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Doing business in Slovenia (not Slovakia)

Small country, great expectations

LJUBLJANA, Slovenia — If you’re an American thinking of buying a new mattress, you might check out the website for Dormeo and see a short promotional video with promises of Italian luxury set against the Florence skyline. What you would not know is that while those mattresses are manufactured in Italy, their production was outsourced by a Slovenian company, Studio Moderna, that sells them around the world.

Tiny Slovenia, part of the former Yugoslavia, has made it big in Europe’s post-Cold War single market economy. Yes, Dormeo mattresses are manufactured in Italy. But their main selling point, efficiency and convenience, represents a company that has taken advantage of the opportunities presented by new Eastern European markets.

“Look how easy it is to carry the mattress,” said Sandi Cesko, chairman of Studio Moderna, pointing out the window of the Dormeo showroom on the outskirts of Ljubljana to a woman — “One woman! Alone!” — carrying the mattress and loading it into her car. The mattresses are rolled and shrink-wrapped for easy transport.

“But people wouldn’t buy them if they didn’t know what was inside,” Cesko said, “so we explain it to them on TV.”

His company began by selling a single product — a brace to counter back pain — in 1991 using direct marketing campaigns in newly opened Eastern Europe. Now it sells products, from mattresses to folding bicycles, made by Studio Moderna and other companies via infomercials, catalogs, wholesale vendors and its own stores in 20 Eastern European markets, including Turkey and Russia, and beyond.

Studio Moderna’s rapid growth in the former Yugoslavia illuminates the success of Slovenia as a whole in its 18-year history as an independent nation. The name Studio Moderna comes from a small marketing company started by Cesko’s father four decades ago. “Slovenia was the export window of Yugoslavia,” he said. “Tito realized it was better to connect to the world.” After its relatively peaceful separation from the other Yugoslav states, Slovenia quickly took advantage of that strong manufacturing and transportation infrastructure. It joined the EU along with seven other formerly communist countries in 2004 and adopted the euro as its currency on Jan. 1, 2007. Along with the other new EU members it also joined the Schengen Area, which allows for borderless travel within the bloc. In 2008, Slovenia had the highest GDP per capita of any new Eastern European EU member state, at 16,600 euro ($24,300).

Slovenia met the commercial standards of its western neighbors even before the breakup of Yugoslavia, according to Anton Bebler, professor at the University of Ljubljana and president of the Euro-Atlantic Council of Slovenia. “It’s due to a higher level of general education,” Bebler said. “Our peasants are much better educated than peasants in other parts of the former Yugoslavia.”

And with few natural resources, Slovenia has always taken advantage of its advantageous position on the borders of east and west, north and south, Bebler said. “One of the arguments by the Serbs when Yugoslavia was breaking up is that Slovenia exploits the others,” he said, by buying raw materials and reselling them westward for higher prices. “Now, 18 years later, Slovenia’s economy is much less connected with the economies of other ex-Yugoslav states.”