Romania, according to the world bank had the fastest growing economy in the EU for the first half of 2017 with 5.8% GDP and 6.9% GDP by the end of that year. The growth was attributed to the growing private consumption, which was apparently generated by reducing the Value Added Tax rates from 24% to 20% back in January 2016. In addition, the Romanian wages increased in both the private and public sector by 13.5% and the growth has continued to increase.
The mostly underdeveloped economy and a positive economic outlook generally make Romania a good candidate for those looking to expand or start a new business in the country. If you are one of them, here are some tips that could come in handy.
Expanding into The Untapped Markets of Romania
Even though the Romanian market has had its share of ups and downs in the past 10 years, its economic outlook seems promising. The Bucharest Stock Exchange boasted robust growth listings as well as trade volumes. As a matter of fact, the exchange experienced the fastest growth among Europian Union capital markets not so long ago. This is a very appealing prospect for investors in other countries who are willing to expand into the nation for the long term. This sentiment is also supported by the President of the Netherlands Romanian Chamber of Commerce. In a recent interview, he said claimed that Romania has a lot of untapped economic potential and went ahead to say that the nation’s geographic location and the skilled, English-speaking workforce should be an appealing aspect for investors from outside.
Be Ready For The Red Tape
According to the World Bank, Romania is the 45th easiest nation to launch and run a business among 190 other countries. However, this ranking does not take into account some of the areas in which the country bogs down starting a company. The country ranks 150th out of 190 countries when it comes to dealing with building permits and it is estimated that you would have to go through about 24 interactions with external agencies in order to get a permit and it would take about 260 days.
This mess can certainly slow down your expansion into the country. So, if when drafting any expansion plans, ensure you take into consideration these types of delays. We all know that an unexpected delay of up to a year can really hamper business. It is also advisable to ensure that you have a competent accountant and lawyer who know how to get things done in a fast manner in order to speed up the process.
Be sure to understand the tax in Romania, keep up to date with VATGlobal.
Learn The Business Culture of Romania
When doing business in a foreign country, the business culture is one of the most vital aspects. Romania, according to Denmark’s Ministry of Foreign Affairs has a formal and hierarchical culture. This model of running business means the lower level workers rarely question the decisions made by their superiors and there’s a great deal of respect for those in power. The top-down model of business defines how organizations’ meetings work. They are dominated by the senior executives and there is very little small talk.
That being said, you should be very careful when doing negotiations with the Romanians, as they have a not so good history of foreigners taking advantage of taking advantage of their nation.
Capitalize on The Nation’s Systemic Strengths
The red tape we mentioned earlier is balanced by various rankings. The World Bank ranks the country 1st in trading across borders, 20th in getting credit and 17th when it comes to enforcing contracts. Access to the EU’s single market makes it very easy to trade with other nations throughout the EU. While it can be hard to launch a business in Romania, it certainly has an excellent system for conducting business.
Understand The Social Culture
Ideally, the social culture is formal. A conventional greeting involves eye contact and a firm handshake. Titles are ideally important and it is normal to address people by their academic title or the local equivalent of Mr. or Mrs. The country emphasizes social etiquette and good manners. The people ideally prefer working with individuals who are humble and don’t like those who brag about their accomplishments.
These social rules are vital as the business culture of Romania is driven by relationships. As such, getting familiar and practicing these things will help you in nurturing strong relationships with the government officials, which can help speed interactions with the government.
Expanding in Romania, despite the several hurdles does not have to be complex. You can simply rely on an expert who has an infrastructure in the country and the support organizations required to get your business up and running in a short span of time.