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Serbia as a hub for technology and high-value manufacturing nearshoring

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Serbia has positioned itself as an emerging hub for high-value manufacturing and technology-driven industries, attracting a growing number of global companies seeking to establish nearshoring operations closer to the EU market. Several factors contribute to Serbia’s appeal as a nearshoring destination, including its strong industrial heritage, skilled workforce, competitive operating costs, and strategic location in Southeast Europe.

Key factors supporting technology and high-value manufacturing nearshoring in Serbia

1. Strategic location and market access:

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• Serbia’s geographic position offers easy access to both EU and non-EU markets, making it a gateway for companies looking to serve Central and Western European clients. The country’s proximity to key European markets allows for efficient logistics and reduced lead times, essential for industries with complex supply chains like automotive and electronics.

• Serbia’s network of free trade agreements, including with the EU, EFTA, CEFTA, and the Eurasian Economic Union, provides duty-free or preferential access to over 1.3 billion consumers, enabling companies to optimize their supply chains and expand their market reach.

2. Established and growing technology sector:

• Serbia’s electronics and ICT industries have a strong tradition, dating back to the former Yugoslavia period. Today, the country is home to a thriving electronics manufacturing ecosystem supported by a network of technical universities and R&D centers. Major multinational companies like Bosch, ZF Friedrichshafen and Continental have established production and R&D centers, focusing on the development of advanced automotive and electronics systems.

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• The city of Niš, historically the heart of Serbia’s electronics industry, continues to attract investments in electronics and high-tech manufacturing, with numerous companies involved in producing components for automotive and consumer electronics.

3. High-value manufacturing investments and R&D focus:

• Serbia has become a preferred location for several high-tech manufacturing investments, including the recent establishment of the JFE Shoji Serbia Center for Automotive and Electronic Industry Development. This Japanese investment, valued at over €51 million, focuses on the production of motor cores for automotive and electrical applications, reflecting the country’s growing role in global automotive and electronics supply chains.

• Similarly, Chinese company Jiangsu Lianbo Precision Technology opened its first European factory in Novi Sad, focusing on producing metal parts for automotive engines and electric vehicle components. This investment, totaling over €57.4 million, is expected to create 500 jobs by 2026 and highlights Serbia’s potential as a key manufacturing base for high-value components.

4. Skilled workforce and innovation ecosystem:

• Serbia’s highly educated workforce, particularly in engineering and technical fields, is one of its most significant assets. The country’s educational institutions produce a steady stream of professionals equipped with the skills needed for high-tech manufacturing and research.

• The government has supported the development of an innovation ecosystem through the adoption of strategies such as the Smart Specialization Strategy, focusing on areas like ICT, automotive technology, and green energy solutions. These initiatives aim to foster innovation and create a knowledge-based economy, making Serbia an attractive destination for technology-driven companies.

5. Supportive business environment and incentives:

• Serbia offers a range of incentives to attract foreign investments, including tax holidays, subsidies for R&D activities, and financial support for job creation. The country’s Free Zones provide additional benefits, such as VAT and customs duty exemptions, making it a cost-effective location for setting up manufacturing and assembly operations.

Sectoral focus and growth opportunities

1. Automotive and electronics manufacturing:

• The automotive sector is one of Serbia’s strongest industries, with established supply chains supporting the production of electrical systems, engine parts, and advanced automotive electronics. Companies like ZF Friedrichshafen and Bosch are actively involved in R&D and high-value manufacturing in Serbia, producing components for major European and global automotive brands.

2. ICT and digital technology:

• The ICT sector in Serbia is one of the fastest-growing segments, contributing over €2 billion in annual exports. The presence of global tech companies and continuous investment in digital infrastructure have strengthened Serbia’s position as a regional tech hub.

3. Advanced manufacturing and R&D centers:

• Serbia’s ability to attract R&D investments from major international firms, such as the recently established JFE Shoji R&D center and the expansion of R&D activities by Continental and Bosch, underscores the country’s growing role as a center for technological innovation and high-value manufacturing.

Serbia’s combination of strategic location, competitive costs, skilled workforce, and supportive business environment makes it an ideal hub for technology and high-value manufacturing nearshoring. The country’s focus on key sectors such as automotive, electronics, and ICT, along with its emphasis on innovation and R&D, positions it as a critical player in global supply chains and a prime destination for companies looking to expand their operations in Europe.

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