The Pride of Slovenia
I once asked a group what the difference between Slovenia and Slovakia is. Many were stumped. The former, famous for subterranean caves and the latter, for its impressive mountain ranges, couldn’t be more vastly different, despite the similar sounding names. This would prove to be even more evident when we recently landed at Ljubljana, the capital city of Slovenia.
Slovenia’s location is quite advantageous, bordering Austria, Italy, Croatia, Hungary and the Adriatic Sea on the southwest. The majority of its population is made up of ethnic Slovenians but there are minorities of Hungarians, Italians, Serbians and others. The South Slavic language, Slovene, is the official language but German and Italian are widely spoken along the Austrian and Italian borders.
Slovenia has a population of about two million and is relatively wealthy, with a GDP per capita of over US $27,000. A former republic under Yugoslavia, Slovenia was declared independent in 1991. In 2004, the country joined the North Atlantic Treaty Organization (NATO) and the European Union (EU), and in 2007, joined the Euro currency union. Just like other countries in Europe, Slovenia’s economy was recently hit by the market crisis. The country’s GDP contracted by 8% in 2009 after having risen 4% in 2008 and almost 7% in 2007. However, things are looking up this year, and we are expecting a modest recovery of a 1% increase. Inflation has been on the downtrend, falling from a 2000 high of 9% to a little over 1% this year. Trade equals about 120% of GDP (exports and imports combined) with about two-thirds of Slovenia’s trade with other EU members. During the last decade, privatizations have been carried out in the banking, telecommunications and public utility sectors.
Slovenia’s Stock Exchange is relatively small with 78 listed companies, a market capitalization of US$11 billion and daily turnover of about US$2 million. Like other East European markets, it has suffered in recent years. However, Slovenia is becoming more integrated with the rest of Europe, with one of the key signs being the 2008 acquisition of the Slovenia Stock Exchange by the Vienna Stock Exchange.
We believe Slovenia has a number of excellent companies that have expanded beyond their shores. During our recent trip, we visited a leading home-shopping electronic retailer in Central and Eastern Europe. Using a multi-channel strategy, the firm markets its products via TV, Internet, retail and wholesale operations to 20 countries in Central and Eastern Europe. I was impressed by their sophisticated data systems covering all 20 countries, tracking every product sold, including description, price, related marketing materials and videos and identifying cross-sell opportunities. The system has over eight million customer records and allows offices in each country to share information and enables the head office to track media costs and sales by country.
At another major home appliances manufacturing company, we saw how an emphasis on practicality, aesthetic value and partnerships with world-famous designers propelled them onto the world stage. Their award-winning designs were crafted to appeal to sophisticated interior designers and home-owners. The company recently launched their new line of appliances at the Russian Fashion Week, one of their largest markets. The company exports all over the world and has even entered the Chinese market with sales in mainland China, Hong Kong and Taiwan. They opened their first Chinese store in a flourishing port city with a population that is more than triple Slovenia’s total population of two million.
I have visited the capital city in the north of the country a number of times but have never had the opportunity to see the coast, so on this trip, we headed for the Adriatic Sea. We were able to drive from Portoroz to Trieste in Italy in a half hour. In the town of Lipica along the Italian and Slovenian border, there was a stud farm where Lipica (Lipizza in German) horses, renowned for their elegance and discipline, are raised. These horses are the pride of Slovenians and are the source of the famed white “Lipizzaner Stallions” used in the Spanish Riding School in Vienna.
We didn’t have a chance to stay long at the farm, but I’m looking forward to visiting Slovenia again to look for interesting companies and see more of this fascinating country.
 Source for all stats in this paragraph: EIU, as of end April 2010.
 Source: S&P EMDB, as of end April 2010.