Sofia, Bulgaria

As I had intended, I used my Pancoast Fellowship to spend several months working with a company in a developing European country. My intention in seeking an internship in central or eastern Europe was to familiarize myself with the region and gain insight into the basic strategies needed for a company to succeed in these markets. The internship I took was a market research position with a real estate company led by an American CEO, in Sofia, the capital city of Bulgaria. This internship was arranged through AIESEC, a global network of university students who facilitate work opportunities worldwide for business and engineering students, with the mission of promoting global development through international understanding and co-operation. My experience was phenomenal: the Balkan region is in a period of unexpected and unprecedented development and the company I worked for, Colliers-Continental Properties, is undertaking extraordinary expansion. This timing made my internship even more valuable than I had expected it to be.

I started my internship just days after the company with which my internship was arranged, Continental Properties, joined the global property development firm Colliers International. Then, shortly after I arrived, major political changes occurring in neighbouring Yugoslavia brought Vojislav Kostunica to power and marked the end of that country’s isolation by the West. These changes, coupled with economic progress achieved by other countries in the region over the past few years, prompted Colliers-Continental Properties to establish itself as the leading property development firm in the Balkans. The firm’s first move to this end was to seize opportunities to serve clients scrambling to set up diplomatic missions and business operations in Belgrade.

These events were remarkably fortuitous for me; I not only witnessed, but also participated in a company’s transition from operating as an independent local firm in a developing European country, to being a member of a global partnership, and I worked with the company as it positioned itself to enter and capture new markets in the region.

My initial assignment was to compile a summary report on political, economic and real-estate market conditions in Bulgaria, to be included in Colliers International’s annual global real estate prospectus for investors. Then, the unexpected political changes in Yugoslavia suddenly opened a whole new real estate market. The January 21, 2001 issue of The Economist lists Belgrade as the second most expensive city in the world to live in, indicating the exploding demand for quality real estate there. I was responsible for gathering economic data on Serbia and Montenegro and information about commercial and residential real estate prices in Belgrade to contribute to a report commissioned by the European Bank for Reconstruction and Development and to prepare a report detailing investment opportunities in Serbia and Macedonia for Colliers International.

My experience with Colliers-Continental was valuable in many respects. In simply fulfilling my work assignments I came to understand the state of affairs in Bulgaria and the Balkan region and became familiar with market conditions there. However, the most interesting element of my work experience in Bulgaria was participating in the weekly Friday staff meetings. These meetings were conducted in English, both for my benefit and to give the young, all-Bulgarian staff, a chance to practice their English in a somewhat formal business setting. Attending these meetings helped me understand some of the elements that are unique and characteristic of this region, and gave me a better appreciation for the challenges faced by companies operating in this developing business environment.

Based on my observations at Colliers, combined with discussion with other foreigners working with Bulgarian firms, I noted some of the characteristics of Bulgarian firms and the special challenges faced in a developing economy: · The vast majority of employees are women. My managing director (a woman) explained that women have adapted to the changes that have followed the collapse of communism, better than men. Women tend to be willing to work hard, whereas many men still expect to be rewarded, regardless of the amount or quality of their work. More women apply for jobs she said, and women tend to make better employees.

· Staff at private companies (non-governmental agencies) tends to be very young. At Colliers-Continental for example, most employees are in their early 20s and only a handful, including the Managing Director and CEO, are over 30. The managing director explained that this is because young people normally have a better grasp of the skills companies seek: familiarity with computer programs, ability to speak English, an understanding of competitive market environments, and a stricter work ethic.

· Companies in developing markets have to contend with overcoming circumstances and inadequacies rarely, if ever encountered by companies operating in the west. This is in addition to overcoming the challenges faced by any organization operating in a competitive market. Working with Colliers-Continental gave me an excellent perspective on such pressures. Colliers International is a global firm with standards and levels of service that must be upheld by all its offices. It was interesting to be with Colliers-Continental as the company struggled to establish and maintain the standards of service that clients expect from Colliers, and that are demanded to remain a member of the international partnership.

· Basic physical infrastructure inadequacies often pose the greatest challenges to running a company in the east. For example, until two years ago there was just one office building in Sofia. This left most businesses, including the company I worked for with no option but to rent residential apartments in the city center and convert them into office space. As a result, the Colliers office is in former apartments. Since apartments are relatively small, the entire company doesn’t fit into one office space, but is spread across several locations. Two floors below the apartment I worked in are more Colliers offices, and two buildings down on the same street is another location. This physical division hinders communication. Since there is not enough room to accommodate everyone in the boardroom for a meeting, meetings must be conducted one small group at a time. This requires a lot of repetition and is an inefficient use of time. In addition, old apartment buildings such as these are not fit for modern wiring, let alone network connections: phone lines and Internet cables are all shared among several employees.

· Growth potential is often restricted by the fact that legal frameworks have not kept up with the pace of economic development. With regards to real estate for example, a law on mortgages hasn’t been enacted yet, and so most mortgages now go at a 16% interest rate. Consequently, the real estate market is small, and will not expand by much until laws are developed to make mortgages a more viable option for more of the population.

There are significant challenges in trying to run a company on par with western standards: features as simple as having real estate agents on call are made difficult by logistical limitations: In the West agents can always be reached on their cell phones; in Bulgaria the cell phone network is quite unreliable. The only way to be certain that a client’s call is answered is to have an agent in the office to answer the phone. As a result a policy was instituted whereby agents take turns staying at the office after business hours and on weekends to serve clients who might call then.

· At this point in time, by simply providing Western-style services a company can gain a competitive edge to a certain extent. There is demand for many of the services that are common in the west, but many are not available in emerging economies such as Bulgaria’s because of infrastructure limitations. A company that can surmount these limitations can find the rewards very lucrative.

· Companies operating in these regions often have to struggle to be taken seriously, both by westerners and by locals.

I expected western clients to be somewhat skeptical of firms based in developing countries, but I was surprised to learn that it tends to be the local population that is most distrustful of companies and local employees. For service firms such as a real estate company, this problem is particularly acute: service-based firms are a relatively new concept in Bulgaria and such firms must therefore educate the local population as to the kind of services they provide, the benefits of their services and market conditions. In Bulgaria real estate services are still in the developing stage and as such many operating procedures are fundamentally different from western standards. I was surprised to discover that some of these operating procedures contribute to a more competitive market then what exists in the U.S. For example, on the Bulgarian real estate market, people selling or renting property list with multiple agencies: exclusive contracts, which are the norm here, are almost unheard of there. This makes market conditions more aggressive for agents, though it also makes the process of selling and finding properties less efficient for clients, who must deal with many agents. For this reason this structure will eventually probably change, though not before the service market is better established and clients fully trust the concept that a single agent will work for their best interest because it is in the agent’s best interest to do so too.

To win the trust of western clients, Bulgarian firms must project an ultra-professionalism image. Bulgaria is not a country that many people in the West know much about, and in many cases if they think about it at all, it is perceived as some distant, dark place full of uncertainty. This image problem is a significant hurdle for Bulgarian companies and business people to overcome when working with westerners, and can be made more difficult by the fact that many Bulgarian company staff are young. Sometimes western clients perceive them as inexperienced or incapable when they meet them for the first time. The fact that English is not inherently known by the vast majority of these employees, but is the native language of most clients and the language used in nearly all business transactions, can exacerbate this problem. It is difficult to fully understand the intricacies of a language that is not your own. In sales, where tact and persuasion are key, this can make the difference between the making or breaking of a deal. Telling a prospective client “I want a meeting with you so that I can present the services offered by our company to you,” as opposed to saying “Continental Properties recently became a member of the Colliers Int’l Partnership – the largest real estate firm in the world… we are now able to provide additional services that I am sure could be of use to you and to clients who contact you at the embassy… When could I stop by for a brief meeting to introduce you to what we can offer you?” can sometimes be the difference between securing a new client and being brushed off.

I had a meaningful internship and enjoyed my stay in Bulgaria. I traveled around Bulgaria extensively and visited Macedonia too, giving me a good idea of what conditions are like in these countries beyond their capital cities. This is a region with a rich and remarkably well-preserved history. On weekends I visited several UNESCO World Cultural Heritage sites, explored modern ports and Greek ruins along the Black Sea coast, went on several fall hikes in the mountains, and experienced a traditional Bulgarian Christmas with the family of a friend I met through AIESEC. Truly, the experience was even better than I had expected. I had wanted to work with a company doing business in a developing European country so I’d have a better understanding of what the pressures and difficulties specific to this environment are. Now I will use this experience to help me fulfill my Fulbright project in Ukraine over the next year, where I will focus on what is required for foreign companies and investors to set up successful business relations with Ukrainian companies and entrepreneurs.

Larysa Szanc Smarsh, Ohio, USA

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