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Country Commercial Guides FY 2000: Greece Report prepared by U.S. Embassy Athens, released July 1999 Note*

CHAPTER IV. MARKETING OF U.S. PRODUCTS AND SERVICES

Distribution and Sales Channels

It is estimated that 80 percent of Greece's import trade is handled through sales agents or distributors. Sales agents operate on a purchase basis without affecting imports on their own account. Agency agreements are not required to be exclusive and can be signed for any period of time. Distributors operate on a wholesale (and in some cases, retail) basis with exclusive sales rights for certain districts or for the entire country. Importers usually maintain their offices in Athens, Piraeus, or Thessaloniki with branch offices, subagents, and traveling sales staff covering the rest of the country. Lately there have been instances of smaller importers joining together to form cooperatives.

Sales agents of foreign nationalities are required to obtain an operating license from a special committee of the local Chamber of Commerce. The issuance of the license is subject to verification that Greek nationals are accorded reciprocal treatment in the applicant's country of residence. Reciprocity must be proven through a certificate from a Greek consular officer stationed in the applicant's country. Prospective sales agents are screened for reputation, experience and financial standing.

Retail and wholesale trade is characterized by small, family-owned and operated businesses, each of which deals in a narrow range of goods. There are 300,000 trading establishments in Greece. There are 7,700 corporations and limited liability companies engaged in wholesale trade and 3,200 corporations and limited liability companies handling retail trade.

There are a handful of department stores and several supermarkets. Several department stores have closed, due to failure to adjust new shopping trends. Those that remain in business, tend to operate like small shopping centers where the "shop-in-shop" concept is applied. A considerable volume of retail sales are still made by small, specialized shops. In the last few years, several major European chains have either purchased existing large department stores and supermarkets or have established their own outlets. However many names like C&A, Woolworth's have still not found the way to Greek shopping areas.

Direct marketing is used in Greece but the limited use of personal checks stands in the way of its development. There are a few small mail or telephone order services in Greece. Door-to-door selling exists on a limited scale. Franchising is becoming increasingly popular in Greece, with most of the franchises in fast food. There is no special law governing franchising in Greece.

Licensing

Licensing agreements have to be filed with the Industrial Property Organization and the Greek tax authorities. All procedures for payment and transfer of royalties to EU and non-EU residents are handled by commercial banks operating in Greece. No foreign exchange regulations apply to royalties. The Ministry of National Economy and the Bank of Greece intervene only when a foreign firm requests an unusually high royalty percentage. Rates over 10 percent are considered exorbitant and are not permitted.

Use of Agents and Distributors

The key to success in the Greek market is to have an experienced agent or joint venture partner with suitable experience and an extensive sales network. The ability to offer full after-sales support to the end-user and spare parts coverage is also crucial.

As the Greek government accounts for most major purchases, it is also essential that local agents or joint venture partners have the ability to participate in government tenders on behalf of U.S. suppliers. The decisive factor in government purchases is low price and strict adherence to specifications. Private sector purchasers are more likely to weigh price in relation to the quality and after sales support of the goods or services being purchased.

Before making a commitment to prospective agents or joint venture partners, U.S. firms are advised to obtain background information and credit reports. The International Company Profile (ICP) program of the U.S. Department of Commerce is designed to assist U.S. companies in this regard. For information on how to order an ICP, contact the District Office or Export Assistance Center of the U.S. Department of Commerce nearest to you.

Establishing an Office

In order to establish any type of business office in Greece, a certified true copy of the company's articles and relevant agreements must be filed with the Court of Misdemeanors. Then, the local tax office must receive a copy of these documents in order to record the newly established entity with the local Merchants' Social Insurance system. Finally, the local Chamber of Commerce issues the license number under which company will operate in Greece.

All traditional types of business organizations exist in Greece along with some more clearly defined subtypes. These include the following:

o Corporation o Limited liability company o General or common partnership o Limited partnership o Sole proprietorship or individual enterprise o Cooperative o Joint venture or consortium

Under Greek law, joint ventures and consortia are not recognized as different kinds of legal entities. The law governing joint ventures has been developed through decisions of the courts and directives issued by the Ministry of Finance. In general, each participant in a joint venture is liable for his share of the total debt, including taxes. Current tax law recognizes the existence and special nature of joint ventures and provides specific rules as to how their accounting records should be maintained.

Foreign enterprises may establish operations in Greece under any of these categories. In the case of industrial projects, the foreign investor is generally required to organize a Greek corporation in order to enjoy all the benefits of Law 2687 (which covers foreign productive investment) and of other incentives provided by the Greek government.

If none of the above forms is appropriate, foreign firms may establish branch offices. This requires the written approval of the Ministry of Development. Such approvals are issued on the basis of a power of attorney that designates a person who permanently resides in Greece to act as the foreign corporation's legal representative in the country.

Selling Factors

The selling factors and techniques that are applicable to Greece are generally the same as those in other western European countries and the United States.

Advertising

Advertising and sales promotion are usually handled by one of many local advertising companies. Advertising companies use all types of media to reach target groups. The mass media in Greece includes four state-run and over fifty private TV channels, and more than five hundred radio stations. There are also eight major national daily newspapers and a large number of general and specialized interest magazines, most of which are targeting on young age groups. International press is also available in major cities and tourist destinations.

A listing of national dailies and some business magazines appears in Appendix E.

Pricing

Greece has fully liberalized price controls, except for pharmaceutical and agricultural products. When pricing a product, firms should consider payment and credit terms. Orders are usually small, and Greek importers will request special consideration if a U.S. supplier requires large orders.

Greek importers generally expect C.I.F. quotation, except when the purchasing company does a large amount of direct buying and provides its own insurance. American firms should be prepared to quote prices on whatever basis is preferred by the prospective buyer.

U.S. exporters should bear in mind that letters of credit and drafts are very expensive in Greece. Banks require that the cash equivalent be deposited before issuing any guarantees. Working capital loans are relatively expensive, and to avoid extra costs, Greek firms often seek cash against documents or extended credit terms of 30-60 days (or longer) from their suppliers.

Credit

U.S. banks and U.S. firms should exercise caution in extending credit to Greek businesses. It is important to obtain full credit background information on any prospective recipient of liberal financing terms. Greek firms with an unhealthy debt/equity ratio are very vulnerable to changing interest rates. It is advisable to run periodic credit checks, even on businesses that have good payment records.

There are no debt collection agencies in Greece. Only courts are empowered to collect debts, through a legal process that is usually long and expensive.

There are a large number of bilingual law firms in Greece which practice business law. A list of attorneys is available from the Office of Citizens Consular Services for Europe, Room 4811, U.S. Dept. of State, Washington, D.C. 20520. This list is also available from the commercial section of the U.S. Embassy in Athens and the U.S. Consulate General in Thessaloniki.

Government Procurement

Purchases by the Greek government of capital equipment and supplies play an important role in the country's commercial environment. Greece is a member of the European Union and a signatory of the GATT Government Procurement Code, and adheres to the polices on government procurement of those organizations. The Ministry of Development controls the procurement of almost all public sector entities, such as ministries, state organizations, agencies, and so on.

It is a standard requirement that all bidders post a bond, usually 5 percent of the bid value, for all tenders issued by the Greek government and quasi-governmental agencies. Bids not accompanied by bonds are invalid. Bonds are returned to unsuccessful bidders within 5 days of the award of a contract. After a bid is approved, the successful bidder is invited to sign a contract that incorporates the terms and conditions of the bid, subject to any negotiated additions or amendments. At that time, a performance bond, usually equal to 10 percent of the bid value, must be posted by the firm.

Bids for the construction of public works are governed by special legislation. Construction bids are normally only open to local firms. However, when projects are complex and require a high degree of technical expertise, or when externally financed, international bids are invited.

If a particular commodity or service can be supplied by a local firm, the tender may be limited to local firms. Another means of directing purchases to local firms is to stipulate that foreign bidders must submit their offers in joint ventures with local enterprises. In major projects, the utilization of local resources (engineering services, manpower supplies, manufacturing, or assembly) is an important factor in bid evaluations. Foreign as well as local bidders must quote and accept payment in Greek drachmas, unless otherwise specified in the tender documents.

Special legislation also governs military construction projects and the purchase of defense items. Most military tenders require offsets. Procurement sponsored by the North Atlantic Treaty Organization (NATO) is open to international competitive bidding in accordance with NATO bidding procedures.

Patents and Trademarks

Greek laws extend equal protection on patents and trademarks to both foreign and Greek nationals. Greece is a member of the Paris Convention for the Protection of Intellectual Property, the European Patent Convention, the World Industrial Property Organization, and the Berne Copyright Convention. Greek legislation is also in harmony with EU rules and regulations on the subject.

Although there is adequate legislation which covers the protection of patents, copyrights and trademarks, enforcement of the law is insufficient, and piracy of copyrighted products and trademarks still exists. For more information, please see "Protection of Property Rights" in the Investment Climate section of this report.