annually

OP for the next

programming

period;

companies,

branch

associations




customers for them

Increase by 5% the number of

export contracts as a result of 1

event

Organization of Bulgarian participation in fairs and exhibitions of machine-building and construction industry, organization of events and contacts with professionals –

47


resources

Sources of


technologists, designers, manufacturers of machinery, etc. and information activities. International exhibitions with high attendance are: СHEMSPEC - Chemicals – Spain,

Barcelona; PAINT 2012 - paints, raw materials and auxiliary products – Istanbul, Turkey; SFORTEC – Technical Fair - Italy, Milan; THE – Industrial Fair - Italy, Milan

Organize meetings with specialists, wholesalers, importers and representatives of industrial enterprises.

Inclusion of special presentations by expert teams to acquaint the audience with the qualities of products.

Organization of demonstration sessions on the use of products

Micro level:

- Participation in exhibitions

- Preparation of promotional materials and samples

- Preparation and conducting of specialized presentations

- Preparation and conducting of demonstration sessions

Meso level:

- Assisting overall organization and facilitation of companies during the events

Macro Level:

- Overall coordination of the organization of the Bulgarian participation

- Organization of specialized meetings during exhibitions

3.9. Development of models for

new markets entry of SMEs in

sector " Manufacture of

chemicals and pharmaceuticals",

starting with products of sub-

sector "Manufacture of soap and

detergents, perfumes and toilet

preparations"

2013 BSMEPA, OTEA 10 000 BGN Budget of

BSMEPA

Models are developed

aimed at SMEs in the

sector, regarding the

steps for establishing on

new markets

Number of developed and

adopted models

Macro Level:

- Development of models regarding the necessary actions/steps to be undertaken by SMEs in entering new markets.

48

7. MONITORING AND CONTROL SYSTEM

For each strategic document it is of great importance, first, to be implemented in accordance with

predetermined goals, deadlines and resources; second, to be sustainable over time and to develop

the activities and effects determined in it. For this purpose, it is advisable to observe (monitor) and

assess the implementation of the document and to identify appropriate actions - for correction and

improvement of its inherent activities.

Monitoring can be defined as: (a) an integral part of the ongoing project management (attributed

also to the implementation of the Export Strategy for sector “Manufacture of chemicals and

pharmaceuticals”, aimed at achieving a certain change - in this case, improving the export

performance of SMEs in the sector); (b) an instrument assisting the control on management and the

process of decision making; (c) a description of events and conditions within a specified period of

time; (d) systematic collection of reliable, timely and relevant information on the progress, changes

and consequences of undertaken program actions. These essential features of monitoring make it

one of the most important components of the management of strategic documents, programs,

projects, etc.

Assessment in its turn is a systematic review of specific management activities aiming to provide

information about the full range of short and long-term effects on the target groups. Program

evaluation may include assessment of the workload, operating procedures, or personnel, but its

main purpose remains the effect and impact of implementing the program (strategic document).

Monitoring should therefore establish the status and follow the progress in implementing the

various components and subcomponents, and the Strategy as a whole. Monitoring should also

identify emerging problems and factors that determine them, and suggest possible measures and

solutions to these problems. The information obtained is expected to be promptly available to the

responsible authority (primarily BSMEPA and MEET). The meaning of this is to enable these

authorities and other competent public institutions, if they consider it necessary - to take timely

"corrective actions" to support achieving the objectives of the Strategy.

It should be underlined that if monitoring focuses on the observation of: (a) actions taken and

resources expended, (b) results achieved, (c) carrying out the process in time, (d) the effects

received, assessment is aimed at determining the extent to which the general and specific

objectives of the document are achieved and also includes a systematic review of specific

management operations to provide information about the full range of short and long-term effects.

The main points that should be observed in connection with the implementation of this Strategy

are:

- Compliance with the schedule of activities;

- Volume, speed and degree of resource use;

- Achieved results;

- Achievement of objectives and impact of the strategic document.

When to monitor? - The aim of ongoing monitoring is to record the effects and deviations from

planned levels early enough, so as to allow their correction before their consequences become too

serious to be overcome. What should not be forgotten is the need for monitoring to be performed

frequently enough to allow adjustment of deviations from the plan followed.

Based on this methodology, monitoring and assessment of the implementation of this Strategy

involves the following sequence of actions:

49

1. Selection of criteria and indicators for monitoring and assessment;

2. Monitoring of performance;

3. Comparison of achievements and targets;

4. Proposal and taking of corrective actions.

In compliance with the adopted objectives and measures in the Strategy for sector “Manufacture of

chemicals and pharmaceuticals”, the following key indicators for monitoring and assessment are

proposed:

Prepared criteria and list of export-oriented companies are uploaded on the National

Export Portal

Easy and fast access to information for development of the sector and SMEs in it

Number of enterprises using the informational database, uploaded on the National

Export Portal

Number of enterprises satisfied with the quality of information available

Number of companies applying for financial support

Number of trained export specialists

Number of trained experts for participation in international exhibitions

Number of enterprises with obtained certificates

In the assessment criteria of project proposals, export potential is explicitly specified

Created at least 2 export clusters

Increase on annual basis of export contracts with invited foreign trading partners

Increase in the number of export contracts for products from the sector, produced by

SMEs, as a result of implementing the working procedures of trade representatives

Increased number of export contracts as a result of 1 event (exhibition, fair, etc..) -

average per event

Number of developed and adopted models for entering new markets by SMEs

Surveillance and monitoring of progress will be carried out by BSMEPA, which is the "owner" of

the Strategy. To this end, the Agency will assign particular responsibilities to an official in its

administration to collect information necessary for monitoring the implementation of the measures,

who will make annual reports to the Executive Director of the Agency.

Annual reports will serve as interim assessments of the Strategy. Reports will be public and the

results will be disclosed to the public.