V. MARKETING OF U.S. PRODUCTS AND SERVICES It is estimated that 80 percent of Greece's import trade is handled through sales agents or distributors. Sales agents operate on a purchase basis without effecting imports for their own account. Agency agreements are not required to be exclusive and can be signed for any period of time. Distributors operate on a wholesale basis (and, in some cases, retail) with exclusive sales rights for certain districts or for the entire country. Importers usually maintain their offices in Athens, Piraeus, or Thessaloniki with branch offices, subagents, and traveling sales staff covering the rest of the country. Lately there have been instances of smaller importers joining to form cooperatives. Sales agents of foreign nationality are required to obtain an operating license from a special committee of the Athens Chamber of Commerce. The issuance of the license is subject to the requirement that Greek nationals are accorded reciprocal treatment in the applicant's country of residence. Reciprocity must be proven by a certificate from a Greek consular officer stationed in the applicant's country. Applications for a sales agent's license are screened for reputation, experience, and financial standing. Retail and wholesale trade is characterized by small, family-owned and operated businesses, each of which deals in a narrow range of goods. There are 300,000 trading establishments in Greece. There are 7,700 corporations and limited liability companies engaged in wholesale trade and 3,200 corporations and limited liability companies handling retail trade. There are a few department stores and supermarkets. A considerable volume of retail sales are still made by small specialized shops. In the last few years, major European chains have either purchased existing large department stores and supermarkets or have established their own outlets. Direct marketing is used in Greece but the lack of broad use of personal checks stands in the way of its development. There are very few, small mail or telephone order services in Greece. Door-to-door selling exists on a limited scale. The franchising concept is gaining ground in Greece. Most of the franchises are in fast food. There is no special law governing franchising in Greece. All traditional types of business organizations exist in Greece along with some more clearly defined subtypes. These include the following: o Corporation o Limited liability company o General or common partnership o Limited partnership o Sole proprietorship or individual enterprise o Cooperative o Joint venture, consortium Under Greek law joint ventures and consortia are not recognized as separate legal entities. The law governing joint ventures has been developed through decisions of the courts and directives issued by the Ministry of Finance. In general, each participant in a joint venture is liable for his share of the total debts, including taxes. Tax law recognizes the existence and special nature of joint ventures and provides specific rules as to how their accounting records should be maintained. Foreign enterprises may establish operations in Greece under any of the above-mentioned forms of business organization. In the case of industrial projects, the foreign investor is generally required to organize a Greek corporation in order to enjoy all the benefits of Law 2687, covering foreign investment, and of all other inducements provided by pertinent legislation. If none of the above forms is desirable, foreign firms may establish branch offices. This requires the written approval of the Ministry of Commerce. Such approvals are issued on the basis of a power of attorney designating a person who has permanent residence in Greece to act as the foreign corporation's legal representative in the country. Basic steps to establish any business office include the following: A certified true copy of the company's articles/agreement is filed with the Court of Misdemeanors. The local tax office receives also a copy and records the newly established entity with the local Merchant's social insurance system. Finally the local Chamber of Commerce issues the license number under which company will operate in Greece. The key to success in the Greek market is to have an experienced agent or joint venture partner with a suitable background, experience and extensive sales/service network, who can offer full support to the end-user, after-sales maintenance, and spare parts coverage. As Greek Government accounts for major purchases, it is also essential that local agents/joint venture partners participate fully in government tenders on behalf of U.S. suppliers. Before making a commitment to prospective agents/joint venture partners, U.S. firms are advised to obtain background information and credit reports. U.S. suppliers evaluating the Greek market should place more emphasis on the status of its modernization than on the relatively small size of the Greek population. The decisive factor in government purchases is low price and strict adherence to specifications. The private sector, however, considers price as relevant to the performance of the equipment or services being purchased. Selling factors and techniques that apply in all other western European countries and the U.S. do apply in Greece as well. Companies set their targets at the beginning of each year, marketing strategies are put into action and the sales force with the assistance of advertisement campaigns try to materialize the company's plans. Greek business people are astute bargainers. Success in business dealings depends on a combination of patience and quick judgment. Greeks are warm and cordial in their personal relationships, and business is usually conducted over lunch or dinner. Greek is spoken by 98 percent of the people and is used for all business and official purposes. Language is not a major barrier to foreign business visitors, as a relatively high percentage of local officials and business people are acquainted with English or French. Advertising and sales promotion is usually handled by one of the many large or small advertising companies. Advertising companies use all media to reach their target group. This may include some of the 4 state and over 50 private TV channels or any of the 500 radio stations throughout Greece. There are also 8 national dailies and a large number of general specialized magazines. A listing of some business magazines follows: KEFALEO 4 Thermopilon Street GR-152 33 Halandri, Athens Tel: 30-1/682-0723 Fax: 30-1/682-7058 Contact: Theoharis Filipopoulos, Managing Director AGORA 178 Kifisias Avenue GR-152 31 Halandri, Athens, Greece Tel: 30-1/647-3384 Fax: 30-1/647-7893 Contact: Kyriakos Livaditis, Chief Editor Technical magazines: PLANT Infopublica Group of Companies, Publisher 4 Kartali Street GR-115 28 Athens, Greece Tel: 30-1/770-0281 Tlx: 218807 LEOU GR TECHNIKI EKLOGI N. Mavrommatis Ltd., Publisher 11 Mayer Street GR-104 38 Athens, Greece Tel: 30-1/524-4555 Fax: 30-1/524-3345 Recently Greece has fully liberalized price controls, expect for pharmaceuticals and agricultural products. When pricing a product, apart from taking into serious consideration the competition, one should also consider payment and credit terms. Orders are usually small. The Greek importer will request special consideration if a U.S. supplier demands large orders. Greek importers generally expect c.i.f. quotation, except when the purchasing company does a large amount of direct buying and provides its own insurance. American firms should be prepared to quote prices on any basis preferred by the prospective buyer. U.S. exporters should bear in mind that letters of credit and drafts are very expensive in Greece. Banks require that the cash equivalent be deposited before issuing any guarantees. Working capital loans now cost more than 34 percent in interest. To get around this, Greek firms often seek cash against documents or extended credit terms of 30-60 days or longer from their suppliers. U.S. banks and U.S. firms should exercise caution in extending credit to Greek businesses. It is important to obtain full credit background information on any prospective recipient of liberal financing terms. Greek firms with an unhealthy debt/equity ratio are vulnerable to changing interest rates. Therefore, it is a good idea to run periodic credit checks, even on businesses which have good payment records. There are no bill collection agencies in Greece. If a case proves troublesome, the debt can be collected only through the courts, and such a legal process is usually long and expensive. A list of Greek attorneys is available from the Office of Citizens Consular Services for Europe, Room 4811, U.S. Department of State, Washington, DC 20520. Purchases by the Greek Government of capital equipment and supplies play an important role in the country's commercial environment. Law 1797/1988 sets forth general policies governing Greek Government procurement contracts. Presidential Decree 173/1990 gives detailed instructions on how the Greek Government procurement system operates with each government-controlled entity. As a member of the EU, Greece is a signatory of the GATT Government Procurement Code. The Greek Government and its quasi-governmental agencies are required by law to procure their purchases through international tenders. The bulk of international government procurement is undertaken by two quasi-governmental agencies, the Public Power Corporation (PPC) and the Hellenic Telecommunications Organization (OTE). Law 2000/1991 permits major government agencies to process their own supply and purchasing programs without the supervision and control of the Ministry of Commerce. It is a standard requirement that all bidders post a bond, usually 5 percent of the bid value, for all tenders issued by the Greek Government and quasi-governmental agencies. Bids not accompanied by bonds are invalid. Bonds are returned to unsuccessful bidders within 5 days after the award of contract. After a bid is approved, the successful bidder is invited to sign a contract which incorporates the terms and conditions of the bid including any additions or amendments. At that time, a performance bond, usually equal to 10 percent of the bid value, must be posted by the firm, which is retained as a guarantee of its performance. Bids for the construction of public works are governed by special legislation. Normally, construction bids are open only to local firms. However, when projects are complex requiring a high degree of technical expertise or when externally financed, international bids are invited. If a particular commodity or service can be supplied by a local firm, the tender may be limited to local firms. Another means of directing purchases to local firms is to stipulate that foreign bidders must submit their offers in joint ventures with local enterprises. In major projects, to the largest extent possible, utilization of local resources (engineering services, manpower supplies, manufacturing, or assembly) is an important factor in bid evaluations. Foreign as well as local bidders must quote and accept payment in Greek drachmas. Special legislation also governs the construction of military projects. Most military tenders require offsets. Procurement for infrastructure projects sponsored by the North Atlantic Treaty Organization (NATO) is open to international competitive bidding in accordance with NATO bidding procedures. Greek laws extend equal protection on patents and trade marks to both foreign and Greek nationals. Greece is a member of the Paris Convention for the Protection of International Property, the European Patent Convention, the World Industrial Property Organization, and the Berne Copyright Convention. As a member of the EU, Greece has harmonized Greek legislation in accordance with EU rules and regulations. Although there is adequate legislation which covers the protection of patents, copyright and trade marks, enforcement of the laws is lacking. Piracy of copyrighted products still exists. Because of this, Greece was placed on the "Watch List" under the Special 301 provision of the U.S. Trade Act (Also see Part VII). Law 1733/87 stipulates the procedure for approving licensing arrangements and granting patents on an invention or a certain know-how. Under the terms of this law, approval of licensing agreements rests with the Industrial Property Organization, under the auspices of the Ministry of Industry, Energy and Technology. The setting of royalty rates rests with the Ministry of National Economy. Approvals are communicated to the Bank of Greece, which is solely responsible for checking the validity of supporting documents governing the transfer of foreign exchange abroad, and releasing the necessary amount required for the royalty fee.