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Crisis as opportunity

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Despite the crisis, Greece also offers business opportunities like this busy café at the foot of the Acropolis.

The Greek economy is on the move. But small individual successes are not enough to beat the recession – By Jerry Sommer

Nikos is standing proudly behind the glass counter of his new diner close to Omonoia Square in the center of Athens. He has just opened – right in the middle of the Greek economic crisis. “Nothing ventured, nothing gained,” the balding 46-year old says with a laugh. For him the crisis proved to be an opportunity.

For 10 years Nikos sold pitas with cheese from his 65-square-feet kiosk to passing customers. Then the neighboring business went bankrupt and the 650-square-foot shop remained vacant until its owner lowered the rent. Nikos gathered all his savings and took his chance.

Now his customers can choose between cheese pitas, sandwiches, cakes and all kinds of beverages. They can sit down and enjoy their meal in a more relaxed fashion. Nikos is optimistic: “I have my regulars from the offices close by. And I’m also hoping for more passing trade.”

The interior of the newly renovated diner is inviting. The walls have been painted with a mural depicting lush green meadows, a blue sky and the sun. But outside, there is no sign of flourishing landscapes, neither in downtown Athens nor in its surrounding districts.

Every fourth shop in the Greek capital is vacant. The retail sales volume decreased by 23 percent in 2010; the Greek economy shrank by 4.6 percent in 2010; and the estimate for 2011 is negative growth of more than 3 percent. In light of the Greek government’s increasingly drastic austerity measures, little improvement can be expected.

But Athens is forced to stay the course by the EU and the International Monetary Fund. Otherwise they won’t lent money to Greece to avert national bankruptcy. So the Greeks are adjusting. Already they are buying fewer new cars – 150,000 last year compared to 300,000 in 2006. They are vacationing less often and saving on clothing, shoes, beverages and food.

Unemployment is 15 percent and rising, according to official statistics. But restaurant owner Nikos is not the only one taking his chances in this crisis. For example a couple of new shops have also opened in the district of Patission, a few miles away.

In one of them a man from Pakistan offers used cellphones. Next door, 27-year-old Ramos from Bangladesh has opened a small corner shop. Everything has been freshly painted but the shelves along the 320-square-foot room are only sparsely filled with cans and pasta. “We don’t sell fresh food,” the owner said apologetically, “it gets spoiled too quickly and we cannot afford that.”

For most of his 11 years in Greece, Ramos worked in a textile factory. Then he was unemployed for 12 months. After that his welfare benefits stopped. With a wife and family to feed, Ramos became a shop owner. Now he waits for customers and hopes for better times.

Just like the young Bangledeshi, the Greek economy is also trying to adapt. Over the last two years, the domestic market has collapsed. Sales of beer, for instance, fell by 8 percent in 2010 compared to 2009. Those who can are looking beyond the national borders.

“Greek companies are trying to compensate the domestic decline in sales by being more export-oriented,” said Martin Knapp, CEO of the German-Greek Chamber of Commerce (AHK) in Athens. Apparently, with some success.

In 2010, Greek exports increased by 10 percent over the year before to €16 billion ($23 billion). In January 2011, the growth rate was an impressive 30 percent compared to the same month in 2010, according to the Bank of Greece.

Mythos brewery is among those companies seeking to profit from increased exports. The subsidiary of the Danish Carlsberg group is planning to increase its exports by 10 percent this year. The company intends to press ahead with a five-year €50 million investment program and recruit more staff in Thessaloniki.

But only every tenth bottle of Mythos beer leaves the country. So even with a 10 percent increase, exports would still only generate 11 percent of the company’s total revenue. The same goes for Greece as a whole: While exports make up over 40 percent of German GDP, in Greece they account for only 7 percent. “Considering the low base level, the increase in Greek exports is quite impressive,” said Knapp. “But it is far too small to save the national economy.”

In addition, the increase in Greek exports – one quarter of which are agricultural products such as grapes, tomatoes, wine etc. – is not based on better products or better marketing but on the fact that Greek exporters are selling more goods to other EU countries again since the European Union began emerging from the slump in 2010.

Other apparent success stories are only of limited value to Greece. In 2010 the company Frigoglass, which manufactures large refrigerators for bars, restaurants and gas stations, was one of the most successful medium-sized enterprises of the country. Last year the company managed to increase its revenue by one third and its net profit grew six-fold to €20 million.

But that growth was produced by factories in Asia and Eastern Europe. And Frigoglass, with a staff of 200 in Greece, intends to continue its global expansion. “We don’t have any expansion plans for Greece,” said Lilian Phillips, Head of Corporate Communications & Investor Relations. “Our capacities in our plants abroad are sufficient.”

There is no doubt that the Greek economy is on the move, with some companies as well as some self-employed entrepreneurs set to profit from the change. But that won’t be enough to get the country out of recession. Nikos, the newly-fledged restaurant owner, is aware of that, too: “Despite what the government says, I can’t see light at the end of the tunnel yet.” At least he has the flourishing landscapes on the walls of his diner to look at.