At the crossroads between Europe and Asia, Bulgaria, European country where the average wage is the lowest also has the lowest budget deficit. Enjoying a strategic location and a fairly low corporate tax rate, Bulgaria naturally became a country of relocation, especially with regard to the electronics industry.
In fact, Bulgaria has many structural advantages which are more than attractive to manufacturers of the electronics industry. From a logistics point of view, Bulgaria has the two largest harbors of the Black Sea and a large number of connections, the country thus provides a bridge between Eastern Europe and the Middle East, a market representing 122 million of inhabitants. With its skilled labor force, which moreover happens to be one of the cheapest in Europ, Bulgaria represents the lowest cost access to electronics market. In addition, the Bulgarian government encourages the construction of new infrastructures (26 industrial sites are currently under development), but should also benefit from the equivalent of 10 million euros of European funds to develop its industry.
The electronics industry
The electronics is against all expectations a traditional sector of the Bulgarian industry. Indeed, between 1970 and 1990, the country was one of the leading manufacturers of electronic equipment in Eastern Europe and provided 40% of computer systems to the region. It is also at this time that the big names of the electronics industry started establishing in Bulgaria as for instance Liebherr, Toshiba, and Siemens, who chose Bulgaria as a production site for their electronic equipment.
Bulgaria mainly produces transformers, amplifiers, printed circuit boards (PCBs) and other microelectronic components, semiconductors and electrical products for house appliances.
The electronics and electrical sectors are experiencing a steady growth since 2000, plus the volume of production has tripled between 2000 and 2009. No doubt then, the sector is booming. Employing 45,000 people in 23,000 companies dedicated to the sector, electronics also plays an important role in the Bulgarian economy. Indeed, 75% of production is exported mainly to Europe, Russia and the United States. Riding the wave of sectorial specialization, however, the nature of the exports is changing: value-added products products are increasingly exported. We can therefore assume that Bulgaria wants to promote quality over quantity, perhaps to become more independent from an economic point of view.
Indeed, it is the networking between local and foreign firms which allowed to show such good results. However, only time will tell if Bulgaria’s success in the electronics will last.