Croatia - Market Challenges Croatia - Market Challenges
Croatia is a developing economy and, despite significant progress in economic and administrative reforms since its independence in 1991, problems remain. These include a judiciary plagued by case backlogs and a lack of expertise in commercial affairs, an overly complex and sometimes non-transparent bureaucracy, the country's relatively high costs, and both real and perceived issues of corruption. Employment taxes are high and there is a lack of good real estate title records. Companies that face court disputes in Croatia often need many years to reach a final resolution. They also complain about a lack of enforcement and dubious court rulings.
Despite the Regulation Impact Assessment Law adopted in 2011 and substantially revised in 2017, many government agencies still avoid or do a poor job when consulting with the public or preparing impact assessment studies prior to proposing any new legislation or changes to legislation. These changes are frequent, making long-term business planning a major challenge.
The current Croatian government, elected in October 2016, announced a comprehensive program of planned reforms to address the complaints and suggestions from the business community. Unfortunately, its implementation has been slow. Overall, the business and investment climate in Croatia is still considered difficult, requiring caution and patience for success by foreign companies.
U.S. firms entering this market must contend with a typically mature market with well established, mainly European, competition. The Croatian consumer is discriminating and will consider many factors beyond brand loyalty in purchasing decisions.