B. Religion
Greek people are very religious, with 98% of the population belonging to the Greek Orthodox Church. The other religions in Greece are 1.3% Muslims and 0.7 % of Jews and Roman Catholics. Greek religion plays a part in people’s everyday life, with churches being built all over the country. In addition the most celebrated events are religion related, for example weddings, baptisms, name days of saints, Easter and Christmas. In relation to religion, Greek people are also very superstitious. They believe that Tuesdays are unlucky (similar to Friday the 13Th in the U.S.) because it is the day that Constantinople fell to the Ottoman Turks. In addition they believe highly in the evil eye which can be cast by envy. If someone praises something highly, he will be blamed if anything happens to it.
C. Greek Hospitality
The Greek people are known for their hospitality and generosity towards foreigners, although nowadays it is harder to find than it used to be. Nevertheless Greece is still one of the few countries in the world where a local will invite you in his home for a meal or treat you for a meal. Greek people never allow their guest to pay when they invite them for a meal, because they consider it a big insult. Greeks are also great hosts and will offer you a feast of delicious food. As long as you keep eating they will not stop filling your plate and cup. So if you don’t want seconds leave a little on your plate and leave your cup just about half empty.
D. Language and Education
The vast majority of Greece speaks Modern Greek and English. This is because the first nine years of school in Greece is free and mandatory. In addition Greek universities are free for Greek Citizens. So due to free education, 94 per cent of Greek managers are university or polytechnic graduates and a further 54 per cent have a postgraduate degree, usually from some college in the US, Britain, France or Germany. In addition, there are a large number of foreign-language speakers among Greeks, facilitating communication with foreigners. Forty-five per cent are familiar with at least one foreign language, usually English, while common second languages are French and German (all three of these languages are currently taught in Greek high schools). There are also several very small linguistic minorities that speak other languages including Romany, Vlach, or Turkish. Even though, a high percentage of Greek workers speak more than one language, immigrants are still a problem for foreign businesspeople. Most Greek can communicate in English but the majority of legal and illegal immigrants only speak their native which makes it very difficult for them to communicate with both foreign and Greek business people.
E. Greek Labor
It is important to mention that Greek people are very hard working. Until recent years there was very little inherited wealth in Greece, most Greek millionaires, like the legendary Aristotle Onassis, are self-made. This is why the poor or middle class people in Greece respect the rich rather than envy them. There are many Greeks that fled to other countries during the wars with nothing and now they are respectable business owners.
The Greek manpower pool is remarkable in possessing both a highly qualified workforce and a large supply of low-cost, unskilled labor. Greek workers tend to be well-trained and adapt easily to new conditions. Any gaps in technical expertise are more than made up by an ability and readiness to learn new skills. Wages, meanwhile, are the second lowest in Europe after Albania, due to a constant influx of foreign nationals coming to Greece in search of work (an estimated 500,000 have now settled in the country). Albanians, Poles, Egyptians, Africans, Pakistanis, Indians, Filipinos, Bulgarians, Romanians and many others - who have entered Greece both legally and illegally - have swelled the ranks of the workforce and kept wages low. In this way, Greece has preserved its traditional advantage over its European partners as a low-wage country. With judicious use of the necessary technology, a foreign firm that chooses to invest in Greece is well placed to use this advantage to best effect.
Greek workers respect their superiors and they usually follow all the guidelines that they are given, but superiors have to respect them back if they want to keep a good relationship. Greeks like new approaches in all levels of business; they like to learn from others using new technology and ideas. However, a foreign manager should not try to turn the whole organization around and follow only his culture believes because they workers are not going to appreciate that.
For regular workers the normal working week is 40 hours, spread over five eight-hour days. If a worker works overtime then he is entitled to extra pay which may range from 25% to 75% of base salary. Workers in Greece are paid on a 14 month salary basis. This includes 12 monthly salaries of the year, one extra monthly salary paid as a Christmas bonus, and two half-month salaries paid as an Easter bonus and a summer-leave bonus. Employees in Greece are also allowed to form and join labor unions which are affiliated with national labor federations. About 25% to 30% of Greek labor force belongs to a union. Although unions are fairly strong, strikes in the private sector are not common. Agreements negotiated by trade unions provide for mandatory working conditions and minimum wages and salaries. For the year 2002 Greece had the second lowest monthly minimum wage of 473 euros, in the EU after Portugal.
VII Cultural Dimensions
It is helpful to look at some of Greece’s cultural dimensions when examining the country from a business perspective. Greece and the United States have similarities and differences when it comes to cultural dimensions. Greece is similar to the U.S. according to power distance. They both are in the middle of Hofstede’s Chart (Cullen, 65). This means that the decision and organizational pyramid is neither tall nor flat but in between. Both countries also rate high on Hofstede’s chart in the dimension of Masculinity. This indicates that the countries experience a high degree of gender differentiation. In these cultures, males dominate a significant portion of the society and power structure, with females being controlled by male domination.
Greece is a collectivist culture. They rely on group decision making and people in the group protect each other in exchange for their loyalty to the group. If attempting to reach a decision concerning business in Greece, it might take a while. This is because the Greeks take into account how each decision affects the group as a whole, which can slow down business processes. In a collectivist culture like Greece, one’s identity is based on their group memberships including family, organization and community. So in other words you are who you are associated with.
Greek business people do not like uncertainty, which explains why they are at the highest level of Hofstede’s Cultural dimension model (Cullen, 65). Greece is a task oriented country, which is based highly on seniority and loyalty. People in Greece seek security and avoid conflicts and competition. Business people in Greece try to minimize risk by following set procedures. The people of Greece are not open for changes because they prefer to follow their traditional methods, which have been working for them for so many years. For them unknown situations are perceived to be threatening, therefore they avoid them.
VIII Economy
Greece has a mixed capitalist economy with the public sector accounting for half of GDP and with per capita GDP 70% of the leading euro-zone economies. Tourism plays a major role in Greece’s economy and it accounts for 15% of the GDP. The workforce in Greece is made up of four-fifths Greek and one-fifth immigrants who are mainly in unskilled jobs. Greece is known to be a major beneficiary of E.U aid, equal to about 3.3% of its GDP. But the Greek economy has shown some substantial growth of 4% since 1997, exceeding EU growth by more than 1 percentage point.
Improvement in the Greek economy can be seen from the following indicators:
- Government deficit has dropped from 13.8% of GDP in 1993, to 0,8% in 2000
- Yields on government bonds have fallen from 10.7% in 1997 to less than 5% in 2003
- The growth rate has averaged 3.5% over the past three years - substantially higher than the EU average of closer to 2%.
- Salomon Smith Barney international investment group have upgraded the Athens Stock Exchange from an "emerging" to a "developed" market.
Although the Greek economy is improving, there are still some areas that need adjustment. Such areas are the reduction of public debt, inflation, and unemployment, and further restructuring of the economy, including privatizing several state enterprises, undertaking serious reforms, and minimizing bureaucratic inefficiencies. Appendix 1 shows a table with all of Greece’s economic indicators, including a forecast for the year 2004.
IX Economic Environment
A. Foreign Direct Investment
Foreign companies are very welcome in Greece by consumers and by the Greek government too. Greeks prefer foreign and imported products over domestic made products with a few exceptions, such as food products and beverage products. Imports supply over 80 percent of the computer and peripheral market. Over 70% of the market is dominated by U.S. suppliers directly from the US or their European subsidiaries. The main competitors of American companies are European companies, including Bull (France), Philips (Netherlands), and Siemens-Nixdorf (Germany). Two Greek assembly companies, Altec and Quest, cover a significant portion of the market.
Computer Market in Greece
(US $ Millions)
1997 1998 1999
- Total Market Size 120.0 140.0 160.0
- Total Local Production 18.8 21.4 24.4
- Total Exports 1.2 1.4 1.6
- Total Imports 100.0 117.2 134.0
- Imports from the U.S. 72.0 82.1 93.5
Source: U. S. Department of Commerce - National Trade Data Bank, September 3, 1999
It is mainly U.S. businesses that are involved foreign direct investments in Greece because most of the other countries that have businesses in Greece are EU members and they are not classified as totally foreign because they have less regulations and barriers. U.S. companies are represented through local firms that act as agents, distributors and importers. Most foreign companies have established joint ventures with local Greek businessmen or are in the process of establishing wholly owned subsidiaries. Greece restricts foreign and domestic private investment in public utilities (with the exception of cellular telephony and energy from renewable sources). There are also restrictions on land purchases in border regions on certain islands.
While there are several successful franchise systems operating in Greece, there is room for many more and some industries are still practically untapped. Fast food is the area with the highest concentration of franchise systems operating in Greece. Many of the key players like McDonalds, Pizza Hut, and Dunkin Donuts, are active but as changing lifestyles allow less and less time for meal preparation at home new opportunities are appearing such as Burger King and Subway. Other areas where franchise systems are proving to be successful are clothing, housing wares, gift wares and computer training.
Although there is no official estimate of total foreign investment in Greece, the total stock of foreign investment is estimates at around $6 billion, or approximately 6 percent of GDP (in 1997). U.S. firms employ about 7,500 people in Greece. The largest single U.S. investment in Greece is approximately 40 percent stake by the U.S. company Whiteshield in the North Aegean Petroleum Company (NAPC). NAPC, a venture worth over $750 million, is involved in the drilling of crude oil west of the island of Thassos in northern Greece. Appendix 2 shows U.S. and other foreign investments in Greece.
Here is a list of reasons why multinationals should consider Greece for foreign investment:
• A stable macroeconomic environment has been gradually restored, which has dispelled the uncertainties and instability of previous years.
• The good prospects gradually being created as the Greek economy becomes steadily more interlinked with that of Balkan countries, but also from increasing economic links between the Balkans and Europe generally.
• Infrastructure built using the Second Community Support Framework, an EU-imposed release from state control of various sectors of the economy (telecommunications, energy, and transportation) and the privatization of state industries, which all create many investment opportunities.
• Greece's clear prospects of participating in EMU (European cooperation in the Mineralogical Sciences (mineralogy, petrology, geochemistry and their applications).are a fundamental change that appears to have affected investment opportunities in Greece positively, due to the benefits of a common European currency (a reduction of foreign exchange risk and cost of money).
• Important legislative changes, such as modernizing the operation of the capital market, deregulation of important sectors of the economy (cellular telephony, domestic air transport) and the freeing of capital movement after 1994.
B. Olympic Games 2004
“An ideal opportunity for investment”
The upcoming Olympic Games, to be held in Athens in 2004, naturally create new business opportunities in various fields. The Games organizers are already making feverish plans, and various investment proposals, particularly in the construction and services sectors, are now being looked at.
Potentially profitable investments can be made in the following areas:
- Building and refitting athletic facilities
- Supplying materials and equipment (security, medical, sports etc.)
- Investing in support services (hotels, transport vehicles)
- Providing services for the games (catering, advertising/promotion etc.)
C. Communication
The Greek road network continues to improve dramatically. The Via Egnatia (Egnatia Odos), currently under construction, will revive a historically important route across northern Greece, boosting east-west transport and communications links and connecting the port of Igoumenitsa with Thessaloniki and points further east with much improved road links. Due to Greece’s indented coastline and multitude of islands underline the importance of maritime communications, which are highly developed. As mentioned before Greece has the best fleet of ships in the world. In addition Greece has an extensive bus and ferry network which is needed due to the fact that it only has one Canal (the Corinth canal) and no navigable rivers.
Railroad construction in Greece started in the 1800s and has been improving ever since. The total railway track measures almost 1,600 miles and is being thoroughly modernized with the aid of EU funding. The new metro system opened to the public in January 2000 and it promised to dramatically improve communications and alleviate congestion in the capital. Greece has 25 domestic airports with the main two being Athens’ Eleftheros Venizelos international airport and Thessaloniki’s Macedonia airport. Greece’s national carrier, Olympic Airways is currently being revamped and privatized. In addition domestic is growing rapidly as airline companies are taking advantage of the European air deregulation. In addition to all the above Greece also consists of waterways, highways, oil and petroleum pipelines, ports and harbors, telephone and cellular services, and 27 internet service providers.
D. Currency in Greece
Since 1st January 2001 Greece became a member of the single currency called the Euro that did not start to circulate until January 1 2002. This meant that the Euro will be acceptable in all countries that are members of the E.U. The Greek Drachma which was the original currency of Greece was not to be acceptable after 28 February 2002. This meant that all transactions in Greece are to be done in Euros. The Euro bank notes are known to be embedded with state-of-the-art security features which makes it very difficult to duplicate. The exchange rate between the Euro and the U.S. dollar fluctuates from day to day. The Graph in Appendix 3 shows the U.S. Dollar relationship with the Euro over the past 12 months.
E. Industry
Greek industry has traditionally concentrated on textiles, processed foods and cement. New industries are now emerging in technology and telecommunications. Greece's main trading partners are other European Union members, primarily Germany and Italy. The major Greek industries are tourism, food processing, textiles, chemicals, tobacco processing, metal products, mining and petroleum. The industrial growth production rate for Greece in 2002 was 7%. Greek shipping is well known and it is number one worldwide. The Greek merchant fleet (vessels under the Greek flag) is the largest in the world. In the 1960s and '70s, Greek ship owners invested heavily in oil refining and shipbuilding. The Greek merchant fleet which includes all types of freighters and other purpose vessels (cruise ships), has a total of 2,100 vessels and a capacity of 24.5 million GRT (Gross Tons). There are also many Greek owned ships that travel under foreign flags. According to the amount of Greek ships and the tonnage they hold, it is said that ships belonging to Greek interests represents 15% of the world’s tonnage. This ranks Greece number one in the world. It is also said that in the EU one out of every 2 ships is Greek.
F. Tourism
Tourism is one of the most important sectors in the Greek economy. It accounts for about 20% of total invisible earnings. Greece constitutes one of the most attractive tourist destinations, welcoming 11.4 million tourist arrivals per year. All the exotic islands and ancient sites make Greece an attractive place to visit. Tourism in Greece has constantly been increasing due to improvements in services provided and the broadening of major tourist infrastructure projects like the new Athens airport.
G. Developing Sectors
Currently there are many investment opportunities open in the Greek economy. There has been an increase in growth in many sectors such as, foodstuffs, beverages, paper, plastics, chemicals, telecommunications materials and services, as well as information technology services for banks. In fact they have been growing at a faster pace than the general rate of development of the economy, which makes them attractive for business people. Those businessmen who have experience in such sectors, with advantages in know-how and technology and with knowledge of international markets may receive great benefits by investing in Greece. Greece’s location and educated workforce also contribute to the success of a businessman’s investment.
H. New Markets
Many Greek businessmen found it possible to expand their production activity beyond their national boundaries not only by exporting but also by establishing themselves in third countries. There is currently great business activity in the Balkans and the republics of the former Soviet Union. Greek businessmen have exercised buy-outs of local companies, as well as joint ventures and developed expanded distribution networks in these less developed countries. At the collapse of communism in most of these countries, Greek business people rushed to these regions in order to provide the goods and services they never had. For example there are many Greek businesses in Romania and Bulgaria such as construction and shipping. This is because the Greek port of Thessalonica is closer and more efficient to these countries than their own ports.
Greece is succeeding at entering these third world markets because they once lived under a regime of high inflation, weak currency and are used to dealing with arbitrary bureaucracy. It is as if they are at home dealing with the same problems of customs, tax and delays.
X Controls and Regulations
There are special control and regulation issues within the country of Greece. The main issues companies need to take into consideration are the way the country interacts with the U.S. as well as regulations regarding imports and exports. Greece imports considerably more than it exports, making it an import- dependant country. Greece’s exports in 2002 totaled $12.6 billion and its imports totaled $31.4 billion. Knowing that exports will be minimal in Greece foreign companies must focus on impacting Greek market. One way in which a new business in Greece can encourage exports is by building up the industrialization of the country.
Greece falls under World Trade Organization as well as government mandated trade barriers. There tend to be nationality-based restrictions on professional and business services slightly on E.U citizens, but strictly enforced on U.S. companies. Therefore the U.S. companies must hire E.U. citizens in order to overcome this barrier. When entering Greece a company must consider that the Greek authorities look at local content and export performance when evaluating for tax applications and investment incentives. In relation to tax, it is important to not that Greece uses the value added tax (VAT) form of taxation of goods, so products are taxed at each production stage. The current VAT is 18% on all goods except unprocessed agricultural products.
Greece also deals on the basis of “term agreement”, which gives Greek suppliers major preferences in contracts, and helps to support the national industrialized base. When dealing on a business basis, companies must be willing to be controlled by the Greek government in all aspects of doing business there. Export subsidies usually not used to support exports with a few exceptions on agricultural products that receive production subsidies from the EU to develop their export competitiveness. A company needs to take into consideration these subsidy regulations and decide on the amount they are planning to export and what it will cost them in the short term as well as the long term.
Other regulations in Greece are intellectual property rights, tax policies and pricing policies. Greek laws are set up to protect intellectual rights of foreign investors as well as Greek nationals. Problems arise when dealing with effective protection on copyrighted software, no protection of trademarked products in the apparel sector and no laws set up to protect the use of copyrighted internet domain names. Greece also makes changes to its tax policy every year which all businesses must be aware of. The EU rules of free movement of capital also apply to Greece. The only set price controls remaining in Greece are the ones on pharmaceuticals, however the government still retains most of the indirect control over pricing. Greek laws guarantee nondiscriminatory treatment for foreign companies, but it has been significantly noted that when a foreign country has a contract proposal against an EU country, the EU country is most likely to win the proposal.
XI Business Practices
To some people Greece may seem as the land of opposites when it comes to business etiquette. The U.S. and Greece are different when it comes to business, that is why it is important to know that in Greece family and friends are important, and that certain American practices are unacceptable. Upon meeting people in Greece, the person must to be referred to as Mr. or Mrs. followed by their second name. In addition older people and men will be introduced first and secondly women are introduced. Eye contact is also very important when being introduced, therefore as long as the individual is addressing you, maintain eye contact.
Upon arrival and departure it is very important in Greece, to shake hands individually with every person in the group. In addition Greeks appreciate personal contact, so a kiss upon greeting someone is considered to be normal and not an act of homosexuality as in the U.S. Also Greek people prefer to be close to the person they are talking to, which is the exact opposite of what Americans prefer. Americans prefer to have some distance between the people they are talking to. So a U.S. businessperson must not get offended if a Greek businessperson gets too close as they speak.
Nothing can be accomplished in Greece without the consensus of others, requiring the building of trust and personal relationships in business before any real tasks are accomplished. However, one's individual personality (philotimo, or self-pride) must be respected. Greeks prefer to take things slowly before getting down to business. Personal contact and entertainment can be an important part of establishing a business and personal relationship. American business people like to take care of business as quickly as possible because for them time is money. Greeks would rather start a business meeting with coffee or fruit juice and some social conversation. Until a relationship is established, the use of first names should be avoided.
Meetings will often be conducted in English if a non-Greek speaker is present, and correspondence will usually be in English. During meetings company brochures are usually produced in both English and Greek so they take in considerations all foreign business people. In addition to brochures, business cards are very popular and they can either in Greek or English or both. One important thing to remember before going to meetings is that Greeks always dress smartly, even in the summer. So an American should be prepared to dress up and forget about those casual Fridays. At the end of every meeting it is customary to end a meeting with the same way you start it, with a handshake.
Greeks are not very punctual when it comes to time. It is ok to be late for a Greek meeting but if you want to give them a good impression it would be wise to be on time. Americans on the other hand are very punctual and they get offended when someone is late for a meeting. It is also important to note that most Greek meetings do not have a set time at which they end so it would be wise to add a couple of hours extra in between meetings. Greeks are loud and vocal so meetings are usually vibrant, and everyone is expected to participate. Many people will be speaking at once, and questions are common. Interruptions, even in presentations, should be expected. Finally Greeks are hard people to convince. So in a meeting a businessperson must come to them with established knowledge, experience and also the power to bargain.
XII Protocol
In general gestures should not be used in foreign countries because you never know what they mean in different countries. A perfect example would be the American hand signal for OK using the thumb. In the U.S. it is used on a daily basis but in Greece it has the obscene meaning of the middle finger. In Greece the nodding of the head often accompanied with a slight bearing of the teeth means NO. But for Americans the same nodding of the head would mean YES. So a businessperson should never believe that all gestures mean the same where ever you travel.
Another gesture that Greeks believe is an insult is when a person raises an open palm at face level. A businessperson must keep this in mind when attending meeting in which he will have to ask and answer questions. Finally when a businessperson goes to a market place or café, he should be ready to talk, meet people and bargain. People mainly go to these places for those reasons. So a business person should not be surprised if people start conversions with him.
XIII Conclusion
In conclusion, Greece is a country that should be considered when businesses are contemplating on going global. In everything the Greeks do, they are very welcoming to foreigners and open to sharing their country. Investors should be aware of 2004 Olympics that are taking place in Athens, Greece. There are very great business opportunities to take advantage of. However investors should be aware of differences between Greece and the U.S. and should learn the Greek way of doing business. Once a businessperson is comfortable with the Greek Culture and Business practices then FDI, joint ventures, licensing and all other business investments are to begin. The topics covered in this paper serve as a starting point to those who wish to invest in the growing market of Greece.
