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One of those, which I think might be successful is the Bulgarian furniture, as Bulgaria has traditions in this branch of the industry, and there are at least 10 factories which have been privatized and are already exporting their production to overseas markets like USA, Canada and the Middle East. On the other hand, because of different factors, which I will briefly mention below, it is considered that if a product can be successfully launched in Belgium, it has a good chance of being successful in other EU countries. For these two reasons I have chosen to present a brief overview of the Belgium market for office furniture as a potential market for Bulgarian firms willing to specialize in the production of office furniture for exports to the European Union. Belgium is one of the smallest countries in the European Union (EU) but its small size does not reflect its relative importance in commercial or economic terms. With only 10 million inhabitants, Belgium accounts for some 3.2% of international trade, and it is the sixth largest importer in the EU. Situated between Germany and France, Belgium is located in one of the world's most industrialized and most competitive regions. Belgium's imports of goods and services is approximately 74% and exports - 77% of its GDP, the highest figures in the EU apart from Luxembourg, with which it has a customs and economic union. Belgium is specialized in the areas of medical technology, advanced industrial materials, biotechnology, food processing, chemicals, pharmaceuticals, aerospace. Furthermore, Belgium is one of the countries that is benefitting the most from the European integration process and the establishment of the single European market. Brussels is the capital of the "new Europe", and the single European market gives Belgium the opportunity to use all the comparative advantages that it draws from its geographic location. Besides, Belgium is the European headquarters for multinational corporations and such organizations as NATO, SHAPE, and the WEU. These are just a few of the reasons why Belgium is one of the most relevant markets in the EU for foreign companies wishing to enter and position themselves in the EU market. From a cultural point of view, Belgium is definitely the most important test market in the European Union, in part because of its cultural duality, enabling the exporter to experience both the German and French ways of doing business. This sales and marketing experience prove invaluable for future exporting to the rest of the EU. It is considered that if a product can be successfully launched in Belgium, it has a good chance of being successful in other EU countries. This is an important thing to be considered by the Bulgarian companies who have decided to export. Besides, Belgium's transportation system is one of the best in Europe. It is easily accessible by air, sea, rail and inland motorways. With respect to the office furniture market in Europe, Belgium occupies an important position. 45-50% of the Belgian office furntiture is imported, and the expected annual growth rate is 4-5%. Further, Belgium has an estremely open import policy and there is little legislation imposed on the office furniture market. According to the statistics the local production of office furniture in Belgium represents approximately 50-55% of the total market and it is almost entirely in the hands of Belgian owned companies. However, many foreign companies are also active on the Belgian market. About 10-12% of the total of the local production and the imports is for export or reexportation. Approximately 45-50% of office furniture sold in Belgium is imported. The European Federation of Office Furniture predicts that the demand for office furniture in the Belgian market will increase at an estimated annual rate of 4-5%. Other sources state that the market will remain rather stable. Indeed, the market should continue to grow in terms of volume but it will most probably decrease in terms of turnover, due to the price collapse in the past few years. The office furniture market in Belgium is divided into two distinct markets: a market characterized by manufacturers who produce large quantities of very standard office furniture with low prices, and a "facility management" market which focuses on the companies's image, needs and philosophy, and which deals with global services (design, lighting, etc). Whereas there has been a collapse in price in the first market, the latter market is experiencing a price increase. Manufacturers are not just selling separate pieces of office furniture. They are now selling more and more systems furniture, that is, entire interiors. The systems furniture sold in Belgium and Europe are quite different from those sold in Bulgaria. Bulgarian furniture is mainly composed of pieces to be attached to walls. Belgian and European furniture is more flexible; it includes dividing walls that can be moved and matched with other office furniture or elements. This difference must be taken into serious consideration by Bulgarian manufacturers. As concerns design, furniture does not only have to be functional and good-looking, but as secondary work conditions become more important, "ergonomic" factors constitute a very important element. Furthermore, because offices have become a status symbol in Belgium, their finished "look" ranks highly on the priorities list. Space-saving furniture has also become a major trend due to increasing office rental costs, together with the fact that a lot of information, previously stored in filing cabinets, is now being computerized. The office furniture market is also sensitive to environmental issues. More manufacturers are specializing in recyclable materials, a fact that is today appealing to many customers for two main reasons: environmental concerns are taken into account and customers who wish to renew their office furniture can get rid of it much more easily and advantageously when the materials are recyclable. Finally, as buyers are exposed to a greater variety of office furniture possibilities, show-room facilities are needed to assist them in their choices. The Belgian office furniture market is divided into two sectors: the private sector (i.e. non-governmental) and the public sector. The private sector represents approximately 85-90% of the total market. Almost one out of two companies (46%) bought office last year. Almost half of the small and medium sized companies determine their budget for purchase of office furniture based on their expected profit. The average annual amount of money spent by companies on office furniture in Belgium varies according to the size of the companies from approximately $3000 (for companies with 20 to 40 employees) to $34000 (for companies with more than 200 employees). The various industries in Belgium spend different amounts of money on furniture, the highest being spent by Banks, Insurance companies with average annual amount per company of $19000, followed by the Health and Education sector with $9000. The average life span of office furniture in Belgium is 9 years. Although the depreciation delay for the same office furniture is of 7,8 years, the average renewal delay is of 16,3 years. The public sector represents 10-15% of the total office furniture market in Belgium. This sector mainly buys low-priced furniture which is on average renewed every 25 years. The public sector is itself divided into two groups: the Belgian government and the European Union. As concerns the Belgian government, large orders are made by the Federal Purchasing Bureau through a bidding process. This procedure is open to all firms, national and foreign. The Equipment Direction of every Belgian government ministry is responsible for smaller purchases of office furniture. Contrary to the procedure for larger purchases, this procedure is not open to foreign firms. As concerns the European Commission, the Secretariat for the Purchase of Materials is responsible for the purchase of office furniture. Invitations to tender are published in the Official Journal of the European Communities and bidding is open to all firms. The selection process is identical to the one followed by the Belgian Federal Purchasing Bureau. Bulgarian manufacturers of office furniture seeking entrance to the Belgium market should concentrate on the facility management market and the systems furniture market. As the facility management market is a relatively new market which is becoming increasingly popular, it constitutes a very promising opportunity. No matter what type of furniture choose to export to Belgium, the Bulgarian manufacturers should not forget to adapt their products to the type of furniture sold in Belgium and Europe. Besides, Bulgarian firms will need to provide quick and efficient services in order to be competitive. The manufacturers who decide to specialize in environmentally friendly products should also find the growing market very promising. Finally, the Bulgarian manufacturers should try to focus only on the private sector. The European Commission will not be publishing any new invitations to tender for the next few years and the Belgian government, as mentioned earlier only deals with Belgian manufacturers for small to average purchases. Although Bulgarian manufacturers are free to bid for large purchases by the Belgian government, they will not find it very profitable to do so. Indeed, since the manufacturers and distributors in Belgium offer discounts of 40-65% for these orders, Bulgarian manufacturers faced with important transportation costs would probably be unable to compete. STRENGTHS AND WEAKNESSES OF THE COMPETITION Brussels constitutes the prime center of national economic activity in Belgium and it accounts for 40% of the total office furniture market. Flanders and Wallonia respectively hold 43% and 17% of the market. The Belgian office furniture market is strongly caracterized by linguistic and political factors. In a study sponsored by the Division of Office Furniture of the Belgian Chamber of Data Processing, a survey showed that 62% of the companies surveyed deemed it important to buy Belgian products and 49% stated that they only buy products from manufacturers in their region. Domestic production of office furniture is in the hands of Belgian owned companies. There are 9 Belgian manufacturers of office furniture in Belgium, the main four being: MEWARF, BULO, T.D.S. ACIOR and ROBBERECHTS. The only foreign manufacturer in Belgium is GIROFLEX, a Swiss owned company. European and NonEuropean Competitors Although there are no foreign manufacturers of office furniture in Belgium, except GIROFLEX, there are already approximately 40 foreign distributors. It is very difficult to determine the exact importance of these distributors in Belgium since the statistics in this area are quite distorted as the market is characterized by resale in the distribution channel. For example, 80% of GIROFLEX seats are sold to foreign office furniture distributors in Belgium. The sales figures of these foreign distributors thus take into account the resale of the Giroflex seats. Belgium has a very liberal import policy regarding office furniture and has so far imposed very few local content constraints. The European Commission has entrusted the European Standardization Committees of each member state with the task of defining minimum standards for office furniture. The European Federation of Office Furniture's main role is to coordinate the work of these committees and to elaborate standards which become accepted throughout the European Union. Once such standards are established, member states may only derogate from their application by establishing stricter standards. The office furniture standards which are listed at the Belgian Standarsization Institute (BSI) are strictly minimum standards. There are currently only 8 standards in Belgium which apply to office furniture and they mainly cover such aspects as dimension, construction characteristics, general technical quality and mechanical testing. There is no mechanism in Belgium however which controls the respect of office furniture standards. It is thus sufficient for a Bulgarian company seeking entrance to the Belgian market to draw up a report in which it states that the office furniture conforms to the Belgian standards and that it does not represent any dangerous element for the users. The problem with this approach, however, is that Bulgarian manufacturers will expose themselves to law suits in the event of accidents if the office furniture did not conform in every aspect to the Belgian standards. Furthermore, Bulgarian manufacturers who simply satisfy the Belgian minimum standards should be aware that they will find it impossible to enter the markets of other member states as they have stricter standards and control mechanisms. Bulgarian manufacturers of office furniture should seek to establish a local production subsidiary represented by a local agent or set up a joint venture with a local manufacturer. There are currrently many production plants and facilities for sale at very low cost in Belgium. Dealing with importers can prove to be a bad option taking into consideration the need to provide rapid and efficient services. Promotion facilities for the office furniture industry in Belgium are assisted by a number of organizations. The Division of Office Furniture of the Belgian Chamber of Data Processing, whose members are both manufacturers and importers of office furniture, constitutes a major source of information. The Chamber used to organize the annual trade fair "Buro" which dealt with all aspects of the office, including office furniture. However, as the fair lost its major sponsors, it has been definitely abandoned. The Chamber is currently working on the establishment of a new kind of annual fair. Although the European Federation of Office Furniture, which regroups European manufacturers of office furniture, is mainly concerned with the coordination of European standards, it is also a useful forum for trade information and contacts. Finally, Fabrimetal and Fabelbois are federations which respectively deal in the specific sectors of metal and wooden office furniture. Showroom facilities are an important means of office furniture promotion in Belgium. The Buro & Design Center is a trade mark specialized in the wholesale of a variety of office related equipment in which office furniture manufacturers have showrooms. There exist no special publications in Belgium on the market of office furniture but magazines which deal with furniture in general sometimes handle the subject of office furniture. Price is an important element in the purchase of office furniture in Belgium. While the public sector will usually award bidding contracts to the lowest bidders, the private sector will usually pay a relatively higher price if the relation between quality and price is justified. Belgium is a very open and easily accessible market. The import duties imposed on general metal or wooden office furniture are less than 3%, and the VAT is 21%. BEST MARKET PROSPECTS AND RECOMMENDED MARKET APPROACH FOR BULGARIAN FIRMS Since the outlook for the facility management and systems furniture markets offer the most promising growth potential, Bulgarian manufacturers should seek to concentrate on those specific markets. They should keep in mind that the services associated with these markets are of prime importance and that a local presence is crucial. Bulgarian manufacturers wishing to penetrate the Belgian office furniture market should focus on the private sector and consider the linguistic and political factors in Belgium in order to determine where and how to enter the market. Bibliography: Word Count: 2521
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