Issue 1, 2015. February-March
DCFTA: PROMISING GROWTH INSIGHTS FROM GRANT THORNTON'S INTERNATIONAL BUSINESS REPORT
In 2014 Georgia gained the opportunity to enter a market of 27 states with over 500 million high-income consumers. To exploit this opportunity, the country must modernize from its unpredictable and poorly implemented business decision-making and focus on market development, consumer protection and product quality, a recent survey by Grant Thornton found.
Overall, businesses positive about EU opportunities
The survey of 50 business respondents, conducted in the fourth quarter of 2014, shows that 70% of respondents expect positive or very positive impacts on the economy from the recent trade agreement, while 26 percent do not expect any change.At present, Georgia has unilateral trade concessions from the EU that removed customs duties for some exported goods. The DCFTA will abolish tariffs for almost all products, which means that the country will enjoy zero customs tariffs. The agreement aims to establish a more predictable legal and institutional environment, making Georgia more attractive to economic partnership. The skepticism of those who do not expect improvement of economycan be explained by the fact the all the necessary processes require time, and while the agreement provides opportunities, making the most of them is a test which the country has yet to pass.
50% reported that their supply-chain management and sustainability are already incompliance with EU regulations, 4% stated that they will be ready within one year, 12% within 2 years, and 4%, within three or more years, respectively. At the same time 28% said that they do not know how long it will take to adopt and implement necessary standards.
Concern over competition
Businesses' lack of confidence is backed up by the fact that companies need to implement quality standards and modern practices to be able to keep up with the competition, which requires significant investment of both time and money. Georgia can offer natural and quality food products and European consumers tend to focus on these product characteristics.Nevertheless, it should be noted that the European market is very competitive. Local companies will need significant investment in marketing and product development to enter the EU market and to be able to compete with long-established players. And while predicting success today is a long shot, the investment most likely will require a few years to breakeven, after which managers will start seeing profits.
The role of the Russia-Ukraine conflict
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