[EXCLUSIVE] Pioneers of Capitalism: The Largest Croatian Companies Founded in 1990.

In the spring of 1990, Croatia was going wild with Tatjana Matejaš Tajči and her song 'Hajde da ludujemo' at the 'Eurovision Song Contest' in Zagreb, while humming Hourina 'Mojoj majci (Ruža hrvatska)'. The year of independence was welcomed in the business world with 'Marković’s law' from 1989, under which 1200 companies were privatized in the former Yugoslavia. The largest Croatian companies that were privatized under this model were Zagrebačka banka and TDR. Ivica Račan at that time allowed multiparty politics, called elections, handed power to HDZ, and withdrew into opposition for almost ten years.

The Parliament determined through constitutional amendments that all forms of ownership are equal, guaranteed citizens the right to own agricultural land, allowed foreigners to acquire ownership rights, and announced the transformation of then social ownership into private.

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—Capitalism came to Croatia under the shadow of political tensions. Nevertheless, entrepreneurial optimism was stronger than the fear of the war that broke out the following year. In Croatia, a record 5746 companies were established in 1990, more than ten times compared to 1989, when a record 484 were established (in the last decade of socialism, only about twenty companies were founded per year).
Syrian Mohamed Radwan Joukhadar left the security of employment in a state pharmacy thirty years ago and founded a wholesale drug company, Medical Intertrade, in Vukovar. However, soon came the most dramatic period in his career – the company was completely destroyed in 1991 during the aggression against Vukovar. Joukhadar literally raised his business like a phoenix from the ashes, and Medical Intertrade is today the largest company in Croatia founded in 1990 and a peer of the independent state.

The story of Croatian pioneers of capitalism and the companies they founded in 1990 is a story about how the Croatian state has treated the economy over its thirty years. About a third of the companies founded in 1990 were engaged in trade and distribution. However, today’s list of the hundred largest companies from that 1990 (which we compiled in collaboration with Bisnode) shows that traders have survived the easiest over these thirty years: 49 percent of the thirty-year-old companies come from that sector, from which even nine out of ten largest!

Only Combis managed to squeeze among traders and distributors, and two more entrepreneurs from the top ten in the portfolio also have production – Joukhadar’s pharmaceutical factory Yasenka and Miljenko Hacek from Cotre’s cable factory Elka. This is, in fact, key evidence of the profitability of business in Croatia. Entrepreneurs who started from scratch (or from a small family business) have succeeded the most and best in trade. This is a sector that largely depends on imports, and its success reflects the same as Croatia’s foreign trade balance. Democratization and independence, hand in hand with the establishment of a new market order and globalization of the world market, triggered the liberalization (of) the Croatian economy and reduced protectionist barriers and tariffs. At the same time, this global trend was not utilized for export growth. Instead, a large part of the production facilities was destroyed during the transformation and privatization, which new owners sold off as real estate.

Thus, in the nineties, the coverage of imports by exports rapidly declined. Croatia became independent and stepped into capitalism in 1990 with an import-export coverage of 77 percent, and the war year 1992 was the only year when Croatia exported 4.4 percent more goods than it imported. However, in just five years, the coverage of imports by exports collapsed to less than 44 percent. (Only the recession in 2008 reversed the trend, so that ratio is now around 62 percent.)
All this favored traders, including these jubilee companies from our story that started business in 1990. They are not ‘bad guys’ because of that; they just took advantage of the circumstances well. The problem is not in strong trade, but in weak industry.

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