Borislav Jošanov, Ph. D., Novi SadBusinessSchool, Novi Sad, Serbia and Montenegro,
DIFFUSION OF E-COMMERCE IN SERBIA
ForINTRODUCTION
More than half of the world's consumer goods companies, according to The Food Business Forum, had established an ecommerce strategy, and many of them have been turning their eCommerce strategies into action. The most of those companies are from the most developed or developed countries, what brings us to the global digital divide problem, which is a part of the other problem: polarization of the countries in two clusters: developed and developing countries.
Among the countries which could not easily find a place in one of these two clusters, in our opinion, is Serbia and Montenegro. The country exists with two separate economies, two national banks, different currencies (Dinar in Serbia and Euro in Montenegro) and all separate state functions except the foreign affairs and the army. That is why this research is restricted on Serbia, which occupies more that 90% of the population and about 86% of the federal state. Population of Serbia (without eastern province Kosovo, which is under jurisdiction of international community) is about 7.500.000 inhabitants. Capital city is Belgrade with population more than 1.500.000, and cities with more that 100.000 inhabitants are Novi Sad, Niš, Kragujevac and Subotica.
EDUCATION
The seventh layer of this model is concerned with educational system. In fact, there are two, very similar education systems, one in Serbia and the other in Montenegro. They are based on different plans and programs in elementary and secondary schools, but they are complement and recognized on both sides. Montenegro has own state university in Podgorica, but the studies are also compatible with those in Serbia. This paper will describe the educational system in Serbia.
The first impression about educational system in Serbia is: it is one of the few systems that is working continuously in last 15 years. If we wont to describe educational system, we must say that in this moment it is functioning almost in the same way as it was 15 years ago. New legislation, which has to bring Serbia to the open European educational space and to fulfill all major aspects of Bologna Convention, exists less then a month and it is still not in practice. In both cases, there are 5 possible levels in education process. Basic education is mandatory, secondary schools can take less then 50% of pupils who finish basic education and there are always free spaces at the end of registration process, although not in all schools. The most interesting profiles are Grammar schools and schools for electronics and economics. High level education is possible on 5 state universities and on private faculties. There are also 52 state higher schools (some of them will be future high schools) and a few private higher schools. After high education, which takes from 3 to 6 years, it is possible to continue on magisterial studies and, after that, to take doctor dissertation. Those 3 highest levels will be changed with new education legislation (source:
As educational system became from that which was in former Yugoslavia, it is very similar with those in Croatia, Slovenia, Bosnia and Herzegovina and Macedonia. Main difference with those systems is, according to the information from Ministry of Education and Sports in Serbia,significant number of private universities and faculties: 7 universities 32 faculties (source: mps.sr.gov.yu).
According to Peter Keen's speech at Bled's eCommerce Conference in 2004, among the most important factors for the development of digital society we can findengineering way of working and thinking, widespread English speaking and good IT teachers, specially in secondary schools.
If we try to analyze these factors in Serbia, we can see that there are excellent engineers, specially in electronics, with the excellent perspective in Serbia and in other countries. This is also big problem, because the brain drain among the engineers and IT specialists is taking a lot of them outside the Serbia, although they are the best paid experts (Maruzzelli, 2004). Nevertheless, technical studies were always very popular in Serbia and there is common opinion that Serbs are much better engineers than managers.
During the socialist period, pupils were learning one of three languages: Russian, English and German, and there was nearly normal distribution of them. Russian was more popular in rural environment, and English was the most popular in cities. In last 10 years, it was recognized that English is global language and now it is mandatory from the first class of basic school, and pupils are choosing second language in the third class, where French is the most popular. People in Serbia realized that they must have two skills: to know how to use computers and to speak English.
Pupils are learning to use computers in last two years of basic school and they continue to learn it in secondary schools. All faculties have the exam from basic informatics (Microsoft Office tools). Unfortunately, the level of their knowledge is not satisfactory and they are still learning more about "bits and bytes" then how to use computer as a tool, although every basic and secondary school has computer laboratories. The problem is that a lot of teachers are not properly trained for their work, because a lot of them were teaching technical education in past years and they had to change it to IT without well organized courses for them. New, young IT teachers are beginning to change that picture.
Almost all among private faculties and higher schools are oriented to teach managers. The most popular studies on state education institutions, beside engineers and IT specialists, are also those for managerial studies. This fact has two sides. First, it is obvious that there is lack of educated managers. Second, to teach managers is now excellent business in Serbia, it is much less the education, because those private educational institutions, in most cases, are not offering real education, but the fast road to get the diploma. False managers are great treat to the business in future Serbia. Good news is that new educational legislation is promising to clean this picture and stop those "take money and run" faculties and higher schools.
There are also some institutions which recognized importance of education experts for e-business. Courses with e-business are taking part in studies more and more every day. Studies specialized in e-business are also taking place in Serbia's education space. Higher business schools first introduced such profiles of experts. There are also magisterial studies and doctor dissertations in that direction. The results of our investigation of their curricula, we found that the most of those courses are dedicated to the studies for software engineers, where they learn main information about ecommerce, technologies which ca be used and the techniques of building Web sites and their integration with information system. Business schools are also teaching electronic marketing techniques. Models and strategies for the development of ecommerce are just small part of those studies or, in the most of the cases, they are not presented to the students at all.
It is also important to say that Internet is taking important role in education process in Serbia. Almost all high and higher level institutions have their sites with usefulinformation for students, like calendar of exams, results of exams, schedules and other interesting information. It is possible to make consultations with professors with the email and to download papers or PowerPoint presentations from the sites. One more important fact: distance learning is a part of the new legislation and there are strong efforts to implement it quickly in the practice.
CUSTOMER E-COMMERCE PROPENSITY
The highest, eighth level of this model dues to customer e-commerce propensity. In the beginning, we will present the most important information which can strongly influence this level.
After 10 years of dictatorship and economic sanctions (when financial sector was totally destroyed and industry didn't work), with terrible results: economy in 1999 (after NATO attacks) is only the half of the sizeit was in 1990 (CIA, 2005), there is 188.656 refugees from Croatia and 99.170from Bosnia and Herzegovinaand 225.000 internally displaced persons, mostlyfrom Kosovo(CIA, 200), boarders of whole country (Montenegro is in strong process for separation) and Serbia (Kosovo is making even stronger steps to separate with great help from international community) are not known and national symbols don't really exist. Authors of this paper seethat Serbia became poor country of well educated people with European manners, who lost all illusions about normal life and equal rights (Vidas-Bubanja et all., 2002). On the other hand, more than 200.000 highly educated people (more than 800.000 in all education levels) left Serbia in last 15 years, making Serbian Diaspora very large. Medium life cycle is 73 years (CIA, 2005), health-care system is functioning, but there is lack of modern equipment. According to the experience "from the ground", international companies are paying people better than those which are owned by domestic people or the state. Retired people are in the worst position living mostly under the poverty line. Important information came on September 22, 2005, where Serbia is announced as this year’s leading reformer,according to the report Doing Business in 2006: Creating Jobs, cosponsored by the World Bank and the International Finance Corporation, the private sector arm of the World Bank Group (source: worldbank.co.yu).Even more important information is that Serbia and Montenegro became a candidate country for European Union on October 3rd, 2005.
GDP in Serbia is, according to the World Bank, now $21,7 billion or $2.620 per capita and annual growth rate is 7,2%. Inflation rate is between 13 and 14% in last 4 years.Structure of national incomes is 56,8% from services, 27,6% from industry and 15,5% from agriculture (CIA, 2005). Main countries for the export of goods are Bosnia and Herzegovina (14,9%), Italy (13,1%) and Macedonia (12,2%), while main import partners are Germany (12,9%), Italy (10,5%) and Bulgaria (8,7%), according to (CIA, 2005). Medium salary is about 151 Euros andmore than 10% of population lives under the poverty line (Maruzelli, 2004). On the other hand, when Euro became only money in the most of EU states, according to the information from National bank of Serbia, people in Serbia changed about DEM 8.000.000.000, what makes more than 4.000.000.000 Euros.
This event is reflecting strongly importance of trust. People in Serbia take their money in their homes, not in banks, and although government is forcing companies to pay salaries thru bank accounts, people are going to the banks and taking all the amounts to their homes. There are at least 2 important reasons for that (all the authors were witnesses, unfortunately). At the end of 80's in former Yugoslavia, banks, encouraged by federal government, were selling more international currencies than they could, without giving any currency to the people, just having money on their accounts. With the break of Yugoslavia, banks called that money "the old savings" and it was not possible to take that money from the banks in next 10 years. In last 5 years small amounts can be taken, but the most of that money is still captured in banks. the other important event is the appearance of pyramidalbanks in the early 90's. Those banks, promising heaven, took more than $3.000.000 from people and national bank decided to begin to return that money to the people 5 years ago, but in small amounts. Thus, all elder people are having their money at their homes. Younger people, who does not remember this 2 robberies, are beginning to bring their money to the banks and to take electronic cards, mostly debit. Their usage is constantly growing and the annual growth rate in trading, comparing 2003 and 2004, is 72% (source: e-trgovina.co.yu).
IT experts have the best salaries in Serbia, specially younger ones which are coming from the faculties for electronics, earning from 800 to 1200 Euros per month, while medium salary in Serbia is less about 200 Euros. Important fact is, according to public information in all newspaper in Serbia on September 28th, that Microsoft decided to create fourth development center and put it in Belgrade, where it is possible to find excellent software engineers.
IT market in Serbia was $342.100.000 in 2003, where software took 16,8% for installation and services. According to (Maruzelli, 2004), the largest concentration of IT firms and professionals is in Belgrade and we can find satisfactory level in other 4 largest cities (Novi Sad, Niš, Kragujevac and Subotica), but situation is not so good in other parts of the country. IT companies can integrate systems and connect them to the nets, and there is good choice of software applications, mainly connected with Microsoft platform. Software integrators are offering all main business functions and full help in implementation. National ERP systems are more popular from international (like SAP or Navission), mainly because they have lower prices and people trust more to the national companies. As transition process is taking place in Serbia, an interesting fact that comes from IT specialists is that companies whose owners are domestic people does not care a lot about information systems, their main occupation is to close commercial value chain, while first thing that international companies do is to invest in ERP and domestic IT companies are also more popular among them (Bošnjak, 2005).
Number of Internet users was 847.000 in 2003 (CIA, 2005), with 20.207 hosts in 2004 (CIA, 2005).Some assumptions say that there are about 800.000 PCs in use. Prediction made by PriceWaterhouseCoopers in May 2003 was that in two years there will be about 4.000.000 of Internet users. There are more that 20.000 Web sites in use (source: beocity.org) and about 40.000 evidenced "yu" domains (source: isc.org). There are also a lot of "com" and "org" domains, but there is not national evidence about them.
On the list of 10 most popular sites in Serbia there are 4 search engines, 3 sites of daily newspaper publishers and 3 sites that are intended to our Diaspora (Krstarica, 2005). All those Web sites are owned by private companies. The most popular sites in Serbia are Krstarica, the largest portal in Balkan, with more than 17.700.000 visited pages each month (Krstarica, 2005) and B92, the most popular media in Serbia, with TV and radio station, with about 80.000 visitors and more that 500.000 visited pages on their site every day (B92net, 2005).
According to (Vujić, 2004), the most of the population is strongly traditionally oriented and they prefer stability, even if that means stagnation.Strong connections with the past (Jerotić, 2003)is also reflecting on the fact that people in Serbia like to go for shopping, what is important social event for them. Green markets are the places where they meet each other, choose every peach or tomato and to haggle with the sellers. Huge mega-markets are taking place in Serbia in last 5 years and they are also very popular. Catalogue way of selling, supported by the Web site, is organized by Neckermann, but much longer terms of sending the articles, or even a lot of cancelled orders, are making people not to trust them, what is also our own experience. On the other hand, "Order Now" selling supported by TV spots and Web sites are making much better job in Serbia. Important issues for their success are the possibility to return ordered goods in 15 or 30 days and COD as the way of paying.
International brands are very popular among younger people, probably more than it is in the western countries, because here they take brands as a sign of social status and wealth (Maričić, 2002). Older people prefer national brands, they do not believe to the international community, mostly because of past economic sanctions, the wars that took place in this region in last 15 years and the treats of future separations of Kosovo and Montenegro, what is also national characteristic (Jerotić, 2003).
Some important examples of B2C e-commerce can be found in retail practice in Serbia. There are implemented numerous virtual bookshops, among whom the most popular is Plato. Virtual shops, organized as malls, are finding more and more customers every day and the most popular goods are books, music, games, programs, movies and cosmetics (Vidas-Bubanja et all., 2002).Neither of the largest systems of mega-stores in Serbia does not have Web site which sells. If we look at the trading cycle, we can see that the only way of paying which works in Serbiais COD. All B2C sites are offering only COD as the way of paying, and giving the details about credit cards is not even as an option in Serbia.
Speaking about B2B ecommerce, the main problem is the lack of national legislation. Sites in Serbia are mainly offering information about the products and the some of them have the possibility to fill the order form. All the other activities are happening in back-offices. Although there is good business tradition, huge problem in Serbia is the fact that a lot of companies are not paying for the received goods in traditional commerce. The uncertainty in unknown business partners with the possibility of frauds, brings trust problems on the surface of ecommerce. Well-known examples of established eCommerce systems are among closed groups of business partners. The wholesaler IDEA, Belgrade, established 4 years ago system “Idea on line buyer” designed for small commercial firms’ electronic ordering. Information about that system were given by Mihajlo Krstić, Idea's ICT expert. The users of this system is closed group of partners. This system of electronic ordering counts more than 3.000.000 transactions per year, working with about 2.500 retailers who are sending their orders thru Internet. Those orders are completely processed on 30 computers at Ideaand automaticallycomplete documentation is created.