The list of the best small, medium, and micro enterprises, which we prepared together with Dunom & Bradstreetom, refutes the thesis that foreigners have bought up all the large companies that are worth something and that were on the market. The truth is that foreigners have dominated the SME scene, particularly its most lucrative part – the best companies in this sector. Out of 150 best companies from our triple list (top 50 micro, as many small and medium), as many as 72 are foreign-owned. This 48 percent of companies under foreign control is significantly higher than in the entire Croatian economy, where foreigners manage 6,700 entities, which is only a 3.7 percent share. Similar disparities exist in other categories. Foreigners in Croatia manage companies that generate 31 percent of all revenues (while on our list the share is 54 percent), with 17 percent of employees (on the list 54 percent) and generate 27.5 percent of added value (the best SMEs – 57 percent).
These facts should not be interpreted xenophobically. It must be acknowledged that foreign companies in Croatia simply perform better than the domestic average. They either have better know-how, a stronger brand, a better product, or a more competitive price… Furthermore, in their parent companies, they often have significantly better financial backing than domestic competition, especially in the SME sector.
Also, the companies on the list are not just about buying domestic intelligence; the primary focus is on ‘buying’ the market. Of the 72 foreign companies, as many as 58 are foreign entrepreneurs – most often multinationals – who established them themselves, while only 14 are originally domestic companies that were purchased by foreigners from domestic founders.
Basic criterion – less than 250 employees
This list was created according to the methodology that we use, together with Dun & Bradstreet, to rank the most successful companies in our publication ‘500 Best’. The main criterion is newly created value, which, simplified, corresponds to the sum of gross salaries and gross profits. It calculates the sum of profits before taxation, net salaries, taxes, and surtaxes on salaries: all contributions from salaries and on them, author fees and contracts for work with all taxes and contributions based on such contracts, student fees, including taxes and other contributions based on student employment contracts, and scholarships, from which funds received as grants or subsidies from the state budget or local unit budgets are deducted.
The competition included companies that meet the European Union criteria for classification as SMEs, and we have further tightened them by limiting revenues (to 375 million kuna) and assets (to 325 million kuna). Namely, for grants and non-repayable funds intended for SMEs, companies with less than 250 employees can compete, which have either revenues of less than 50 million euros or assets of less than 43 million euros. In fact, all companies above that limit are considered large by Croatian standards. These include, for example, Fibis, AGS Croatia, or JT International Zagreb, which are formally medium-sized companies (according to the criteria of number of employees and assets), but with revenues exceeding one billion kuna, they are among the hundred largest companies.
In addition to the number of employees, revenues, and assets, we also considered additional elimination criteria. Namely, if a company is a partner (if it has 25-50 percent shares in other companies or if other companies have that much share in it) or operates as a related company (has majority ownership of other companies or is another company a majority owner), their results are summed, so companies that independently meet the SME criteria but operate in large groups like Energija naturalis, Končar, Žito, C.I.O.S Group… did not make the list.
Problematic cross-border connections
We could not apply that connectivity criterion in cross-border connections because there are no consolidated data on the operations of all companies with majority foreign ownership. Thus, the list also includes companies that operate in Croatia and are owned by some of the largest global systems. The best companies in all three categories are also under majority foreign ownership – Drugi plan among micro enterprises, Abest among small ones, and General Logistics Systems Croatia among medium ones.
For example, the company Puni broj is owned by Super sport, which is the largest domestic company in the gambling category, so it fell off the list because together they significantly exceed the SME criteria. However, regarding the geographical origin of ownership, if Puni broj were directly owned by the Czech fund Emma Capital, it would be on the list.
All companies in foreign ownership operate in Croatia as independent entities but utilize all the benefits of their parent companies. We have marked them on the list because they have an advantage over domestic companies. Furthermore, they cannot use funds from EU funds according to SME criteria. As many as 96 out of 150 companies on the list are from Zagreb, which refutes the common thesis that the capital is economically strong because it has the largest companies, many of which operate throughout Croatia, and revenues are summed at the headquarters. Zagreb has less than 50 percent of companies in the top 1000, and when it comes to the best in the SME sector, it is almost two-thirds (64 percent), which shows that Zagreb has not only the absolute but also the relatively strongest SME scene in Croatia. The distribution is different in the rest of the country, where companies from the three largest centers usually prevail. However, on this Lider list among 150 SMEs, only three are from Split and Rijeka, and only one from Osijek. The relatively strongest Croatian business center – Sveta Nedelja has three representatives, while Velika Gorica secured second place on the list with four companies. Other centers have at most two companies on the list, which features 39 cities and villages.
