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Country Commercial Guides for FY 2000: Slovenia Report prepared by U.S. Embassy Ljubljana, Released July, 1999 Note*

Chapter IV Marketing U.S. Products and Services

Distribution and Sales Channels

Several distribution channels are open for U.S. goods to enter the Slovenian marketplace, including wholesaling and retailing, as well as franchising, joint ventures, and licensing.

There is a large number of merchants, agents, intermediaries, wholesalers and retailers available in Slovenia. Since 1990, when the transition to a market economy began, foreign trade ceased to be the exclusive domain of a few specialized companies. Today, any firm may now carry out both foreign and domestic trade.

Use of Agents and Distributors, Finding a Partner

For handling distribution, a carefully chosen local agent or distributor can be much more efficient and cheaper than direct sales by a U.S. exporter not familiar with the Slovenian market. Reliable and capable potential partners can be found, but care needs to be exercised. Most trading firms are newly-established, with only a few years of experience, while former "socially-owned" trading companies are being privatized and restructured.

Due to the high cost of borrowing and a general lack of working capital, failure to pay suppliers promptly is a growing problem in Slovenia. Therefore, U.S. firms are advised to obtain a confirmed letter of credit as a basis to conduct business with a new local partner. Dun & Bradstreet's agent in Slovenia (phone: 386/61/1332076; fax: 386/61/1333105) or the Slovenian Chamber of Commerce (phone: 386/61/1898102; fax: 386/61/1898100, attn: INFOLINK Office) may be helpful in determining the creditworthiness of a potential local partner.

The following are some well-known American companies that have local agent/distributor or representative offices: Goodyear, Merck, Sharp & Dohme, Coca-Cola Amatil, UPS, IBM, Nike, DHL, Philip Morris, Oracle, Hewlett Packard, 3M, Microsoft, Air Routing International, Pfizer, Wrigley, Deloitte & Touche, Eli Lilly, Ford and many others.

Franchising

McDonald's, Atlas-American Express, Dairy Queen, and Diners Club are the best-known U.S. franchises in Slovenia. McDonald's has opened 10 restaurants during the last three years, but most of them are direct investments; only two are under franchise. There are no other American franchises in Slovenia, although a lot of European companies have established outlets in the market.

Direct Marketing

Direct marketing is not well-developed in Slovenia: Selling of mailing lists of individuals is not common, and mail-order houses are rare. Amway is the only U.S. direct marketing company with an office in Slovenia.

Joint Ventures/Licensing

In addition to founding their own companies, foreigners can also invest in existing companies. In companies in which partners' shares are not in the form of securities (i.e., private companies and limited-liability companies), investments may take place with the agreement of the partners and by joining in the partnership agreement. Takeovers of joint-stock companies are much more frequent and depend less on partner-shareholders because partners' shares are in the form of securities and are quoted on the Stock Exchange as such. (Shares of closed companies are an exception.)

Takeovers of companies are possible through mergers or acquisitions regulated by the Law on Commercial Companies. These require the approval of the management board. In takeovers of companies in the narrow sense, bidders address their tenders directly to shareholders, either with or without the approval of the management board. Takeovers in this sense are not specifically regulated, so the provisions of the Law on Commercial Companies and the Law on the Securities Market should be used reasonably. Takeovers are possible both for public companies whose shares are quoted in the market and for private companies through direct offers to shareholders.

If the company conducting a takeover acquires a controlling interest in the other company, it is obliged to so inform the issuer of shares, the Securities Market Agency, and the Stock Exchange within seven days of the date that it is apparent that they hold a controlling number of shares. The issuer who has received such a notice must publish it publicly within ten days in daily newspapers or on the premises of the Stock Exchange (Official Gazette no. 47/97).

Both domestic and foreign legal and natural persons may freely conclude all types of commercial contracts (agency contracts, distribution contracts, license contracts, etc.). Slovenian legislation does not stipulate several different permits and other administrative procedures for the performance of individual foreign trade transactions or contracts. In addition, contractual parties in international legal transactions may select the law that will regulate their mutual relationships and the court (arbitration tribunal) of competent jurisdiction that will hear disputes.

Steps to Establishing an Office

In conducting business in the Republic of Slovenia, foreign companies have the same rights, obligations and responsibilities as domestic companies. The principles of commercial enterprise, free operation, and national treatment apply to the operations of foreign companies as well. Their basic rights are guaranteed by the Law on Commercial companies and the Law on Foreign Transactions (the right to manage or participate in the management of companies in proportion with invested funds; the right to transfer contractual rights and obligations to other foreign and domestic natural and legal persons; the right to participate in profits in proportion with invested funds and the right to free transfer and reinvestment of profits; the right to recover investments in companies and their share in net assets after the dissolution of companies).

However, restrictions are placed on foreign investments in certain sectors of strategic or other special significance. Foreigners cannot establish their own companies in the following areas: manufacture and sale of arms and military equipment, pension and medical security insurance. These limitations regarding individual activities are statutorily defined; certain limitations have been eased, above all by allowing for the possibility of foreign investments but their share may not exceed a specific percentage which would enable them to have a controlling interest in companies in these sectors.

In Slovenia, foreigners may establish any legal-organizational form provided for in the Law on Commercial Companies (limited-liability companies, joint-stock companies, limited partnerships with share capital, limited partnerships, general partnerships, and silent partnerships). All companies acquire the status of a legal person upon their entry into the court register. Prior to the entry into the court register, a number of formalities must be performed. Upon deciding to establish a company it is therefore beneficial to consult a lawyer as soon as possible to prevent unnecessary difficulties which may arise during the process of founding the company (from adopting the memorandum and articles of association to their certification by a notary public and entry into the court register).

Foreigners may be exclusive or part owners of companies.

Companies established in such manner have rights, obligations, and responsibilities in legal transactions in the territory of the Republic of Slovenia equal to those of domestic companies.

Selling Factors/Techniques

Shopping hours in Slovenia are between 8AM and 8PM. Most stores are open on Saturday mornings; only a very few are open on Sundays. Most Slovenian consumers prefer to pay in monthly installments, even for low cost goods. Other factors/technologies critical to success are close and frequent contact with buyers, motivated and trained intermediaries, and aggressive market promotion.

Advertising and Trade Promotion

All normal channels for advertising are available and are widely used in Slovenia: newspapers and magazines, television and radio, outdoor billboards/signs, etc. Other promotional techniques such as sales promotion, public relations, and trade fairs are also common. The major newspapers are: Delo, Dnevnik, Slovenske Novice, and Vecer. The major business journals are: Finance, Gospodarski vestnik, Manager, Podjetnik, and Slovenian Business Report.

Pricing Products

The level of prices in Slovenia is generally very high due to high costs of labor and lack of competition in some areas. Most prices are determined by the market. The prices of gasoline, energy, natural gas, railway transport, telecommunications, milk, and some other products are set by the government. The government may also influence the pricing policies of companies under its direct or indirect control.

Sales Service/Customer Support

Sales service and customer support are relatively undeveloped as a marketing tool in Slovenia.

Selling to the Government

The procedure used by state agencies and state controlled companies for purchases is prescribed by the Decree on Procurement of Goods, Works, and Services published in the Official Gazette no. 24/1997. Prices of Slovenian companies can be 10 percent higher compared with prices of foreign competitors. In cases where a foreign supplier is selected, it has to import Slovenian goods of equal value. Slovenia is not a signatory to the WTO agreement on government procurement.

Protecting Your Product from IPR Infringement

Slovenia has a comprehensive legal framework which provides protection for intellectual property rights. Slovenia has signed the WTO Uruguay Round Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) and has implemented those commitments. The number of intellectual property complaints has been quite low, although U.S. industry in particular has raised some concerns about the pace and breadth of action taken by the government against infringement.

Industrial property rights (patents, designs, trademarks and service marks, and appellations of origin) can be protected in Slovenia by their registration at the Slovenian Intellectual Property Office (phone: 386/61/1783054; fax: 386/61/1783110). A list of Slovenian patent attorneys is available from the Patent Office (phone: 386/61/1264012; fax: 386/61/1264079).

Slovenia is a party to: the Convention Establishing the World Intellectual Property Organization, the Agreement on Trade-Related Aspects of Intellectual Property Rights, the Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the International Registration of Marks, the Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks, the Locarno Agreement Establishing an International Classification for Industrial Designs, Hague Agreement Concerning the International Deposit of Industrial Design, the Patent Cooperation Treaty, the Berne Convention for the Protection of Literary and Artistic Works, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcast Organizations, the 1973 Geneva Phonograms Convention, and the Brussels Convention Related to the Distribution of Program-Carrying Signals Transmitted by Satellite.

In case of IPR infringement, a U.S. company should hire a local attorney, who can then pursue the matter in the local commercial court.

Need for a Local Attorney

Slovenia does not recognize U.S. legal accreditation, and regulations regarding licenses to practice in-country are restrictive. Some Slovenian law firms can conduct business in English and are familiar with U.S. law. A list of English-speaking law firms is available at the U.S. Embassy in Ljubljana.

Performing Due Diligence/Checking Bona Fides of Banks/Agents/Customers

A few firms operating in Ljubljana can assist in performing the important task of due diligence on potential Slovenian partners. These include:

I Poslovne informacije d.o.o. (Dunn & Bradstreet's agent in Slovenia) Zrinjskega cesta 4

1000 Ljubljana
Tel: 386-61-133-2076
Marko Batista, Director

Creditreform d.o.o.
Dunajska cesta 21
1000 Ljubljana
Tel: 386-61-131-4320

Fax: 386-61-131-3019
Alfred Zemen, Director

Intercredit, d.o.o.
Cankarjeva cesta 3/III
1000 Ljubljana
Tel: 386-61-125-9065
Fax: 386-61-125-9130
Milos Varga, Director