5/2015

INTERVIEW: Fred Cook, CEO of Golin, started in the PR industry as an account supervisor at the global PR firm’s Los Angeles’s office before moving to Chicago 11 years ago to become the agency’s third CEO. BR talked to him after the local launch of his book, Improvise »page 30

ROMANIA’S PREMIER BUSINESS MAGAZINE

MAY, 2015 / VOLUME 19, ISSUE 5

HEALTHCARE FUND ACCESSION MEZZANINE CAPITAL III HAS BECOME A SHAREHOLDER IN AMETHYST RADIOTHERAPY LTD THROUGH A CAPITAL INCREASE AND HAS EXTENDED ITSINITIAL FINANCING » PAGE 33

While the adoption of cloud computing in Romania is gaining velocity from one year to the next, figures put Romania among the lowest placed EU countries in terms of adoption rates by businesses, individual users and the public sector. Still, there is encouraging news in all of these areas, players told BR » page 12

ROMANIA STILL NOT ON CLOUD NUMBER NINE REAL ESTATE

ENERGY

Mall important

In the pipeline

NEPI opened the EUR 14 million Mega Mall shopping center in Bucharest on May 14, the first project of its kind in eastern Bucharest

Romania wants to press ahead with an electricity interconnection project with Turkey in the Black Sea worth an estimated EUR 600 million

» page 7

» page 24

www.business-review.eu Business Review | May 2015

EDITORIAL Anda Sebesi EDITOR-IN-CHIEF

It’s all about innovation Nowadays innovation is a key word for any company aiming to maintain its market share and its position in consumers’ minds. It can take the form of many things, but generally it’s about transformation, driving competitive advantage, launching new products or services, adopting new business models or increasing the pace of change.

As a result of this innovation, technology plays a crucial role in all our lives, from individuals to companies. As it accelerates exponentially and is adopted across industries and by the business environment as a whole, it enables new products and services and creates new markets and opportunities. In this context, innovation becomes a much broader term. But while it can create significant added value, especially on the long term, innovation cannot be imposed. For example, while the adoption of cloud computing in Romania is picking up speed from one year to the next, figures put us among the lowest placed EU countries in terms of adoption rates by businesses, individual users and the public sector. The most recent Eurostat survey, published in December 2014, found that only 5 percent of Romanian companies use cloud computing services, by comparison with an European average of 19 percent. Marginally above Romania are Latvia and Poland, just 6 percent of whose companies use cloud computing, and Bulgaria, Greece and Hungary, each with 8 percent.

The European champions in cloud adoption are Finnish firms, 51 percent of which use the cloud to store e-mails, file databases, software and applications. But the situation is not as dramatic as it seems, and in reality the picture across Europe is not significantly different, say experts.

In the public sector, adoption is even lower, since the Romanian authorities are reluctant to take the leap, for various reasons. Generally, the public sector is slower to adopt the latest technologies, as institutions are still bureaucratic and apprehensive when it comes to sensitive public data. Our feature on pages 12-18 explores just where Romania is at with the cloud. By contrast, private companies embrace new technologies much more easily, regardless of their field of activity. For instance, local lenders, who’ve seen their industry buffeted by international headwinds in recent years, are looking to innovation to attract customers through more sophisticated products and services targeted at their needs. We survey some of the local banks’ recent launches on pages 34-35.

Of course, lenders weren’t the only ones to suffer: the advertising industry took a hit as budgets came under pressure, but is fighting back with new approaches from agencies and the growing role of digital. The concept of programmatic media and marketing analytics are starting to emerge in Romania but they are fully understood and applied by only a few specialists. Insiders say that programmatic media is professionals’ latest tool in promoting brands in an effective, complex, customized and efficient manner, with the help of data and technology. Find out more on pages 26-29.

Even the internet is about to shift to a new Hypertext Transfer Protocol (HTTP), bringing users greater speed, security and efficiency at no higher cost. A specialist talked BR through the tech – you can read his take on page 21. In other words, things are moving fast under the influence of technology with an impact on all aspects of our lives and businesses. And it all comes down to innovation. anda.sebesi@business-review.ro

EDITORIAL 3 Contents 3 7

EDITORIAL REAL ESTATE

9

CONSTRUCTIONS

12 COVER STORY 20 IT 21 24 ENERGY 26 MEDIA 30 32 ENTREPRENUR 33 HEALTHCARE 34 FINANCE 36 MANAGEMENT 37 38 GREEN CORNER 40 42 CITY 44

It’s all about innovation NEPI opens first shopping mall in eastern Bucharest Sanex invests EUR 1.4 mln in green project slated to reduce energy consumption Romania still not on cloud number nine 3Pillar Global Romania CEO: ’Universities can’t train enough IT students’ Goodbye HTTP/1, welcome HTTP/2 Romania to export electricity to Turkey through submarine cable Reshaped media industry climbing back towards EUR 330 million mark Golin CEO: the future is about integration and speed Making a healthy profit from nutritional products Accession Mezzanine Capital III becomes shareholder of Amethyst Radiotherapy Technology, discounts and education help banks rebuild CEO Corner Expat managers upgrade perception of local management culture Metro Cash&Carry Romania to reward com munity-minded entrepreneurs Expat managers upgrade perception of local management culture Harnessing the benefits of hippotherapy What’s on at TIFF 2015

ISSN No. 1453 - 729X PUBLISHER Bill Avery EDITOR-IN-CHIEF Anda Sebesi DEPUTY EDITOR-IN-CHIEF Simona Bazavan EDITORS AT LARGE Anca Ionita, Simona Fodor JOURNALISTS Otilia Haraga, Tatiana Lazar, Romanita Oprea, Fulvia Meirosu, Andreea Marinas COPY EDITOR Debbie Stowe PHOTO EDITOR Mihai Constantineanu LAYOUT Beatrice Gheorghiu, Raluca Piscu PUBLISHER Bloc Notes Media ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania

EXECUTIVE DIRECTOR George Moise BUSINESS DEVELOPMENT DIRECTOR Oana Molodoi SALES & EVENTS Ana-Maria Nedelcu, Oana Albu, Valeria Cornean MARKETING Anamaria Radu PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 EMAILS editorial@business-review.ro sales@business-review.ro events@business-review.ro

www.business-review.eu Business Review | May 2015

4 NEWS

NEWSin brief AGRICULTURE Government wants to ban wood exports The government is working on an emergency ordinance that would temporarily ban the export of unprocessed wood. Moreover, companies will need an export license once the ban is lifted.

The measure is meant to create transparency and offer the authorities greater control of wood exports, said PM Victor Ponta. This takes place in the context of a new Forest Code being adopted which has provoked street protests in several cities.

JUNE 1 Income tax changes Several changes related to income tax declaration will come into force on June 1. They cover income generated from real estate transfers and property leasing.

Car sales see 15.7 pct growth in first four months

Vehicle leasing market up 14 pct in Q1 to EUR 277 mln The local vehicle leasing market recorded a 14 percent increase in the first quarter against the same period last year, totaling EUR 277.08 million, according to Bogdan Speteanu, GM of BCR Leasing. The most dynamic segment was commercial vehicles, especially heavy goods ones.

In the first three months of last year, the car leasing financing market amounted to EUR 242.17 million.

Car financing registered a 20.2 percent advance from EUR 133.08 million, giving it a 48 percent share of the total automobile leasing market.

BANKING OTP Bank Romania jumps to EUR 1.3 mln profit in Q1 OTP Bank Romania has reported a EUR 1.3 million profit in the first quarter of the year, after losses amounting to EUR 5.18 million in the last quarter of 2014. This was influenced by the

JUNE 1 VAT cut Value added tax will be cut to 9 percent in June for all agro-food products, including soft drinks and catering services. The authorities say the measure will lead to price falls and are monitoring retail networks in case they artificially hike prices.

JUNE 1 Tip tax ditched The authorities have dropped the tax on tips as it would be too difficult to implement, according to finance minister Eugen Teodorovici. The move comes into force on June 1.

AUTO The car market, meaning cars and commercial vehicles, increased by 16.5 percent in the first four months compared to the same period last year, with car deliveries up 15.7 percent, according to the Association of Automobile Producers and Importers (APIA).

At the same time, since the last quarter of 2014 there was an upswing in imports of used cars, which recorded an advance of 14.9 percent in the first four months of 2015, over 76 percent of which (about 56,150 units) were at least eight years old. The ratio between the imports of used cars and sales of new ones went up to 3.7 to 1.

MONTH AHEAD

Petrom half marathon reaches fourth run Local, national and international runners were out pounding the pavements in the middle of May in the OMV Petrom Bucharest Half Marathon organized by the Bucharest Running Club Association. On two warm and sunny days, May 16 and 17, more than 8,000 runners of all ages from 50 countries participated, a 50 percent increase from last year’s event. previous takeover of Millennium Bank.

The result includes a EUR 1.36 million loss for the latter.

Aegon Romania reports 96 pct increase in underwritings in Q1 Aegon Romania registered a 96 percent increase in gross written premiums in the first quarter of 2015 compared to the same period of last year, to RON 14.51 million (EUR 3.3 million). First quarter results come after a period in which the company maintained the growth rate of new policy sales and completed the integration of the Eureko portfolio. Globally, Aegon recorded revenues of EUR 2.75 billion in the first quarter of 2015, up 32 percent on the first quarter of 2014.

ENERGY Green energy promotion scheme awaits government approval Romania could implement a new support scheme worth up to EUR 2 billion for the promotion of green energy based on feed-in tariffs for projects of less than 500 kW. The scheme will come under a new law on electricity

produced from renewable energy sources that has been approved by Parliament. “We have done the draft, but we do not have a budget or duration, so we cannot fix a price. These variables depend on the government,” said Zoltan Nagy-Bege, a member of the regulatory committee of the National Authority for Energy Regulation (ANRE).

Energy efficiency fund underway to counter climate change Romania’s energy authorities are working on an energy efficiency fund intended to reduce the effects of climate change. Iulian Iancu, chairman of the Commission for Industries and Services of the Chamber of Deputies, called on players to submit solutions to amend the Tax Code to finance and support the fund. Fines levied on companies who break the law on electricity produced from renewable energy sources will be funneled to the energy efficiency fund.

JUNE 18 Real estate event BR organizes its 14th Realty event, dedicated to the real estate industry.

Realty 2015 will provide networking and learning support for industry professionals keen to spot opportunities and trends, find potential partners, meet decision makers and build a profitable business on the Romanian real estate market.

JUNE 29 French business community Building on the tradition of previous events in the series, Business Review is organizing the sixth French Investors Forum dedicated to the local French business community.

MOST READ www.business-review.eu 1 Local PR market shows first signs of real maturity

2 Idea Bank to enter Romania’s top 10 lenders in 2-3 years

3 eSports weekend in Bucharest: DreamHack 2015 starts this Friday

4 Bitdefender in third place among Romanian IT services exporters

5 Romania to see among highest

INVESTMENTS Foreign investments double in

growth in emerging Europe, says EBRD

www.business-review.eu Business Review | May 2015

March against first two months Foreign direct investments (FDI) totaled EUR 885 million in the first quarter, up 55 percent over the same period last year, while in March the volume doubled compared to the first two months of the year put together, reaching EUR 476 million, according to central bank data. In February, investments decreased by 63 percent from January, from EUR 299 million to EUR 110 million. FDI fell by 10.6 percent last year compared to 2013, to about EUR 2.43 billion from a EUR 2.71 billion peak in 2013 after the economic crisis.

MACROECONOMICS GDP posts 4.2 pct growth in Q1 GDP grew in real terms in the first quarter against the last three months of 2014 by 1.6 percent, while compared to the same period of the previous year it was 4.3 percent higher using the unadjusted series, and 4.2 percent higher when seasonally adjusted. The growth surpasses pundits’ estimations and has been mostly attributed to an increase in private consumption.

Central bank cuts key rate to record low of 1.75 pct The board of the National Bank of Romania (NBR) has decided to cut the monetary policy rate by 25 basis points to a new record low of 1.75 percent.

The measure becomes effective starting May 7.

This most recent cut is a surprising move given that it is the third reduction this year. After the central bank lowered the monetary policy rate to 2 percent in March, most analysts had predicted that the level would be maintained until the end of the year.

REAL ESTATE AFI Europe Romania posts 8.1 pct operating income hike in Q1 AFI Europe Romania has reported a net operating income of nearly EUR 9 million for Q1, an 8.1 percent increase on Q1 2014. The hike was driven mostly by the two new office buildings AFI Park 2 and AFI Park 3.

AFI Palace Cotroceni in Bucharest, the largest and most important asset of AFI Europe Romania, generated a net operating income of EUR 7.4 million in Q1 2015, a 1.3 percent upswing compared to Q1 2014.

DTZ and Cushman & Wakefield merge as part of global deal Real estate service firm DTZ, backed by private-equity giant TPG, has reached a deal to acquire rival Cushman & Wakefield Inc. for USD 2 billion, according to the WSJ. The resulting company will keep the Cushman & Wakefield name and will have around 250 offices in more than 50 countries.

Both companies are present locally

NEWS 5 through franchise and affiliated companies. DTZ has an affiliated agency in Romania (DTZ Echinox) while Cushman & Wakefield has had a franchise agreement with Activ Property Services since 2013 when it left the local market. The company had bought Activ Property Services in 2006 when it entered Romania.

WHO’S NEWS BR welcomes information for Who’s News.

Submissions may be edited for length and clarity.

Get in touch at simona.bazavan@business-review.ro

Adriana Grecu

RETAIL Farmec opens first branded store in France Romanian cosmetics producer Farmec has opened, with its partner Carlgin Sasu, its first branded store in France, in Menton, 40 km east of Nice. This is the first unit opened abroad this year, after the producer set up two branded stores in Greece in 2014. Farmec’s first store abroad was opened in 2003 in Sharjah, the United Arab Emirates. In Romania, the company owns six outlets in Cluj-Napoca, Arad, Timisoara and Targu Mures.

TELECOM Telekom Romania reports 7.7 pct revenue drop in Q1 Telekom’s revenues in Romania decreased by 7.7 percent in the first quarter, from EUR 261 million a year ago to EUR 241 million, mainly owing to the reduction of call termination fees applied in the second quarter of 2014, according to data released by Deutsche Telekom. EBITDA fell by 17.7 percent, from EUR 66 million in the same period of 2014 to EUR 55 million, due to a revenue decline. Telekom’s number of subscribers for mobile telephony in Romania fell slightly from 6.047 million in the same period of last year to 6.008 million.

Vodafone Romania revenues down 5.8 pct in fiscal Q4 Vodafone Romania revenues decreased in the fourth quarter of the 2014-2015 fiscal year by 5.8 percent on an organic basis against the same period last year, to EUR 164.7 million, according to Mediafax. The fourth fiscal quarter corresponds to the January-March 2015 period. In the fourth quarter of the 2013-2014 fiscal year, Vodafone Romania registered revenues from services worth EUR 173.03 million.

is the new CEO of Aon Romania. She has broad professional background in the insurance market and has been acting as the company’s interim CEO since last December.

Grecu joined the company in 2012, as chief broking officer (CBO).

Nadia Oanea has joined Grant Thornton as head of its tax advisory practice in Romania and Moldova.

Previously she acted as head of the tax department at another international consultancy and audit firm and overall has 15 years of experience in local and international taxation. Oanea is a full member of the Chamber of Tax Consultants in Romania (CCFR) and of the Body of Chartered Certified Accountants in Romania (CECCAR).

She has served as a tax advisor to multinational and local companies in multiple industries. She has also been involved in transactional tax advice as well as a full range of corporate activities.

Madalina Rachieru has been promoted to partner by international law firm Clifford Chance.

She coordinates the capital markets practice of the Clifford Chance Badea office in Bucharest and has over 13 years of experience in the field.

Rachieru, who has been with the law firm since 2002, also specializes in international transactions, banking and finance. Over the years, she has advised financial institutions, investment banks, local and global companies. Rachieru graduated from the Bucharest Faculty of Law in 2002 and has been a member of the Bucharest Bar since 2003.

Mark Rock Average mobile data consumption up 40 pct says ANCOM Average monthly mobile data consumption increased by 40 percent in the second half of last year, according to figures released in May by the Romanian National Authority for Administration and Regulation in Communication (ANCOM). The average user in Romania consumed 155 MB mobile internet traffic monthly in the second half of last year, up by 40 percent on the first half of 2014.

is JTI’s new general manager for Romania, Moldova and Bulgaria. He is replacing Charlie Cunningham-Reid, who will lead JTI’s corporate affairs & communications department in the UK. Rock has 28 years of experience in the tobacco industry. His previous position was head of the company’s

corporate trade marketing department in Geneva.

Razvan Rosculet is the new sales director of FM Logistic, having joined the company in April. He has 11 years of professional experience in B2B sales with companies such as Orange Romania where he worked for seven years and Telekom Romania. Rosculet is a graduate of the Electronics and Telecommunications Faculty and holds a master’s degree in marketing.

Ionut Simion will take over as country managing partner of PwC Romania on July 1.

The position has been held for 11 years by Vasile Iuga, who will become South East Europe cluster leader within the firm. Simion joined PwC Romania in 2000 and was appointed tax and legal services partner in 2007. Since 2012, he has coordinated the PwC tax department in Chisinau, Moldova. Iuga joined PwC Romania upon its incorporation, in 1991. He became partner in 1997 and, since 2004, has been country managing partner for Romania, coordinating a team of over 650 professionals in five offices.

Carmen Staicu has been appointed spokesperson and head of the external communications department at Erste Group Bank AG as of May. She takes over the position from Hana Cygonkova, who held the post for 14 years and who will now have a different role within the group. Staicu joined the group’s external communication department in 2011. Previously, she served as senior account manager with Grayling Romania, headquartered in Bucharest.

Timos Tsokanis is the new chief technology and information officer (CTO) of Telekom Romania after an interim period of three months in the same position. He has 20 years of experience in the telecom sector, both in technology and in commercial organizations.

Having worked within the Telekom group for more than six years, Tsokanis has dealt with the transformation and modernization of network and IT operations and systems consolidation in two countries.

www.business-review.eu Business Review | May 2015

6 neWS

Boost business through quality of life, urge tomorrow’s bosses

PwC calls for active management of state firms, warns of competitive pitfalls

Tomorrow’s business leaders consider better quality of life the first step to improve performance, according to new research.

State owned-enterprises (SOEs) have a key role to play in creating public value, and while state ownership can bring advantages, it can destroy value without best ownership and management practices, says recent research.

∫ AndA SeBeSi The study, How Leaders Value Quality of Life, conducted by Sodexo, is the first analysis of the impact of quality of life on organizational performance, say company officials. According to the study, 69 percent of Millennials (the generation born between the early 1980s and early 2000s) believe that an improvement in the quality of life will have a significant impact on the performance of the organizations they will lead in the future, compared with 57 percent of current leaders.

Overall, they named quality of life as the main driver of organizational performance, while current leaders put it in fifth place.

“The study is the first international barometer for decision makers. It is a unique analysis for which we asked the opinion of leaders who make decisions that influence the quality of life in the organizations they lead,” said Delphine Martelli-Banegas, head of the corporate department at Harris Interactive.

Some 66 percent of the leaders interviewed said quality of life was already a priority within their organizations, while 86 percent said they had implemented at least three initiatives to improve it.

Furthermore, 60 percent of the organizations surveyed have a dedicated budget for such initiatives, while 48 percent of the leaders had appointed a team or individual to monitor quality of life. In 62 percent of the organizations the indicator is measured.

“Improving quality of life has become an essential issue thanks to the demographic, economic, technological and environmental changes that we’re currently facing. For most organizations, the future competitive advantage will result from the ability to generate added human value. The importance of quality of life will increase as new technologies amplify consumers’ voices and new generations play a more significant role on the labor market,” added Michel Landel, CEO of Sodexo. anda.sebesi@business-review.ro

∫ AndA SeBeSi These are some of the conclusions of a new report – State-owned enterprises: Catalysts for public value creation? – which draws on the findings from a Pulse survey of 153 CEOs in January 2015, and professional services firm PwC’s 18th Annual Global CEO Survey.

“SOEs are an influential and growing force globally. The proportion of SOEs among the Fortune Global 500 grew from 9 percent in 2005 to 23 percent in 2014. And while SOEs face many of the same opportunities and threats as private companies, they have a different purpose, mission and objectives, which relate to some aspects of public service and social outcomes,” said Daniel Anghel, partner, tax consulting, and leader of the PwC Romania integrated services team for the public sector.

He says the future SOE will need to be more actively owned and managed if it is to deliver real public value, and avoid competing unfairly in markets where private and third sector enterprises can deliver the goods and services that citizens need and want more efficiently and effectively. “In addition, SOEs should not be purely evaluated on financial reports, but on how they contribute to societal value creation – taking an integrated and holistic view to include a wider range of impacts including human, social, environmental, intellectual and infrastructural as well as financial dimensions,” added Anghel.

The study also found that state-

Daniel Anghel, partner, tax consulting, at PwC Romania backed firms have many similar worries to their private sector counterparts. According to PwC’s 18th Annual Global CEO Survey, the top five concerns include over-regulation, the availability of key skills, government responses to the fiscal deficit and debt burden and geopolitical uncertainty. But statebacked enterprise CEOs are more wary of cyber threats (68 percent) than their private sector peers (60 percent).

While state-backed CEOs are more confident about short-term growth than their private sector counterparts, they continue to be less confident of growth over the next three years. This difference may hint at the tension that state-backed CEOs face in aiming to be commercially viable and competitive while also trying to fulfill non-commer-

cial objectives, the latter often demanding trade-offs in terms of financial performance between the short and longer term, found researchers.

According to the study, digital technology could be a key enabler, offering the scope to deliver higher productivity and better outcomes while also reducing costs. Some 64 percent of statebacked CEOs quizzed in the Global CEO Survey said they were concerned about the speed of technological change (compared to 57 percent of non-statebacked CEOs). At the same time, statebacked CEOs see digital technology as creating most value in terms of operational efficiencies, data analytics and the customer experience.

The PwC survey of 153 CEOs found that a larger proportion of CEOs than in 2010 believe state ownership distorts competition in an industry and leads to political interference in the marketplace.

To become catalysts for sustainable public value creation, the report sets out four tests which experts believe the leaders of the SOE of the future – particularly the board of directors and the executive team – will need to meet. They are: clarity (a clear understanding of the purpose and objectives of the SOE and their role in delivering this); capacity (time and resources to conduct their role well); capability (required and relevant expertise and experience to steer and manage the SOE) and commitment to integrity (serving the citizen for the purpose of societal value creation). anda.sebesi@business-review.ro

Fuchs buys Alex&Comp Fuchs, the largest producer of seasonings in Europe, has announced that it has taken over the spice division of local producer Alex&Comp, effective since March. ∫ AndA SeBeSi Fuchs has produced individual and mixed spices for Romanian retailers since 2001 at its facility in Curtea de Arges, Fuchs Condimente. In 2009 the group earmarked over RON 50 million for a new facility in the same city.

With its Fuchs and Cosmin brands, which together generate an annual

turnover of RON 70 million, the company is the local market leader.

Alex&Comp has produced spices and flavors in Galati since 1994, under the brands Alex and Casa Condimentelor. With an annual turnover of RON 10 million from spices, it is the third biggest player on the Romanian spice market.

According to Fuchs representatives, the recent acquisition is complemen-

tary to the firm’s existing portfolio and it will develop the Alex brand.

“This investment confirms our strategic interest in the Romanian market, ensures the long-term existence of 250 jobs in Romania and consolidates our global businesses,” said Nils MeyerPries, CEO of the group.

anda.sebesi@business-review.ro

www.business-review.eu Business Review | May 2015

ReAL eSTATe 7

nePi opens first shopping mall in eastern Bucharest South African investment fund New Europe Property Investments (NEPI) opened the EUR 14 million Mega Mall shopping center in Bucharest on May 14. ∫ SiMOnA BAZAVAn Construction of the 72,000 sqm (GLA) project located in Bucharest’s Pantelimon neighborhood near the National Arena started about one year ago and was initially supposed to be completed on April 23. Even the May 14 opening took place with works still being carried out on the site. Company representatives said everything would be finished in a month’s time.

Overall, the mall contains over 200 shops, with tenants including retailers such as Peek&Cloppenburg, H&M, Zara, Mango, Marks & Spencer, C&A, LC Waikiki, Koton, New Yorker, Pull&Bear, Bershka, Stradivarius, Orsay, Kenvelo, Lee Cooper, Tom Tailor, Next, Tommy Hilfiger and Musette. It also hosts a Carrefour hypermarket, the tenth in Bucharest, a World Class center and a Cinema City multiplex with the first 4DX cinema in Romania.

With the opening of Mega Mall, Bucharest’s modern retail stock has

Mall go: NEPI hopes the facility will attract 1.5 million visitors every month gone above the 1 million sqm milestone.

The project is the largest shopping mall to be opened this year in Romania and also the first project of this kind to be opened in eastern Bucharest. The de-

veloper is planning to take advantage of this and is expecting as many as 1.5 million visitors each month. Already it has reported 400,000 visitors in the first weekend following the opening, ac-

cording to NEPI representatives.

However, from next year Mega Mall will see competition from a project of the same size, ParkLake, currently under construction in the Titan neighborhood. ParkLake’s developers, Portuguese Sonae Sierra and Irish Caelum Development, are investing EUR 180 million in the project and are planning to open it in 2016.

Mega Mall is the largest investment the South African investment fund has made in Romania.

A commercial property company, NEPI is presently one of the largest real estate investors in Romania. It owns some 330,000 sqm of commercial space, the biggest shopping malls in its portfolio being Promenada Mall Bucharest, Ploiesti Shopping City and Vulcan Value Centre in Bucharest. In addition to shopping centers, NEPI owns several office projects such as Floreasca Business Park and The Lakeview in Bucharest and City Business Centre in Timisoara. simona.bazavan@business-review.ro

www.business-review.eu Business Review | May 2015

8 ReAL eSTATe

Romania needs legal framework to standardize performance of green houses, says Liebrecht & wood The authorities’ support is not vital to developing a market for sustainable housing in Romania; however, their involvement is needed to create a framework to measure the performance of green developments, says Didier Balcaen, partner and chief operations officer for Russia and Romania at Liebrecht & wooD Group. ∫ SiMOnA BAZAVAn

Didier Balcaen, Liebrecht & wooD

While building green houses has grown to be more than a trend on many Western markets, in Romania this segment is still in its early stages. However, developers are confident that the market holds potential, especially in light of the EU’s 2020 energy saving targets, so much so that the government’s lack of support is not necessarily seen as a setback.

“It is always easy to blame it on the government. I think that when it comes down to it, it is not up to the government to make it happen. For a developer, government support is not the determining factor; it is just something that helps,” said Didier Balcaen, partner and chief operations officer for Russia and Romania at Liebrecht & wooD

Group, during a sustainability event organized during Belgian Week in April.

However, the authorities’ involvement is needed to create a framework that would enable both developers and prospective buyers to measure the energy performance of green houses, he stressed. “Green can become very trendy and all developers may then put the green stamp on their project. Then consumers may no longer see a difference. This is why I think that it is important for the government to create a proper framework. If you say that one house consumes ten times less than another one, do people believe you? You need to have some kind of standards so that when people see a project on paper they will be confident that the developer will actually do it that way,” argued Balcaen.

In order for this segment to develop

and grow, end-users need to see the actual benefits of investing in sustainable housing, he added. “So to create a framework and an objective way for a client to assess how sustainable a house is is the key thing the government can do,” he concluded.

Liebrecht & wooD has been present in Romania since 2001. It has developed locally the West Park retail park in Bucharest, the Victoria Park office project and the first phase of Militari Shopping Centre. It also plans to build a second EUR 110 million retail park in Cernica and to start works next year on a 5,000-unit residential project in Frumusani, some 22 km from Bucharest.

The developer says it has invested some EUR 200 million in Romania so far.

It is also present in Poland and Russia. simona.bazavan@business-review.ro

CBRe: industrial and logistics leasing to surpass 2014 level The total leasing activity (TLA) involving industrial and logistics space amounted to 431,000 sqm in 2014, up by 39 percent compared to 2013, according to data from commercial real estate services firm CBRE Romania.

This year the TLA is projected to exceed last year’s level. ∫ SiMOnA BAZAVAn Both logistics players and manufacturers will be driving this growth said Dana Bordei, head of the firm’s industrial agency. More and more retailers are looking to open logistics hubs outside Bucharest, especially in the western part of the country. Demand for industrial space outside the capital will also maintain its upward trend in 2015, she added. The availability of local labor force at attractive costs is the main factor manufacturers consider before opening production facilities in Romania. Such was the case of Japanese automotive parts producer Yazaki, which last year leased a built-to-suit project in Braila (16,000sqm to 45,000 sqm in WDP Braila).

However, in order for this trend to maintain its momentum, it is important for the country to invest in the educational system on the long run so that it

Investment in education is needed to create better qualified workers for industry can produce better qualified workers able to manufacture more labor-intensive products, said Bordei. Otherwise, companies will simply relocate local operations to cheaper locations once the local market becomes too expensive, she warned.

Out of last year’s 431,000 sqm TLA, 26 percent represented relocations, 25 percent pre-leases, 23 percent renewal transactions, the acquisition of distressed assets and owner occupied space another 11 percent each and new demand and expansions 3 percent each.

Some 30 percent of the space leased last

year (in various types of transactions) was in Bucharest, the same figure as in Timisoara, followed by Ploiesti (20 percent), Arad (6 percent) and Oradea, Deva and Braila (5 percent each).

Half of the space leased last year was for warehouses, 34 percent was for manufacturing and the remaining 16 percent for logistics.

The largest transaction signed last year was Continental’s pre-lease of 45,000 sqm for a warehouse/logistics unit in Timisoara Airport Park.

Romania’s stock of industrial and logistics space amounts to 3.26 million

sqm (within privately owned industrial parks). Some 25,000 sqm will be delivered this year. Last year’s average vacancy rate in Bucharest was 11.3 percent (124,000 sqm available) while outside the capital it stood at between 10 and 14 percent (170,000 sqm available).

Prime headline rents for greater Bucharest dropped to EUR 3.8 percent/sqm/month in 2014 while outside the capital they stood at between EUR 3.4/sqm/month and EUR 3.8/sqm/month. Service charges range between EUR 0.75/sqm/month and EUR 1/sqm/month, according to CBRE. On the industrial and logistics market, CBRE had a 62 percent market share last year (out of the entire stock leased through real estate services firms). It brokered transactions totaling (50,500 sqm) in 2014 and another 36,000 sqm in the first quarter of this year, according to company data. simona.bazavan@business-review.ro

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COnSTRUCTiOnS 9

Sanex invests eUR 1.4 mln in green project slated to reduce energy consumption Romanian ceramic tiles manufacturer Sanex is planning to kick off EUR 12.5 million of investments in technological upgrades over the next couple of years to increase floor tile production capacity by 50 percent, with a EUR 1.4 million green project at its Cluj factory. ∫ SiMOnA BAZAVAn Sanex is investing the EUR 1.4 million in an atomizer which will enable its factory in Cluj-Napoca to reduce the consumption of gas used during the tile drying process by between 14 and 18 percent, according to company representatives. Half of the investment is a grant from the Norwegian government through the 2009-2014 Norwegian Financial Mechanism.

“The impact of the project targets energy consumption reduction and therefore a more responsible use of the available resources,” said Peter Molnar, general director of Sanex.

Over the next couple of years the company, which is part of the Austrian Lasselsberger group, is planning to invest EUR 12.5 million in technological upgrades which will enable it to cater to growing demand by increasing the production of floor tiles by half.

For now, Sanex sells all it produces

Sa-next move: the tile maker is planning to reduce its gas consumption

locally – 6.5 million sqm of ceramic tiles in 2014 – and imports from other group subsidiaries in order to meet domestic demand, said Sergiu Apolzan, the company’s marketing and sales director.

“We estimate the market will post a

slight increase this year but we are more optimistic about 2016,” he predicted.

This optimism stems from the fact that a growing number of residential projects are being announced which in turn will mean growth for the construction

market, added Apolzan.

Last year Sanex posted a EUR 30 million turnover having sold some 6.5 million sqm of ceramic tiles. In 2015 the producer wants to increase sold volumes to 7.3 million sqm.

Although there are no official statistics, between 25 million and 27 million sqm of ceramic tiles are estimated to have been sold last year in Romania.

This puts the local market’s value at over EUR 100 million.

The EUR 1.4 million investment project at the Cluj-Napoca factory is being run in partnership with International Development Norway, a Norwegian organization with over ten years of experience in international projects developing good practices in eco-business.

Sanex was set up in Romania 44 years ago and in 2004 became part of the Austrian Lasselsberger group. The company’s main brand on the local market is Cesarom. simona.bazavan@business-review.ro

www.business-review.eu Business Review | May 2015

10 TAX & LAW

BRIEFS

Fiscal amnesty in 2015? new rules regarding cash register machines, new obligations for the registering of personal money of the employees, as distinguished by the cash of the business, taxation of gratuities (tips), and extension of the application of thresholds for cash transactions to physical persons as well.

Ministry of Finance drops tax on tips The tax on tips has been dropped on the order of the minister of finance, Eugen Teodorovici, who said that although the measure had been sought by the business community, it would be extremely difficult to implement.

According to the minister, the change could come into effect on June 1. The government decided on April 22 to regulate tips, obliging companies to print them on a separate tax receipt.

Government sends fiscal amnesty bill to Parliament The government sent a draft bill to Parliament on May 13 which if passed will grant an amnesty for certain outstanding taxes for copyright contracts for which the fiscal authority (ANAF) has sued taxpayers. The measures relate to contributions due by June 1.

The reason for the move is that the authorities are now involved in lawsuits that cost the state more than the sums that could be recovered, explained PM Victor Ponta.

Parliament passes personal insolvency law The Chamber of Deputies passed a personal insolvency law in a final vote on May 21. The law sets out three ways to resolve personal insolvency.

Individuals can opt to repay their debts to a reimbursement timetable, by liquidating assets or through a simplified procedure. According to Ana Birchall, the PSD MP who initiated the bill, the law will help Romanians in financial distress and the final form does not favor either debtor or creditor.

Parents must pay taxes on minors’ earnings from artistic activities Parents who don’t declare income generated by minors from cultural, artistic, sports, advertising or modelling activities risk being fined. The measure was introduced by a government ruling published in the National Gazette on February 13 and came into effect on May 14. Parents now have to inform social services if their children earn money from activities such as singing at concerts or acting in movies, TV advertisements or theater plays.

Child benefit to double Child benefit will double from RON 42 to RON 84 (approximately EUR 19) per month, Parliament has decided.

The move will cost the state RON 1.8 billion (EUR 400 million). PM Victor Ponta said the sum would be covered in 2015 but extra revenue would need to be found from 2016.

Nadia Oanea, Executive Director, Head of Tax, Grant Thornton

April comes with the enforcement of the reduced 9% VAT rate for food, but also with a lot of measures aimed at strengthening financial discipline regarding cash transactions. Is it possible to have a fiscal amnesty in May? With the Government releasing the draft of the new Tax Code intended to enter into force on 1 January 2016, including many proposed reduction in taxes and other tax incentives, which brought enthusiasm from the business environment and a lot of discussions on how the budget will be affected, in April we have already enacted the reduction in the VAT rate for food.

Government Emergency Ordinance no. 6/2015 amending the Tax Code introduces, starting on 1 June 2015, the application of the reduced VAT rate of 9% to supplies of the following goods: food, including beverages other than alcoholic drinks, for human and animal consumption; live animals and fowl of domestic species; seeds, plants and ingredients used for the preparation of food; products used for completing or substituting food; catering and restaurant services, with the exception of alcoholic drinks.

The same Ordinance brings an important change in the taxation of nonresident taxpayers, allowing for the taxation of net income of interest derived by legal entities and of income from independent activities derived by natural persons, residents in a member state of the European Union or of the European Economic Area, starting from 1 June 2015, under certain conditions.

This measure was introduced in order to ensure equal tax treatment with resident taxpayers, in which case the taxation is applied by subtracting deductible expenses from the taxable base, by taking into consideration the EU principle regarding the freedom of rendering services and the free movement of capital.

But what was really notable in April’s changes to the tax law refer to the new rules for cash transactions:

Government Emergency Ordinance no 8/2015 has amended and completed the regulations regarding the cash register machines and introduced the obligation to tax tips (gratuities). The economic operators shall decide whether the income derived from the collection of gratuities remains at their disposal or whether these represent a source of other income, which is to be distributed to the employees, income tax being due accordingly.

Also, the Ordinance introduces the obligation to maintain a registry of the personal cash of the employees, in which the amounts of money possessed by the personnel of the economic operator that carries out its activity in the unit for selling goods or rendering services should be recorded.

We inform you that at the moment of preparation of this article, on the website of the Ministry of Public Finances an information note was published, according to which the Ministry of Public Finances shall organize on Friday, 15 May c.a., new consultations with the relevant stakeholders on the market with reference to the legal provisions referring to the taxation of gratuities.

We reiterate that Government Ordinance no. 10 from January 2015 established the tax receipt lottery as a measure to combat tax evasion and to encourage buyers to request tax receipts for the taxation of the economic agents’ income. The first draw of the tax receipt lottery was special, as it was organized on April 13, 2015, Easter day.

However, the lottery will continue with monthly draws, starting in July.

Also, starting on 9 May, a new law strengthening the financial discipline of the cash receipts and cash payments operations is in place. The law limits the cash receipts and payments made by legal entities and individuals carrying out independent activities in any form and other registered or unregistered entities from/to any persons from these categories.

Marking a first, the law limits the cash receipts and payments between natural persons, carried out for the transfer of the ownership of goods or rights, provision of services as well as those representing loans / loan repayments. These transactions can be performed up to a daily threshold of 50,000 lei/transaction.

However, after so many new restrictions enforced, May comes with a new draft law published on the website of the Ministry of Public Finances, proposing a fiscal amnesty.

Recently the audits performed by the National Agency for Fiscal Administration (ANAF) aimed to reclassify the economic nature of transactions, imposing additional taxes and additional late payment interests and penalties, the most frequent ones pertaining to: l reclassification of the income of those practicing a liberal profession and of the copyright beneficiaries as income from dependent activities and the taxation thereof according to the rules common for salary income; l reclassification as salary income, properly taxed, of the exempt per diem given to international transport employees or of the per diem paid to temporary work agents; l inclusion of the copyright rights within the sphere of VAT taxable operations, if the service has been provided by a taxable person acting as such, namely in an independent manner; l the obligation of calculating and paying the social health insurance contribution by applying a contribution quota to a monthly taxable base which cannot be lower than the country’s minimum gross salary, no matter if the income is lower than this minimum threshold.

In view of the significant magnitude of the calculated amounts related to the inspections that took place or are taking place, as well as of the estimated amounts based on the macroeconomic analysis, the Government is contemplating the adoption of certain measures pertaining to canceling the additional amounts and the delay accessories related to the decisions issued for the fiscal periods before June 1, 2015 and unpaid at the date of entry into force of the proposed normative act, and to stop inspections on these topics in the future for the same period.

The proposed measures aim to rectify some inequities from the past, but, for the future, further clarifications on the legal provisions are needed, e.g. changes to the Tax Code, Labour Code, or the Law regarding the Health insurance system, to ensure certainty of taxation for the taxpayers.

nadia.oanea@ro.gt.com

12 COVER STORY

www.business-review.eu Business Review | May 2015

Romania still not on cloud number nine While the adoption of cloud computing in Romania is gaining velocity from one year to the next, the statistics do not lie. Figures put Romania among the lowest placed EU countries in terms of adoption rates by businesses, individual users and the public sector. Still, there is encouraging news in all of these areas, pundits told BR.

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COVER STORY 13

Catalin Necula, sales manager for infrastructure solutions and cloud at Star Storage

∫ OTILIA HARAGA The most recent Eurostat survey, published in December 2014, found that only 5 percent of Romanian companies use cloud computing services, by comparison with a European average of 19 percent. Marginally above Romania are Latvia and Poland, just 6 percent of whose companies use cloud computing, and Bulgaria, Greece and Hungary, each with 8 percent.

The European champions in cloud adoption are Finnish firms, 51 percent of which use the cloud to store e-mails, file databases, software and applications.

Experts consulted by BR say that the situation is not as dramatic as it seems, and that in reality the picture across Europe is not significantly different.

“While the adoption rate is higher than in Romania, there are several drawbacks delaying adoption such as diverse and continuously changing data privacy regulations, slowness and the undesired effects of some EU policies and multi-country business processes,” Mihai Rada, director advisory, and Gheorghe Vlad, senior manager in IT advisory at KPMG, tell BR. In the public sector, adoption is even lower, since the Romanian authorities are reluctant to take the leap, for various reasons. Generally, the public sector is slower to adopt the latest technologies, as institutions are still bureaucratic and apprehensive when it comes to sensitive public data.

The Eurostat survey found that 76 percent of companies in Romania use the cloud for e-mail services. But only 37 percent use other services like file storage, database and software services.

“We can look at it in a negative way – if

we consider the level of digitalization – but also see it as a big opportunity,” Michal Golebiewski, marketing and operations director at Microsoft Romania, comments to BR. He believes that Romania does not yet have “a crystallized verticalization of cloud services.”

“It’s about usage scenarios. That’s why companies with mobile sales forces or external agents will be more interested in mobility and cloud. It’s the same with sharing documents and

Markus Lause, director of the enterprise business unit at Vodafone Romania

Costin Matache, executive director at Ymens, estimates that by 2017, all big companies in Romania will use cloud solutions, based on the data in the CIO Council survey.

“Overall, the market stands at approximately EUR 100 million, a figure I believe will consistently increase in the coming years on account of public and private organizations’ interest in becoming more efficient, flexible and agile in this increasingly competitive

"We feel that Romanian mid-market businesses are ready to enter a new era of digitalization that will lead to cloud adoption. The increase in mobile data consumption, the high adoption rate of smartphones and tablets and the constant change we see in consumption habits, both from consumers and businesses, will lead to a forced digitalization of businesses, both from the B2C perspective but also internally, in the area of business management.”

Markus Lause, director of the enterprise business unit, Vodafone Romania. accessing information remotely. And here we see banking and professional services,” says Golebiewski.

The National Strategy on the Digital Agenda for Romania 2020 paints a slightly rosier picture. The document quotes a CIO Council survey carried out in 2012, which found that in Romania, 55 percent of private companies use cloud technologies in various forms. However, only 10 percent of survey participants use only public cloud.

environment,” he tells BR. Even if statistics place the cloud adoption rate in Romania at the lower end of the scale, in the area of digital commerce the situation is quite the opposite, according to Laurentiu Ghenciu, vice-president, EMEA sales, at Avangate. “In digital goods and online services verticals, we’re seeing adoption of close to 100 percent,” he tells BR. Citing the Gartner survey IT Market Clock for Digital Commerce 2014, Ghenciu comments, “SaaS (software-

as-a-service) digital commerce platforms are popular among small to midsize organizations, as well as an increasing number of large enterprises.

Roughly 20 percent of implementations are due to be delivered using SaaS, and that number is growing.”

He adds, “The reason we believe Romanian digital companies use mostly commerce platforms in the cloud is that they entered the market later than their foreign counterparts and simply went for the more agile, faster-to-market solution.”

Cost is also an important factor: SaaS platforms are normally revenueshare, with low or zero upfront costs, while on-premise implementation clearly comes with different costs, notes the VP. “On the startup front, there is no doubt that companies go for a cloud-based commerce platform, no matter where they are from – Romania, the US or China – again, because of the costs and benefits brought by a revenue-share model: you don’t sell anything, you don’t pay anything either. Likewise, when you sell more, the platform scales with you without any additional investment in infrastructure or support,” he tells BR. Most experts canvassed by BR seemed to agree that the early cloud adopters in Romania were IT companies. The reason is that these firms were “the first to understand cloud technology and its highly valuable benefits,” says Matache. Multinationals, which have adopted global IT strategies, including cloud solutions, followed next, he adds.

Catalin Necula, solution sales manager for infrastructure solutions and cloud at Star Storage, shares that view.

“IT companies in the financial-banking industry, utilities and retail have understood the benefits that cloud has to

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14 COVER STORY

Mihai Rada, director advisory at KPMG

Nazmi Caglar Boluk, CEO of Euroweb Romania

offer and so migrated to the private, Management) solutions, the EU 27 avcloud virtualized platform: from serv- erage usage rate stands at 23 percent of ices like e-mail, collaboration and shar- firms versus 14 percent in Romania. ing information inside the organization And 53 percent of companies in EU 27 to virtual servers, backup services, countries exchange information elecdata recovery services in case of disas- tronically between organizations, ter and data replication in third party against only 39 percent locally.

It is estimated that cloud services data centers,” he says.

According to Necula, companies with will produce revenues exceeding EUR regional or national business, which need a high availability of critical applications, are fast adopters of public cloud services as are companies that experience high variations in resource consumption. The manager argues for these firms, the benefits of this model bring added value from the first year.

More cautious when it comes to migrating to the cloud are companies that lead their activities in one single location, because externalization is seen as a supplementary risk. However, backup and disaster recovery services are still considered valuable, says Necula.

As far as the public sector is concerned, he argues that it is still enslaved to the traditional IT model and finds it hard to ingest the idea of outsourcing IT infrastructure to a third party company. By comparison with Romania, other Euro- 150 million by 2017, if public institupean states are much more open to tions understand and rule in favor of these types of services, says Necula of adopting these services, Boluk tells BR. “Even though the term ‘cloud’ is no Star Storage.

The reasons for the slower adoption longer a mystery for IT users in Romaof cloud services in Romania may be a nia, the revenues generated by these cause of the lower digitalization level services are low compared to the performance of other countries in the reamong local companies.

Nazmi Caglar Boluk, CEO of Eu- gion, which are much more advanced roweb Romania, warns that there is from this point of view,” says the Eustill a gap between Romania’s use of roweb expert.

In Europe, things are different becertain categories of IT solutions and the European average. While in the EU cause virtualization services alone – 27 countries approximately 71 percent basically cloud computing – mean a of companies have a website, in Roma- market of EUR 4.5 billion for software products and another EUR 1.5 billion nia only 36 percent do.

For the use of SCM (Supply Chain for hardware, he notes.

However, the adoption of cloud computing services is set to grow. It is forecast that cloud computing will rise by approximately 20 percent in Romania. “On the local market, the cloud adoption level was under 10 percent in 2013, but we expect significant growth over the coming years when the green wave for European funds for 2014-2020

“On the local market, the cloud adoption level was under 10 percent in 2013, but we expect significant growth over the next coming years when there green wave for European funds for the timeframe 2014-2020 comes. We estimate very high growth in demand from small companies and public institutions, after the European Commission will have set the financing rules for IT projects in 2014.”

Nazmi Caglar Boluk, Euroweb Romania. comes. We estimate very high growth in demand from small companies and public institutions, after the European Commission set the financing rules for IT projects in 2014,” Boluk tells BR. According to Matache, cloud CRM (Customer Relationship Management), ERP (Enterprise Resource Planning), cloud communication and collaboration solutions or cloud content and document management solutions have sparked the interest of businesses in Romania. Private cloud is currently the predominant model used in the enterprise environment.

Lucian Daia, head of custom solutions at Zitec, says that many compa-

nies are still using software solutions such as operating systems, productivity applications and presentation websites at a minimal level.

The development of applications to increase the efficiency of these processes directly on cloud platforms can boost the degree of cloud adoption, in an accessible way for companies.

According to an IDC study, one of the dominant hybrid cloud models used worldwide is SaaS linked to onpremise applications. The global trends in the coming years, which are expected to reach Romania as well, indicate that the hybrid cloud model will post faster growth, according to Matache.

“Five years ago, data loss and privacy risk were primary concerns and contributed to slower cloud adoption rates.

Today, most organizations realize that cloud is a platform they have to integrate and support, so they are more focused on operating effectively. The question is no longer: ‘How do I move to the cloud?’ Instead, it is: ‘Now that I’m in the cloud, how do I make sure I’ve optimized my investment and risk exposure?’,” say KPMG experts.

Of the challenges that companies are still facing over cloud adoption, the KPMG experts rank as most common those related to data loss and privacy risks, risk of intellectual property theft, impact on the IT organization, measuring ROI, high cost of implementation and legal and regulatory compliance issues.

“The decision to go or not go into the cloud is also related to the degree to which a company is using digital technologies: it is less likely that an agriculture company will see benefits from going into the cloud while transportation or retail firms will be more open to it,” argue KPMG experts Rada and Vlad.

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COVER STORY 15

The ascension of the cloud model has an example moving from writing let- use both models. The same with cloud such as smartphones and tablets is been amply documented and re- ters to sending e-mails, from buying – I can use only cloud or a mixed envi- very common in this segment and searched. Andreea Mitirita, director tax CDs to streaming songs directly to de- ronment, in a very flexible way,” he cloud-based solutions support it very well,” adds the Microsoft representaconsulting at PwC Romania, points to vices and the list could continue. The tells BR. He goes on, “Cloud is a huge oppor- tive. a Forrester survey which reveals that transition took time even though there A survey commissioned by Mithe top industry sectors to have imple- were strong reasons for the change. In tunity for SMEs. It has been proven to mented cloud services globally are util- our case, for many years users ‘owned’ help them grow their business with crosoft and conducted by Ipsos Mori in ities, media, entertainment and leisure IT solutions. Cloud is changing that better cost control. One main obstacle Europe (Romania included) found that followed by manufacturing, financial model: IT solutions are ‘rented’ (sub- for them to invest in new technology 55 percent of SME employees agree scription based),” Golebiewski tells BR. has been the initial cost: you have to that mobile technology helps them services and insurance and retail.

Across the EU, most enterprises He mentions other barriers: medium buy licenses, business applications, save time and boost productivity so that they can better balance work and using the cloud are active in the inforpersonal life. mation and communication sector (45 The survey also found that 83 perpercent), followed by those fields covcent of SME employees can be conering professional, scientific and techtacted by their work outside of normal nical activities, according to Eurostat. office hours. This is the perfect sce“In Romania's case, although there is nario for cloud mobility, Golebiewski still insufficient public information on concludes. cloud usage across business sectors, “We feel that Romanian mid-market we expect that IT is the sector with the businesses are ready to enter a new era most intensive usage of cloud computof digitalization that will lead to cloud ing solutions,” says Mitirita. adoption. The increase in mobile data Daia adds Zitec’s take. “Our expericonsumption, the high adoption rate of ence shows that locally, retailers are smartphones and tablets and the conthe largest cloud consumers. At the opstant change we see in consumption posite pole are companies in strongly habits, both from consumers and busiregulated fields such as pharma, financial and utilities, but there is strong in- and large companies have concerns re- maintenance services. To give you an nesses, will lead to a forced digitalizaterest among them in the migration of lated to security and privacy. Another idea, with cloud you can have all of tion of businesses, both from the B2C typical worry is the effort of migrating that on all devices for a daily fee com- perspective but also internally, in the applications to the cloud,” he tells BR. One major obstacle that still stands in the existing infrastructure to the cloud. parable to the cost of cup of coffee. area of business management,” Markus the way of cloud adoption is force of “Take again the example of music stor- Sure, different qualities of coffee come Lause, director of the enterprise busihabit. The cloud disrupts mentalities age: If I already have hundreds of CDs, at different prices, but still… ness unit at Vodafone Romania, tells BR. and these are often much harder to I must decide if and how to convert ” says Golebiewski.

He gives other arguments in favor of The cloud apps that have become change than mere equipment. “There them to electronic versions and use is the natural status quo which tends to them on portable devices. I can trans- cloud adoption for such firms. “The available for a wider number of midaffect every aspect of our lives. Take as fer all and throw away the CDs or I can concept of bring-your-own-devices size and small businesses are generally

“Locally, retailers are the largest cloud consumers. At the opposite pole are companies in strongly regulated fields such as pharma, financial and utilities, but there is strong interest among them in the migration of applications to the cloud.”

Lucian Daia, head of custom solutions at Zitec.

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16 COVER STORY

Laurentiu Ghenciu, vice-president EMEA sales at Avangate

in the area of invoicing, ERP, CRM, tivity or internal process applications.

The view is shared by Golebiewski, stock management, document management, fleet management, cloud who tells BR that this would “open the storage and video as a service, adds door to extremely innovative and fasLause. He thinks that professional cinating possibilities in terms of the services for companies lead cloud and ‘Internet of Things’, where sensors, deapps usage, followed by retail and vices and systems can work together to wholesale, while construction and make our lives much easier.”

“Besides the cost related argument, manufacturing are next.

“Of course, as the hardware sharing there are other two important benefits: model is stirring a revolution on the IT services market’s business segment, it is to be expected that the model will radically transform other industries that have strong IT infrastructures: television, the medical field, banking and insurance,” says Necula.

The sky’s the limit for public sector cloud adoption potential The adoption of cloud computing in the public sector is part of the first pillar of the National Strategy for the Digital Agenda for Romania, which includes e-government, inter-operability, cyber security, cloud computing, open data, big data and social media. It aims to achieve a boost in efficiency and reduce costs in the Romanian public sector thorough the modernization of the administration.

“The Lisbon Agenda outlined challenging goals for public administration across the EU to provide various e-government services via electronic channels, for both private citizens and businesses. Cloud computing should be considered a very attractive strategy for the development of modern digital public administration, considering its cost efficiency,” Rada and Vlad tell BR. They add that, technically, there are no limits to what the public sector could do using IaaS, PaaS and SaaS cloud services for citizen engagement and communication, government produc-

Lucian Daia, head of custom solutions at Zitec

a less optimum manner than the private sector.”

According to the National Strategy for the Digital Agenda 2020, the dominant model for the development of cloud computing that other European countries have so far adopted is the Governmental Cloud (G-Cloud), a private or community cloud especially created to be used by national govern-

“Five years ago, data loss and privacy risk were primary concerns and contributed to slower cloud adoption rates. Today, most organizations realize that cloud is a platform they have to integrate and support, so they are more focused on operating effectively. The question is no longer: ‘How do I move to the cloud?’ Instead, it is: ‘Now that I’m in the cloud, how do I make sure I’ve optimized my investment and risk exposure?”

Mihai Rada, director advisory, and Vlad Gheorghe, senior manager in IT advisory at KPMG

enabling e-government for the benefit of citizens and the interoperability of various government organizations,” he says.

If cloud were applied in the public sector, this would have “an immediate impact on people’s lives and huge benefits,” Timos Tsokanis, chief technology and information officer Telekom Romania tells BR. He adds that the benefits would exceed those in the private sector, “because the state has a tendency to do things in

ments.

“Cloud solutions can significantly eliminate issues faced by all IT departments, of both central and local authorities, associated with capacity, purchasing and maintenance of an IT infrastructure or data processing center,” say KPMG experts.

The real problem, according to the experts consulted by BR, is that governments are still reluctant to see cloud as a reliable partner for the development of the public administration and

a more effective allocation of resources.

According to Golebiewski, in the public sector very careful attention is paid to aspects such as local data storage, privacy and security. “In line with this special attention to data, this sector, as in any big enterprise, tends to use private or hybrid cloud solutions,” he says.

The private cloud means that authorities use their own datacenter, fully managed locally. Hybrid cloud is the partial extension of private cloud to public cloud for some workloads like backup, data recovery and storage, he notes.

Tsokanis says that reluctance regarding cloud adoption can be found in all national governments, not just in Romanian.

“We should not imagine that Romania lags much behind other countries.

Cloud usage in the public sector is still the exception and not the rule because various authorities still have certain ’legacies’ and a lack of flexibility, which are difficult obstacles to surmount,” he comments.

Traditionally, the public sector has been dominated by “the moving of boxes” so more attention was given to hardware than to what could be built upon it. “This is hard to change overnight,” adds Toskanis.

One solution comes from Necula, who suggests that there should be more training sessions targeting specialists from public institutions.

“At the moment, the use of traditional IT technologies is preferred in this sector, and acquisition processes are extremely cumbersome and limited, but in the future we hope that things will change,” he says.

However, the first step towards the adoption of cloud services in the public sector has been made in the education

www.business-review.eu Business Review | May 2015

COVER STORY 17 “There is the natural status quo which tends to affect every aspect of our lives. Take as an example moving from writing letters to sending emails, from buying CDs to streaming songs directly to devices and the list could continue. The transition took time even though there were strong reasons for the change. In our case, for many years users ‘owned’ IT solutions. Cloud is changing that model: IT solutions are ‘rented’ (subscription based).”

Michal Golebiewski, marketing and operations director, Microsoft Romania.

Private user more connected to the cloud

Michal Golebiewski, marketing and operations director at Microsoft Romania

field. “The education system is the most open towards this model of using IT resources, especially because the information in this field has an open regime. Also, public cloud ensures the necessary resources to cover the con-

sumption peaks that are specific to elearning platforms. The educational field is the gateway through which cloud adoption will spread across public institutions,” predicts Necula.

For individual users, the cloud is all about convenience of use anytime, “More individuals are using cloud serv- anyplace. They can have data and apices which are closely correlated to the plications at their fingertips, as they adoption of mobile technologies. As can access them from anywhere with mobile computing rapidly grows (i.e. an internet connection. the penetration of smartphones and Golebiewski argues, “Cloud adoptablets) so does the adoption of cloud,” tion among the consumer segment is KPMG experts tell BR. They add that al- much bigger than in business – if we though not fully aware of it, most peo- think about personal email or use of sople use cloud services while storing cial media (which are cloud services).” backups, photos or other media on the Online gaming, music and video cloud space provided by mobile de- streaming, virtual drive and data storvices. age, plus apps stores are the kind of

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18 COVER STORY

Orange exports local smart shop flagship concept to group level Romania was the first country in which Orange Group opened a smart shop, a new digital outlet concept designed to provide a tailor-made approach and superior shopping experience. The operator is planning to replicate the Romanian model at the level of the entire Orange group.

Costin Matache, executive director at Ymens Smart in the right place: the smart shop concept is being rolled out more widely

“Overall, the market stands at approximately EUR 100 million, a figure I believe will consistently increase in the coming years on account of public and private organizations’ interest in becoming more efficient, flexible and agile in this increasingly competitive environment,” Costin Matache, executive director, Ymens. services in the cloud that are available to individual consumers.

Telecom operators in Romania have special offers giving cloud storage space and access to cloud applications to their customers. “At Orange we can talk about music services such as Deezer which are in the cloud, but also entertainment services such as Orange TV Go, which can be accessed from a tablet, smartphone or laptop,” say company officials.

However, unlike the business sector where cloud generates revenues for companies that provide these solutions and offer a better economy of scale for those who take up the service, the model for the individual consumer is different.

“Individual consumers who are ready to pay are still few and the model is mostly ‘freemium’: they get basic features for free and pay for upgrades,” says Golebiewski.

But even judging by individuals, Romania is still lagging behind other Western European economies. According to Eurostat, one in five Europeans uses cloud storage services to keep documents, photos, videos and other files. Moreover, 15 percent of Europeans use the cloud to share files.

The leading countries in cloud

adoption by individual consumers are Denmark, where 42 percent of the population uses the cloud, followed by Great Britain (38 percent), Luxembourg and Sweden (35 percent each) and the Netherlands (34 percent).

However, in Romania less than one in ten Romanians uses cloud services, on a par with Poles and Lithuanians Approximately 15 percent of Europeans use cloud to share services, 44 percent use email applications, and 38 percent USD sticks, DVS or bluetooth.

Most use cloud services free of charge, and 88 percent of them store and share photographs.

Only 54 percent use cloud services for text documents or technical presentations. One third of Europeans use cloud to share just music.

“Individual consumers are willing to test and use platforms that are as varied as possible and have new capabilities. They prefer that new applications are as integrated as possible with consecrated platforms, are secure, not hard to manage, accessible from mobile devices and have an important social component, from sharing on social networks to interacting with other users,” comments Necula. otilia.haraga@business-review.ro

∫ STAFF “We will definitely integrate and adapt this new concept in our stores. At the level of the group, 20 percent of Orange stores in France and Europe will have implemented this new concept by 2018, based to the available space,” Claudiu Dragomir, sales & distribution director at Orange Romania, told BR. Globally, approximately 600 stores in Europe will be completely revamped.

Other outlets will adopt part of the concept, depending on the store design, arrangement and size. The company is planning to implement the smart shop concept across Romania as well, starting this year and continuing for several more, Dragomir told BR. The next step is the fine tuning.

“After this launch, which is the first at the level of Orange Group, we will be taking some time to analyze the progress and feedback we receive from customers coming to the new store, and improve it.

As part of the implementation of the new store concept, many processes were analyzed and improved. This has enriched customer experience and shortened waiting times – one of the positive pieces of feedback we have received,” he said.

Orange Romania has hosted several group premieres: EDGE technology, the first HD Voice International call, Passpoint technology and more recently the Orange TV stick were launched in Romania before being replicated across the entire organization.

The first smart shop in Romania and Orange Group was inaugurated on March 20 in Cluj-Napoca on 21 Decembrie 1989 Blvd.

Romania was chosen as the first location of this flagship store for its open-

ness to last generation technology and devices, high-performing internet services and tradition in innovation.

Cluj was preferred to Bucharest, because “one of the largest Orange communities is in Cluj, and here we have a large customer base and a considerable number of direct and indirect employees,” Dragomir told BR. “In recent years, Cluj has grown as a center of innovation and many IT&C startups that are developing based on IT&C solutions launch their businesses there.”

The operator has not relocated many stores yet for optimization reasons, and some have been moved within the same commercial center. “The relocations we are doing pursue either the optimization of store placement in the city or the optimization of surfaces depending on the opportunities on the local market. Over recent years, rents have remained relatively constant, with insignificant fluctuations,” Dragomir told BR. At the end of April, the Orange network included more than 90 of the operator’s own shops and 233 franchise outlets. With its partner stores, Orange had more than 700 points of presence in total.

The new smart store launch is part of the company’s Essentials2020 strategy.

“Essentials2020, our strategy for the next five years, is built around the customer and a desire to connect with what is essential to them, through an incomparable experience. We will continue at the same pace, and we have plans to invest nearly half a billion EUR by the end of 2018. The new smart shop concept is an example that illustrates this strategy,” said Jean-François Fallacher, CEO of Orange Romania. editorial@business-review.ro

www.business-review.eu Business Review | May 2015

IT 19

OPINION Alina Georgescu, SALES DIRECTOR, YMENS

The Romanian Cloud Customer Journey providers with excess compute capacity and customers with computing needs became a whole new market within the IT industry, and one that experts are betting on for several years now. Romanian customers can now benefit from the offers of large IT global players and local companies as well, depending on their needs. But customers’ demands are always rising.

Our customers have chosen Ymens for the innovative solutions we brought to their businesses and, after a while, the request for innovation increased again. This is one of the main reasons we never stopped investing in new solutions, modern services or Research & Development. To think that once a customer gained experience in using your cloud solutions is enough to make it loyal is a little bit of idealistic. Customers demand innovation and, therefore, they are asking the same thing from their partners and vendors. If you want to stay in the game, you need to play the game and these days the game is called Innovation. And, if we look at the market, there is still room for cloud-driven innovation: IoT (Internet of Things), Smart Cities, web-scale IT, Big Data are only some areas that will deploy new solutions and services for customers everywhere.

When talking about cloud, the debates generally focus on what’s the next big thing in terms of innovation, consumption and market growth. Nevertheless, we should sometimes remember to look at our own evolution as cloud users and customers in order to discover the direction we are heading in. As a country, Romania is still regarded as an emerging market in terms of cloud adoption, with different levels of cloud usage within the traditional customer segments. Public sector is just starting to discover the cloud potential, enterprises are already using it in order to gain efficiency or business growth, while SMEs are still exploring the PROs and CONs of adopting cloud. Consumers lead from afar, as they are already using various cloud services, even without being aware of this fact. The 8 million Facebook users in Romania are a relevant proof of cloud’s presence in our everyday lives.

However, the past years have brought a shift in cloud perception, a significant change that drives the cloud industry’s growth and impacts the way cloud is used both by businesses and consumers.

1. From a leap of faith to a value proposition In 2012, when Ymens was launched as a fully dedicated cloud company, the Romanian market was still timidly approaching the concept, barely understanding its potential and business impact. For SMEs, cloud generally meant a very convenient “pay-as-you-go” way for accessing new-edge technology that before seemed almost out of reach due to the high investments costs. Even so, adoption started in a tempered pace, as the lack of knowledge regarding the impact cloud has within an organization quickly raised a wave of concerns among the customers. Where will my data be stored and who will access it? Should I trust an external cloud vendor with my core-business processes? What should I do with my latest investment in technology? Am I ready for the cloud?

We have encountered all of these questions on the way of building Ymens’ customer portfolio. Resistance to change is part of the human nature and we kept in mind the fact that business owners and users are entitled to have their doubts and questions. Therefore, we opened up and shared our knowledge with our customers along the way.

The more we’ve learned, the more we’ve shared so that clients can trust us and see us as a reliable partner for their businesses. In the beginning, 8 out of 10 customers were considering that cloud adoption is equivalent with taking a leap

3. The consumer cloud – not only the hype, but also the business potential

of faith. Along the way, cloud adoption within the enterprise sector shifted this ratio - now, 8 out of 10 customers see the cloud delivery model as value added to their business. What made them change their opinion? Firstly, cloud education. Secondly, the major industry trend is towards cloud and, if you want to be competitive, you have to at least go with the flow or, more recommended, be among those early adopters. Thirdly, using cloud convinced them of the benefits. The “live” cloud experience demonstrated how cloud really works.

No more buzz-words, but clear benefits: accessibility, scalability, back-up, business recovery, security, costs optimization, flexibility – and these are only some of the advantages customers gain nowadays when using cloud.

Questions remain, but different. The

discussions are leading us to more complex topics, like integration between cloud solutions and on premise systems, Managed IT services, hybrid or private complex cloud architectures and so on.

Basically, the customers’ focus migrated from “why should we use Cloud” to “how to better use Cloud” and this switch is fairly working for their advantage.

2. From innovation to commodity and back to innovation You may think that it is pretty quick to use cloud as the innovation gateway of the IT world one day and the second day to see it as a commodity. But in order to take advantage of all its’ potential, customers started to treat cloud services as commodities. What began as the offer-demand meeting point between

Of course, at Ymens, we are addressing requirements coming from the business sector. But to ignore the consumer cloud market evolution would be a tremendous mistake. Of course, the personal decision process is very different but we see similarities in approaching, testing and trusting new technologies. That’s why most of our customers are, as individuals, the tech-savvy type.

It’s no secret that the consumer cloud market is rapidly evolving, with storage and social services gaining more and more users. It’s the hype of the new generation, always connected, permanently sharing information regardless of the location or time zone. According to a worldwide study, consumer subscriptions to cloud-based storage services are expected to hit 1.3 billion in 2017.

The youngsters, already embracing most of the cloud benefits, are the future generations of cloud business customers.

While we approximate the Romanian cloud market to be around 100 million euro, the consumer cloud usage and behavior trends give us great confidence in the cloud growth we are about to witness in the following years.

www.business-review.eu Business Review | May 2015

20 IT

3Pillar Global Romania CEO: ‘Universities can’t train enough IT students’ In 2003, Romanian entrepreneur Catalin Stef started a software company in Cluj, which went on to be bought by 3Pillar Global. He now coordinates operations in Romania and India as CEO of 3Pillar Global Romania. The firm is in expansion mode, looking to consolidate its business in Cluj and Timisoara, and a third center may soon be opened in Romania if all goes well.

Much of the recruitment takes place through headhunting, but also through our own promotions and positioning to become more visible in IT communities.

We are targeting medium- and senior-level engineers with two-seven years of experience, who should fill programming and testing vacancies. As far as programming is concerned, we are especially looking for Java and Phyton skills but also specific technologies for developing web and mobile applications. We are also looking for managers with technical experience.

∫ OTIlIa HaRaGa You lead the offices in India and Romania.

What are the differences in mentality, culture, work ethics, schedule and salaries between the two countries?

It is a great challenge to lead operations on different continents because there are numerous cultural differences: from different holidays and the sync of the calendar to the relationship between the employee and manager and the desire to make a name for themselves that young Indians have and energy they are willing to put into that.

One of the main challenges was to sync the differences between the two cultures so that the strong points complete with each other and we can use this complementarity in the services we offer customers, where it is necessary to have greater adjustment power because we are working on very different external markets.

For instance, IT people in India excel at implementation while those in Romania are used to thinking out complete solutions for product development, working alongside the customer’s teams and bringing added value from the project stage.

From this point of view, the level of the IT industry in Romania is closer to that in the West, even the UK. What is the story behind the company from the time you started it until you sold it to 3Pillar Global?

In 2003, at 26 years old, I set up a software company in Cluj. After graduating from the Babes Bolyai University, I became an employee, after which I worked as a freelancer for a time. There was a time when I was working as an employee for eight-nine hours a day and an entrepreneur for four-five hours at night. The 12-14 hours increased after I set up the company, because I was a programmer, manager and salesperson at the same time.

I wanted two things: to be independent and to be able to create a working environment that was different from what existed at that time in Cluj, one where each person could be important

Since the company was taken over by 3Pillar Global, what are the actual investments and investment areas?

Investments vary from one year to the next but can reach several hundreds of thousands of EUR if they include things such as moving to a new headquarters, as happened last year. But we also invest in less tangible things such as the quality of the collaboration with the management teams, teams in other locations and customer relations.

through their contribution, where experience can be individual and where one does not have the feeling of being a little cog in a big wheel.

In 2008, I reached 50 employees and had my headquarters in an office building. Then there came a time when I could no longer support the growth of the company, when we had hit a plateau, and I made a first partial exit from the company, followed by a second one towards LeverPoint, the future 3Pillar Global. That was a decisive moment in my career.

In 2009, we started hiring massively.

Why did you open offices in Cluj and Timisoara?

I founded the company in Cluj and the fact that the Romanian headquarters is located here is a natural continuation of this. The second center, in Timisoara, came as a result of our expansion, since Timisoara is a town where there are many IT specialists trained at several large multinationals with a high degree

of seniority.

How many people work at the Romanian offices at the moment? How many more will you take on?

In Romania there are more than 300 employees, of whom two thirds are in Cluj and one third is in Timisoara. In the discussions we had with our customers in the first quarter of the year, it emerged that we need to take on 100 more employees, but we will most likely exceed this figure.

How do you recruit IT staff? Do western Romanian cities offer a large enough pool?

It is obvious that at the moment, demand exceeds supply, and universities cannot train enough IT students. Our data show that even if the number of students were to increase by 50 percent, they could all be absorbed by the labor market. But it also depends on the degree of seniority that a company requires.

Do you think western cities should be encouraged to develop through special policies from central and local administration?

I think solutions should be found to grow the number of graduates, implementing in this sense some strategies leading to the promotion of IT from early on (high school or medium-level school) in order to create the necessary pool. I think that, on the other hand, local decision makers need to think out some regional strategic policies allowing easier movement of highly skilled specialists between smaller or mediumsized cities and regional hubs such as Timisoara and Arad, Cluj and Alba Iulia.

I am talking about macro strategies at regional level that would be win-win, both for the regional center and the satellite cities, and also for investors.

The risk is that investments in IT will plateau because of the difficulty of attracting candidates, which would strategically be a great loss for these regional centers. otilia.haraga@business-review.ro

www.business-review.eu Business Review | May 2015

IT 21

Goodbye HTTP/1, welcome HTTP/2 The internet is about to shift to a new Hypertext Transfer Protocol (HTTP) bringing users greater speed, security and efficiency at no higher cost, according to its proponents. An expert in the field outlined told BR what the new technology means for both web users and professionals.

Big leap forward: Vlad Paun, CTO of software company atelieru.ro, says that this is the most complex update of the HTTP protocol since 1999

∫ aNDa SEBESI The Internet Engineering Task Force’s HTTP Working Group has completed its work on Hypertext Transfer Protocol 2, the successor to the HTTP/1.0 and HTTP/1.1 protocols that are the core of the World Wide Web. The working group has finished two closely related specifications, the HTTP/2 itself and HPACK, a specification for compressing HTTP/2 headers.

Work on HTTP/2 began in 2012 in response to the development of Google’s SPDY protocol. Google created SPDY to address a number of performance gripes that the company had with traditional HTTP. But how necessary is the transition to HTTP/2 now? Specialists say that HTTP/2 promises to bring big changes and improvements to how the internet operates.

“It is the most complex update of the HTTP protocol since 1999. After such a long period of time standardized solutions for existing problems start to emerge,” said Vlad Paun, CTO of atelieru.ro, a software company. By comparison, HTML5 was completed as standard in 2014 while its predecessor HTML 4 was standardized back in 1997.

As in the case of HTML 5, the transition to HTTP/2 is not mandatory but it brings significant benefits for its users and especially for owners of sites with high traffic.”

Users complain that the current iteration, HTTP 1.1, is starting to show its age, especially now that web pages are

more resource-intensive than before. cured connections. Hence, they are I am sure that new benefits that we’d As a result, HTTP/2 has been changed trying to persuade web developers to never thought of will emerge. With a to make loading web pages faster. Paun use more secure methods to commu- base of new communication rules, new says that the biggest new feature is nicate information and make the inter- mechanism can be built,” adds the CTO. He says that the upgrade is not something called multiplexing, in- net a more secure environment,” said likely to inflate software companies’ tended to allow multiple HTTP re- Paun.

He adds that the shift will take time. staff or equipment costs. “Paradoxiquests to be delivered at the same time.

The CTO outlined some of the ben- “We will not witness a complete transi- cally, the costs should decrease as web efits that HTTP/2 will bring its users. “It tion that soon. The two standards will developers can ‘produce’ more using is about speed. Without talking too run in parallel for a long time yet. But the same equipment. In addition, paymany technical details, the new proto- we hope to be taking advantage of roll costs should remain stable as we col allows for more efficient communi- HTTP/2 next year,” said the CTO. He assume there is a budget for increasing cation between the user (who uploads adds that his company has already team members’ level of knowledge,” a web page) and the server (which started training sessions with its pro- said Paun. “I am sure that those web transmits the content of the requested grammers and briefed its customers in developers who are passionate about web page). At present the web browser order to prepare them for the new their job and are the likely users of this can have between two and eight simul- standard. Speed and security will be new protocol will be eager to try it in taneous connections to the server. the initial benefits for final users, Paun the production environment and These connections are used to receive told BR, with 3G and 4G network users measure its performance.” images or information. HTTP/2 particularly noticing the greater speed. changes the rules and needs a single “In addition to these direct advantages, anda.sebesi@business-review.ro special connection,” commented Paun.

In his opinion the direct advantage is that it makes it possible to drop the other parallel connections which cost time and resources. “In other words, websites will be faster to access while l Multiplexing and concurrency: several requests can be sent in rapid servers will use fewer resources to succession on the same TCP connection, and responses can be received transmit the same quantity of informaout of order – eliminating the need for multiple connections between tion,” said the atelieru.ro representaclient and server tive. l Stream dependencies: the client can indicate to the server which of the Commentators say that this new resources are more important than others protocol means a new beginning and l Header compression: HTTP header size is drastically reduced greater opportunity, which in the case l Server push: the server can send resources the client has not yet reof HTTP/2 is about security. “Although quested for HTTP/2 the use of an encryption l No need to change websites or applications to ensure they continue to mechanism for communication (TLS work properly. or https) is not mandatory, Firefox and Chrome have already announced that Source: http2.akamai.com they will support HTTP/2 only on se-

The main benefits of HTTP/2

www.business-review.eu Business Review | May 2015

22 IT

OPINION Nicu Pana, IT SALES MANAGEMENT CONSULTANT

Courage is the name of the game It’s fascinating how much we think we can control and predict the future and how far off our predictions seem to be each time, at least for the medium and long term. This twilight zone type of failure does not however stop us from indulging in the same type of educated guessing game next time there’s an opportunity.

Romania has the most competitive European telecom market, at least in terms of average revenue per user pressure, as well as the galloping “arms race” in terms of infrastructure development.

Who could have predicted that ten years ago? Who could ever have imagined a sagging economy could live up to and even surpass Germany in any area, let alone in technology? The honest answer is nobody. To try and find post factum any smart reason why this happened is also doomed to fail.

However, one cannot help but notice that the advent of the mighty Romanian telecom service access industry is due to grass roots entrepreneurship and hard work as well as low levels of regulation and red tape. Somehow a state that reaches far into many areas has left telecommunications to effectively selfregulate for a long period of time.

Having seen many Central European and Western residential markets, I think I might easily argue that we enjoy the best overall price-quality ratio in Europe, possibly in the world. Which means that somehow we have what it takes to lead and empower.

The question is: can it last? And if so, how sustainable is it? It looks like the right structural set-up that led eventually to this leading position might be in danger. The jury is still out on that one, but just for a moment, let’s stop, take a step back and think it through. Interconnectivity tariffs are at an all time low, roaming charges have plunged under pressure from Brussels, the cost of labor is growing, despite recent otherwise welcome dips, new taxes show up out of the blue, like the peculiar tax on “special constructions”. The cherry on the cake is that content providers bump up their prices as they also need to offset the collapse of their advertising streams.

The immediate result is that the overall value of the industry is set to shrink rather than grow. And we cannot really blame this on the “crisis”. There is obviously one short-term benefit, lower prices for users, but everybody else is somehow on the losing end. How long can this imbalance keep up? Difficult to say, as the future is hard to tell even though it seems like it can be predicted.

But why take chances?

It’s not really the case that someone or some entity should do anything about it. No one – not even outstanding individuals – is smart enough to beat the market as it winds about under various unforeseeable forces. Sometimes doing nothing is better than doing something.

What I mean is that less regulation is better than more regulation.

People sometimes argue that you need an impartial watchdog to police the playing field and make sure nobody plays foul, just as in any football match you need a good referee to make sure the game runs smoothly. But the best referee is the one you don’t notice, and if you realize you don’t know his name, it means he did a good job. To extend the analogy, the regulatory situation in Romania and in Europe in general is more like a football referee who tells players to whom to pass the ball, how fast to run, when to shoot on target and even how many goals to score.

No wonder then that the European telecommunication industry is losing overall competitiveness, apart from the unfortunate fragmentation that is preventing European players from gaining sufficient muscle to commit themselves to innovation. Romania has a state-ofthe-art telecommunications infrastruc-

ture because we did not follow rigid rules that are meant to manage complexity where it exists rather than stimulate growth.

I remember a time not that long ago when telco chief execs were heralding the brand new world of video-enhanced communication with MMS and video calling. Because boardrooms were hopeful they sank hundreds of billions of euro into 3G licenses, basically a bunch of A4 pages stating that operators could use a natural resource, radio spectrum, that used to not even be used.

The top brass’s predictions did turn out to be partly true but with an ironic and unwelcome twist of fate. Video calling and picture messaging is big, only not with the telecom providers who paid the bill. The likes of Google, Apple, Facebook, Instagram and YouTube have stolen the show to the extent that telco operators have become bitter and borderline hostile to the “freeloaders”. It always takes a high toll to rewrite the rules of the game when the game is half way through, so even suggestions of reparatory measures like limiting internet neutrality are bound to raise hell and tremendous oppositions from, let’s face it, the world’s most powerful and influential companies.

You cannot change the past but you can hope to influence the future. So embracing reality is more often than not a better choice when you want to adapt and prosper. What could this mean?

Commit yourself to innovation, and not half heartedly like organizations tend to do today: “Let’s do a pilot, let’s try it out and if the business case is positive let’s ask HQ for money to really do it three years from now.”

Innovation does not work that way.

You cannot aim, calibrate, recalibrate and shoot, hoping – demanding, even – that you are successful with each try. Innovation is not like selling potatoes; it’s a totally different animal. It requires trial and error and the sad news is that the error rate is overwhelming and could spark a huge war with any cost efficiency-minded CFO. Have the guts to fight for the right to waste some money intelligently for the future.

I have yet to see in these companies an innovation and research department as a permanent function. As a telco you cannot really control regulation if it goes ballistic on you and you cannot control what your competition does. Your only strategic chance to not play the limbo cost game of how low can you go is to get your hands dirty trying to come up with the one unforeseeable thing that will attract users in droves and make them pay because they want it badly, not because it’s just a good deal. The name of the game is the courage to try something other than the old trick in the book that once made you successful.

Nicu Pana is a sales management consultant for various European telecom companies.

About the author: Nicu Pana is a sales management consultant of ten years’ standing with a background in the telecom industry. His international experience includes working on various direct sales force programs with telcos in several European countries: Slovakia, Hungary, Croatia, Greece, Montenegro and Romania. He specializes in building up direct sales forces and introducing sales force efficiency programs. He spent seven years as an entrepreneur running a youth marketing company. He started his career as an academic teaching business communication at the Academy for Economic Sciences as well as working as a business journalist and editor with various papers including this one.

www.business-review.eu Business Review | May 2015

24 eNerGY

romania to export electricity to Turkey through submarine cable Romania is keen to press ahead with electricity interconnection projects in the Black Sea, such as a submarine power cable between Romania and Turkey. The venture is part of Romania’s national projects included in the 2007-2020 Energy Strategy updated for 2011-2020. The costs of the project are estimated at EUR 600 million. ∫ Laura GriGore The cable project, which was first put forward nearly a decade ago, comes in the context of an energy surplus in Romania. “Romania is an important electricity producer, but one that needs external markets, as our production capacity already exceeds domestic consumption,” said the prime minister, Victor Ponta. Romania needs the infrastructure to transport energy to external partners.

Talks between Romania and Turkey on a transport electricity cable began in 2006. At that time, the investment was estimated at EUR 400-500 million. In June 2009, Transelectrica and Vattenfall Power Consultant AB of Sweden signed a service contract for the feasibility study, including an environmental study and specifications for a Romania-Turkey submarine power cable project. The EUR 1.24 million feasibility study costs were borne by Transelectrica (75 percent) and Nuclearelectrica (25 percent).

The submarine cable was expected to be able to transport electricity between Russia, Ukraine, Moldova, Romania and Turkey. Other options included the transmission of electricity between Turkey, Romania, Poland, Serbia and Hungary, and the feasibility study was to determine other possibilities of energy transport between the European states.

Nuclearelectrica recently announced that it no longer intends to be involved in the feasibility study for the submarine cable. The undersea cable is particularly important for units 3 and 4 at Cernavoda, which will increase energy production. It is expected that units 3 and 4 at Cernavoda will become more attractive to investors.

The Turkish president, Recep Erdogan, said that Turkey had discussed the transfer of electricity with both Romania and Bulgaria. “This is not a new project. We discussed the transfer of electricity from Romania and Bulgaria.

Our ministers of energy continue their meetings. Our principle is to have both sides win and eventually we will make the next step in the sense of choosing the best offer,” he commented.

The National Power Grid Company Transelectrica and Italian group Prysmian Power Link signed a Memorandum of Understanding for the

Powering up: talks between Romania and Turkey over a transport electricity cable began in 2006

submarine cable that should transport quality of the supplied electricity.

Interconnection between Romania electricity from Romania to Turkey. It covers the pre-planning, planning, fi- and Turkey via the submarine cable nancing, construction and operation of was discussed in person by officials. “At the submarine power infrastructure the moment the situation is this: there meant to interconnect the two Balkan was a feasibility study carried out several years ago. It was considered that electricity markets.

Prysmian Group, which has three not all relevant data have been clarified production facilities for submarine ca- and the relevant authorities have orbles, has a long-term presence in Roma- dered a new feasibility study to better show what can be obtained,” annia and the whole Danubian region.

The two companies will form a team nounced the Romanian president, of experts that will analyze the techni- Klaus Iohannis.

The cable is likely to be joined by a cal, financial and legal implications of developing this cable connection. The second, fiber optic one for data traffic. memorandum does not entail mutual “The 400 kV DC cable that will connect financial liabilities among signatory Romania and Turkey for the provision parties or the obligation to actually par- of energy will, most likely, have a correticipate in project implementation, ex- sponding fiber optic for data provision cept when it is deemed feasible and that will make the project even more atTranselectrica gives the go-ahead for tractive,” said Octavian Lohan, vicedeveloping the electricity transmission president of Transelectrica. According to him, this would not significantly inline.

According to the agreement, the crease the overall cost of the scheme.

Commentators say the project will project is compliant with the policies of the Romanian and Turkish govern- make a major contribution to the state ments as well as those of the European budget. Romanian energy-producing Union, and is expected to bring a signif- companies will also be able to trade icant contribution to the development with the Turkish state and earn new inof the regional markets in South-East come. It could also pave the way for the Europe. It is in line with the EU policy development of other interconnections known as the ENTSO-E, and the Ro- between countries in the Black Sea remanian policy to increase the intercon- gion which will benefit from the infranection capacity of the national electro structure, say industry insiders.

Pundits say the project can be conenergetic system with South-East Eurosidered of pan-European interest, pean systems.

The initiative aims to enhance the owing to its potential contribution to retransmission capacity and improve ex- gional energy market development in changes in South-East Europe, thereby the context of integration with the Eufacilitating the security, quantity and ropean Union market. Both Romania

and Europe will have a new export destination and an alternative power source. In Romania, the national power system and interconnection with the energy systems of neighboring countries is managed and operated by Transelectrica. Romania is the majority shareholder with a stake of 58.7 percent.

Currently the European Union is the largest energy importer in the world. It imports 53 percent of its energy at an annual cost of around EUR 400 billion.

The European Council has called for all member states to achieve interconnection of at least 10 percent of their installed electricity production capacity by 2020. When power plants fail or during extreme weather conditions, countries need to be able to rely on their neighbors for imports, says the council.

Without infrastructure it is impossible to buy and sell electricity across borders.

Therefore, connecting isolated electricity systems is essential for the security of supply and helps achieve a fully integrated EU-wide energy market which is a key enabler for the Energy Union.

Twelve member states, including Romania, remain below the 10 percent electricity interconnection target and are therefore cut off from the internal electricity market. Improving energy interconnections between member states as well as infrastructure modernization would contribute to minimizing disruptions and energy dependence, according to officials. editorial@business-review.ro

www.business-review.eu Business Review | May 2015

eNerGY 25

Property Fund takes next step towards lawsuit against e.oN in romania The Property Fund has asked E.ON shareholders to take the next steps towards legal action against officials from the group’s companies in Romania, who are accused of signing spurious contracts. ∫ Laura GriGore The Property Fund (FP) has called for the completion of agendas by E.ON Distribution Romania and E.ON Romania shareholders, for meetings scheduled for May 26 and 28. The move is to allow shareholders to approve legal action against board members and directors of E.ON Distribution Romania, E.ON Distribution Moldova and E.ON Energy Romania. The lawsuit will seek the recovery of damages caused to the firms by the acquisition of various services with E.ON Romania, their majority shareholder.

According to data provided by the FP, in 2014, the total value of these strategic and management consulting contracts reached an estimated EUR 7.7 million.

The fund believes that the services were unnecessary, and the price paid unwarranted. E.ON Romania rejects the FP’s charges of violation of corporate governance principles or the existence of a conflict of interest. “Our company has always had an institutional collaboration with the FP and has always re-

Bad energy: E.ON officials stand accused of signing unjustified contracts sponded to requests for additional information by this entity. The strategic consultancy service contracts referred to by FP representatives were in accordance with the law and in full compliance with the approval of the competent corporate bodies and commercial market terms,” said E.ON officials. The majority shareholder of the companies is the German utilities group E.ON, which holds shares exceeding 50

percent of capital. The Property Fund is a minority shareholder with 18 percent in E.ON Distribution Romania and 13.39 percent in E.ON Energie Romania. The Romanian state through the Ministry of Economy also has minority holdings in E.ON subsidiaries in Romania. The FP put up for sale the share packages held in E.ON companies in 2012 but has failed to find a buyer. One reason, say commentators, is that they are minority

share packages at unlisted companies, and so have reduced exit possibilities.

Earlier this year, Greg Konieczny, FP manager, said the reason FP shares were being traded with a discount was the high share (about 50 percent) of the assets of unlisted companies. “The priority for this year and next is to reduce this exposure either by listing or by selling transactions,” said the manager.

The money the FP gets from selling its shares will be distributed to shareholders and used to redeem shares according to the plan imposed by US hedge fund Elliott, its largest shareholder. Elliott has asked fund manager Franklin Templeton to reduce the discount of share transactions to 15 percent of net assets. So far this year, the FP has sold nothing in its portfolio. The fund took out a loan of RON 500 million from Citibank to finance redemptions and cash distributions. The fund estimates that payment to shareholders of RON 600 million of share capital resulting from the reduction in the nominal value of shares will begin on June 29. editorial@business-review.ro

MoL romania increases fuel sales by 7 percent MOL Romania posted a 7 percent hike in total fuel sales in Q1 on the same period in 2014, to 121 kilotonnes (kt), having expanded its network of gas stations, according to the financial results published by the company. ∫ Laura GriGore The data indicate that diesel sales increased by 5 percent compared to January-March 2014, while sales of gasoline rose by 7 percent.

MOL Romania opened 12 stations last year following investments of EUR 11 million and at the beginning of this year took over 42 ENI stations (which operate on the local market under the brand Agip). The company said it would continue investing in Romania.

The acquisition of the 42 stations in Romania is part of a larger transaction announced last summer by MOL involving the purchase of 208 filling stations in three European countries: Romania, the Czech Republic and Slovakia.

Following its acquisition of ENI Romania, MOL Romania's distribution network reached 200 fuel supply sta-

Foot on the gas: MOL Romania is in expansion mode

tions. The company was renamed Retail Trade MOL and will merge with

MOL Romania.

Lars Hoglund, senior vice-president

of the retail division of MOL, said that the group wants to reach the top three fuel distributors in each market where it operates and that Romania was the third largest market for the Hungarian group.

In terms of international strategy, the Hungarian group will focus on nonfuel sales, which MOL sees growing “aggressively” in the next two years.

MOL Romania is part of Hungarian oil and gas group MOL and has operated on the Romanian fuel distribution market since 1995. The group sold 501,000 tons of fuels, lubricants and liquefied petroleum gas in Romania in 2014, down from 503,000 tons in 2013, owing to increased duties last year, according to company figures. Annually, Romania consumes about 5.8 to 6 million tons of fuel, about 75 percent of diesel demand. editorial@business-review.ro

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26 MEDIA

Reshaped media industry climbing back towards EUR 330 million mark The local media market has endured drastic changes, budget cuts and shock new laws, but is managing to fight back. Still dominated by TV, the advertising landscape is evolving thanks to new approaches from agencies and the growing role of digital. Although the sector is once again drawing near to EUR 330 million, players canvassed by BR were divided over whether the industry has exited the crisis. ∫ ROMANITA OPREA Recently, The Group launched another media agency, Prometheus. The company says it is seizing an opportunity on the market, trying to find an undeveloped media niche. Prometheus officials describe it as the first agency specialized in programmatic media and marketing analytics in Romania and the only one to offer complete programmatic solutions though its own technology and instruments. They add that it is also the first Romanian agency to sign a contract with Google for access to the search engine’s exclusive platform and instruments.

“Programmatic planning and buying activity and marketing analytics capability, although used notionally on a larger scale, are fully understood and applied by few specialists,” said Dan Balotescu, managing partner at affiliated agency Media Investment. “The results will efficiently reshape relations between brands and consumers over the internet, spell good news for ‘live’ and active websites, plus publishers, bloggers and owners of relevant content, and contribute to the increased efficiency of brands’ investments in communication. Media Investment’s clients will benefit directly from the expertise now offered by Prometheus.”

According to the agency’s representatives, programmatic media is professionals’ latest tool in promoting brands in an effective, complex, customized and efficient manner, with the help of data and technology.

Prometheus has a team of seven people specialized in programmatic media and marketing analytics. “Our colleagues from Media Investment were already offering this kind of service to clients but we realized in the meantime that programmatic media activity is specialized and much more sophisticated that one simple division in traditional media agency can offer.

Currently, we alone own the complete package: instruments, technology, data, analytic capabilities and access to Google’s programmatic platform in Ro-

Maria Tudor, CEO of Zenith Romania

mania,” added Cecilia Tanasoiu, managing director at Prometheus.

In terms of what the agency offers that Media Investment was not doing already, Tanasoiu outlines that three features form the complete programmatic ecosystem: access to all the adtech stack, world-class tools and

Tanasoiu.

The media agency is targeting any type of audience, at scale, on any device, at any time. It describes its potential clients as smart, focused on results and successful.

“For us, the internet is another dimension of focus, interaction, communication and existence, including commercial, for people and brands. Our clients were expecting us, as always, to outrun the future. The launch of an agency specialized in programmatic media requires a sizable investment and we are happy we were able to do it,” commented Zoltan Szigeti, president of The Group.

TV still king as players split over end of crisis With a media market still dominated by TV, which specialists agree is not likely to change significantly over the coming years, Romanians are not in line with

“At Zenith, the key is the fact that our expertise has become broader. Media is not just about scale, but about more-than-media, and diversified services go hand-in-hand with our core planning and buying. Despite being somewhat technologically behind, we embrace all international movements in terms of media process, agency-client relationships, new channels, new services and product development.”

Maria Tudor, CEO of Zenith Romania. platforms; the data they collect from multiple points and manage wisely; and expertise. Moreover, programmatic enhances traditional media by working with it.

“We have cross-functional teams and capabilities and we deliver performance based on that. The market has reached a certain level of understanding and expertise required to embrace and apply this new layer of technology above its day-to-day work,” added

international media investments trends, say industry players. Overall media investment has been relatively constant over the past five years and pundits expect it to remain so in 2015, with digital the only field increasing in share and total value. Digital is tipped to gain share against TV, but not at the rate market players would like to see. Mobile media investments still lag far behind.

Highly professionalized and semi-

conscious of its power, according to Cezar Batog, managing director at Optimedia, the industry is starting to revive. As evidence, he points to new product/service categories that are appearing both on TV and digital.

The industry is shifting to make room for businesses that respond to consumer needs in terms of utility (online businesses, e-commerce, classified) and price (retail). “The barrier of having a minimum budget to communicate in a certain category is fading away with the emergence of performance marketing. Every budget pays off if it brings results. I see it as a very good sign and I feel the media space is fermenting with new ideas and opportunities, mainly the digital space,” said Oana Petroff, CEO at Mindshare Romania.

Others agree that the worst is over, despite the impact of a shock Emergency Government Ordinance (OUG) in 2013 that banned media agencies from intermediating the sale of advertising space between TV stations and clients, leaving the latter to deal directly with each other. “After the impact of the crisis in 2009, we faced the impact of the OUG in 2013. We are now undergoing reconstruction. The media market is on a positive trend: for the last two years in a row there have been slight increases of 2-3 percent. So we are optimistic that the market is recovering after the decline of 2009-2012,” said Alexandra Olteanu, managing director at Initiative.

But there is still some recovering to do, caution some industry players. “I would mention a paradox: on one hand, the market is still struggling with the effect of years of decline in ad spend, but on the other, it is ready to take on the challenge of digital development. At Zenith, the key is the fact that our expertise has become broader. Media is not just about scale, but about morethan-media, and diversified services go hand-in-hand with our core planning and buying. Despite being somewhat technologically behind, we embrace all international movements in terms of media process, agency-client relationships, new channels, new services and

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MEDIA 27

Carmen Lixandru, managing director at MediaCom Romania

product development,” said Maria Tudor, CEO of Zenith Romania.

Paradox seems to be the key word for the media, agrees Alexandra Iavorschi. “On one hand, it’s a small media market. To put things into perspective, the billings of the biggest media agency in Poland (as reported in RECMA, the annual report on the media agency industry at global level) are higher than the entire Romanian media market (official estimates). And this already small market has effectively halved in the last six years. On the other hand, it is an extremely innovative, change-embracing and future-facing industry, standing proud in terms of capabilities among the biggest markets,” said the managing director of Starcom MediaVest Group.

The view is echoed by Maria Tudor, who considers the local market internationally competitive in terms of the level of expertise.

Players see both good and bad signs for the future. “Ad spend was finally on track to increase in the second half of 2014 and I believe we had a positive 2014 for the Romanian market; we also forecast a small increase in 2015, of up to 5 percent,” said Carmen Lixandru, managing director at MediaCom Romania.

Unfortunately, the latest news from the biggest worldwide clients is not so good and the Romanian market will definitely be hit by this sooner or later.

“The largest advertisers wants to spend less on marketing; they are looking to cut expenses where they can from media budgets and agency fees to production costs. They want efficiency.

Clients have been putting pressure not only on their media suppliers but also on advertising and media companies and I do not foresee a much better situation this year,” Lixandru added.

But others take a more optimistic

view. “In terms of traditional media, the Romanian market is established and well developed. We have access to syndicated data for the main media and after 25 years of advertising we can be proud of talented and skilled professionals at all levels. The programmatic media in Romania has recently accelerated in its development, raising our hope that this new way of programmatic planning and buying will soon become appropriately professional as well,” said Balotescu.

Many agree that television will continue to dominate the sector, despite having stagnated of late. “In the official

Dan Balotescu, managing partner at Media Investment

players, Google and Facebook), so the share of digital is significantly higher than that shown in many market estimates,” commented Iavorschi.

Lixandru added that the media split will continue, with TV getting the major share of advertising in Romania (more than 65 percent) and continuing to dominate the media landscape, but with a shift from traditional TV viewing to multiple screens. “Internet advertising is the only medium growing year by year and I expect an increase of 15 percent in 2015, as improving digital ad technology makes internet advertising cheaper and more effective. Newspa-

“The largest advertisers wants to spend less on marketing; they are looking to cut expenses where they can from media budgets and agency fees to production costs. They want efficiency.

Clients have been putting pressure not only on their media suppliers but also on advertising and media companies and I do not foresee a much better situation this year.”

Carmen Lixandru, managing director at MediaCom Romania. estimates, TV still holds the ‘lion’s share’, at about 60-65 percent of total advertising budgets, with a flattish evolution in the past five-six years. The medium growing year on year – and significantly so – is digital, which we expect to grow this year too. Also, we must take into account that the industry monitoring tools currently available do not capture all digital budgets (we are talking especially about budgets allocated to the two big international

pers and magazines are in decline – unfortunately for the big publishing houses, there is no real solution to this yet. Radio and outdoor will preserve their share and I see both among the most interesting opportunities for clients this year,” she told BR. In turn, Alexandra Olaru believes that the recession and the fast pace of technological advancement have gradually changed consumer lifestyles and purchasing habits, putting pressure on ad-

vertisers to reconsider the media mix in favor of digital channels and TV in order to maintain visibility before their customers.

According to Zenith data, the total amount of time individuals are spending consuming media is growing. Media is always on, anywhere and anytime, is accessible and diversified, and there’s a large usage of a wider number of media channels than before. Digital media consumption is growing more quickly than other indicators, mostly because of technology and more digital avenues.

“The penetration of new mobile devices (for instance, smartphone penetration stood at 34 percent in 2014 versus 9.1 percent in 2011, and the number of connected devices per person grew to 1.7 in 2014 from 1 in 2012) is rising, also because of the constant growth in internet connections (with telecom providers pushing attractive offers for services and the quality of broadband connections available to consumers in Romania). Digital is everywhere,” said Tudor.

As a result, specialists are expecting a significant increase in digital ad spend over the next five years. “We regularly publish agency estimations on ZenithOptimedia’s AdForecast global product (www.adforecast.com). Internet spending is estimated to reach at least 16 percent of ad expenditure by 2017 from 14 percent currently, with online display (including online video) driving the majority of digital investments,” added the Zenith representative.

Agencies outline their 2014 and 2015 amid impact of OUG And while The Group is consolidating its position on the Romanian market by adding more agencies to its portfolio (which currently includes Media Investment, OMD, House of Media and

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28 MEDIA

Cezar Batog, managing director at Optimedia

Prometheus) and celebrating ten years Publicis Groupe (having become its maon the local market, other firms are also jority shareholder at the end of 2013).

However, 2014 was a difficult year looking into joining forces and creating for many, for example Mediacom, bigger and stronger companies.

“2014 was an excellent year for Mind- mostly because of the effects of OUG share. Not in terms of billings, which 25/2013. “The second half of 2013 was decreased after the OUG, but in terms quite chaotic and the problems continof innovation. We started ahead of the ued in 2014 as well,” said Lixandru. market, launching two new products in “The period brought a lot of pitches on growing digital areas: programmatic the media market, people working buying and video: Xaxis, the GroupM harder to implement media campaigns, programmatic buying platform, and legal issues that were sometimes immVideo, the video delivery platform possible to solve and so on. We closed across the web. Developing new prod- the last year well, but it was pretty hard.” ucts in data analytics and extending our Industry players complain that the efservices to database marketing au- fects of the law change are still showing tomation were also in focus, to make it easier for our clients to leverage the large flow of data that can be captured while advertising. We were the most awarded media agency at Effie 2014 and won two ADC awards,” said Petroff.

As for Initiative, in 2014 the agency maintained its top three position on the market and won Effie awards, and is now working on integrating market trends such as mobile and programmatic media. It has also just started Cadreon, a programmatic hub working out of Budapest, for countries in the CEE region.

Zenith officials are also happy with their agency’s performance in both the tough and easier times, which market data put among the top three, as well as its turnover. “New skills and talents have joined the agency. We have and IAA Romania was forced to restate launched new divisions and products its position and ask the prime minister on three pillars: data, digital (including to change the legislation, before its conperformance) and content,” said Tudor. sequences become too drastic.

“A law like OUG 25 sent the advertis“We are probably ahead of the market in terms of business initiatives and we ing market back to the Stone Age. This have continued to invest. We have effect is so strong that not even IAA can gained new clients and fought off at- shift it. For all the players in the market tempts to poach some of our existing (including agencies, clients and staones. We are proud of our clients and tions) the effects of OUG 25 are: bureaucracy, unnecessary work and the longevity of our relationships.”

In 2014, Zenith was integrated into uncertainty,” bemoaned Balotescu.

Alexandra Olteanu, managing director at Initiative Media Romania

All agencies in the market complained of feeling the adverse effects: cash-flow was immediately hit, as the ordinance changed the flow of TV campaign invoicing from TV channels directly to the advertiser. Additionally, it brought tonnes of bureaucracy and diverted a lot of agencies’ resources to contractual and legal work – invoicing checks, corrections and so on.

“Explaining this market, particularity to any international ad player (including our group, any advertiser or media vendor) is so difficult. As the time passes, we still do not see a benefit for any player or the market overall. We, at

“The crisis was more of a shock that brought the market to its new current value. The past five years of stability, with only single-digit variations, are an indication that any perception of a ‘crisis’ is unfounded and the 50 percent decrease from 2008 only took it to its true value. It will take real effort and added value to accelerate this growth significantly.”

Dan Balotescu, managing partner at Media Investment.

Zenith, managed to adapt swiftly solved the majority of issues and moved on, but the pain remains,” said Tudor.

Other players are of the same view.

“There were four months of confusion right after the OUG, everything was postponed and most TV campaigns were put on standby. There were clients who couldn’t sign any contract due to legal limitations, payments were also postponed and the consequences for

TV channels’ cash-flow were severe,” complained Lixandru. “We were somewhere in the middle, trying to solve the legal problems between our clients and the suppliers. At the same time, we continued doing all the other jobs a media agency usually does for its clients. Unfortunately, nothing has changed so far, but I hope the recently submitted complaint will eventually bring a practical solution to our problems.”

Agencies are hoping for a change in the near future, as the law managed to harm their image, trying, Oana Petroff believes, to diminish their role and contribution as advertising consultants. “It was a brutal intervention in a private economic environment that barely had a precedent,” concluded Petroff.

Alexandra Iavorschi, however, sees some positive effects: first and foremost, a strong re-confirmation of the partnership, trust and valued relationship between clients and agencies. “Another significant effect, given the abrupt cessation of a well established remuneration- and revenue-generating framework, was a shift of paradigm from purely ‘buyers’ of media space to sophisticated consultants across the paid, own and earned media ecosystem, a rapid build-up of capabilities and knowhow related to digital media, and a profound revamp of the traditional scope of work,” noted the Starcom MediaVest Group representative.

Still in crisis mode When it comes to post-crisis green shoots, Maria Tudor believes that there are signs of hope. But the industry still depends greatly upon the state of economy. “The business community sounds positive, but we are cautious. The ad market, for whatever reason, has reversed the trend, but it is not yet sustainable and not strong enough to say

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MEDIA 29

Oana Petroff, CEO at Mindshare Romania

that crisis is over. Recovery takes a while and is fragile,” added Tudor.

Alexandra Iavorschi is not optimistic, believing that the crisis has not yet passed – and to some extent may never.

“Many of the traditional media clients – especially FMCG – are still at the very beginning of their recovery, after years of double-digit decreases. They are still and will remain cautious about advertising investments until the market is back on a healthy growth curve. Even when we have technically, officially, exited the crisis, some behavioral patterns will survive – ideally the healthy ones, like the focus on return on investments, accountability and measurement,” said Iavorschi.

Others concur that the tough times are not over yet. “There are some categories that have grown in Romania in recent years (pharma, retail, telecom, financial/banking) but this was not enough to set a clear trend. When you have only a 4 or 5 percent overall increase after a dramatic decline, you cannot say the crisis is over,” agreed Lixandru of MediaCom Romania.

Furthermore, the invested budgets are relatively small compared to neighboring markets, and everything seems to be on hold. “Until the paradigm changes, we can’t say that we’re out of the woods. The crisis has become a vicious circle – there are no advertising budgets due to the lack of sales, and there are no sales because we don’t promote our products enough,” concluded Cezar Batog of Optimedia.

But Dan Balotescu sees things very differently – as a correction. He argues that the media industry has been out of the crisis since 2009. “The crisis was more of a shock that brought the market to its new current value. The past five years of stability, with only singledigit variations, are an indication that any perception of a ‘crisis’ is unfounded

and the 50 percent decrease from 2008 only took it to its true value. It will take real effort and added value to accelerate this growth significantly,” said Balotescu.

Agencies focus on reinvention Players argue that the industry has to change itself to make it work. “It’s about demand and supply, in multiples areas. Good or bad, we have the industry we all – agencies, media, advertisers – deserve. And there are many good aspects and some positive developments (for example, all the ad spend monitor-

parency to advertising regulations. For The future – digital fuses her, most important of all is the need everything for advertising companies of all sizes to In a market estimated in 2015 at around reinvent themselves (not only their sys- EUR 300-330 million, the media is tems, but also their structure and serv- going through an exciting development ices) to keep up with the enormous stage, driven by technology. “The faster changes that have already come in the the industry develops, the faster we media, marketing and communication. should integrate and gain expertise “We all need to be faster, smarter, to with the right technology, at the right understand the culture and context and time and use it in the right way, toto adapt our companies to an era of new gether with our media knowledge and technologies, social interaction and de- expertise,” commented Balotescu. vices. Talking specifically about media According to Zenith Adforecast, ad exagencies, I see one problem that will penditure will reach EUR 306 million by definitely affect everyone: transforma- the end of 2015, marking moderate tion of the planning process. The intro- growth of 1.9 percent on last year, folduction of programmatic bidding and lowing forecast 2014 growth of 3.6 perthe instant ‘trade desk’ in digital will cent versus 2013, the first upswing clearly affect the quality of media plan- since 2008. ning and, in general, will replace any As in all communication industries, notion of original thinking and creativ- the business model is changing, say inity in media strategies and tactics. dustry professionals. And the change is Under client pressure for cost efficiency, everywhere: industry structure, playmedia agencies will try to justify their ers and relations between the players. existences based on likes, hits, clicks, “We can no longer speak about TV, press, shares, viral this and viral that, no mat- radio and outdoor. Digital fuses everyter the ‘content’ or brand message. This thing. A project with a magazine title is something that we need to have in will include the magazine itself but also mind and try to avoid,” argued Lixan- its digital assets, site or social. That’s dru. not press anymore. The media industry In the eyes of Alexandra Iavorschi, will be different,” said Tudor. media agencies are uniquely positioned Others think companies’ roles will in the ecosystem of communication change. “I think media agencies will agencies, due to their technological ca- evolve to play a more strategic role, as pabilities, which offer access to big data integrators, the facilitators of a collaboand the capacity to extract valuable in- rative dialogue between all specialized sights from these data. She is a firm be- agencies and client, in a new way of liever in the saying “Big data tell big working. And that’s because of data bestories”, which she thinks will become coming more available and more imincreasingly and exponentially relevant. portant and because of our power to “I wish that the media industry recog- analyze and leverage all data across the nized this unique positioning and that planning process and feed back the init was fully ‘exploited’ – by other agen- sights and lessons. I’m sure that cies and clients alike – in accessing whether or not we manage to change these almost inexhaustible resources. I the media industry to more innovative think that the first agencies that can models from within, it will definitely change from outside, from consumer/client demand. We’d better lead the change,” said Petroff.

“A consistently growing market, by 35 percent year on year, would help us make more investments and develop important areas such as tools and research for digital,” added Olteanu.

Advertisers believe they need new tools in order to be properly equipped in today’s communication world. And as Oana Petroff argues, this is about being open and developing the agility to evaluate opportunities more quickly, to plan activities based on real-time target insights. Specific channel and shopmonetize these resources and the first ping behaviors, cultural events of the clients that recognize this immense po- moment, content and topics that spark tential will be the winners in the near conversation in social media are changfuture,” said the Starcom MediaVest ing every day and becoming springrepresentative. boards for media creativity, part of the Cezar Batog had a more pragmatic message. “Everything is visible today in view: he wants to change the remuner- terms of data, so fitting the right mesation model, arguing that the current sage to the medium can be done in one is old and does not correspond with more clever ways, by segmenting the media development. audience and showing customized “I would change the way the industry messages by interest and adapting acts as a voice. The Romanian Advertis- communication to consumer behavior ing Industry should regain the respect in a very direct way,” concluded the and significance it deserves for a Mindshare representative. healthy business environment,” argued Balotescu. romanita.oprea@business-review.ro

“We are now undergoing reconstruction. The media market is on a positive trend: for the last two years in a row there have been slight increases of 2-3 percent. So we are optimistic that the market is recovering after the decline of 2009-2012.”

Alexandra Olteanu, managing director at Initiative Media Romania. ing initiatives). We can and have to contribute to make it better, each of us. And, hopefully, the power of positive example will prevail. But nobody should artificially change it or regulate it either (no OUGs or external forces or bodies) without understanding the mechanism (which is globally valid) and working with industry members and representative bodies,” said the Zenith representative.

The idea of industry rebirth is shared by Carmen Lixandru. The managing director says she would change many aspects of the industry, from pitching rules to data access, and trans-

www.business-review.eu Business Review | May 2015

30 INTERVIEW

Golin CEO: the future is about integration and speed Fred Cook, CEO of Golin, started in the PR industry as an account supervisor in the global PR firm’s Los Angeles’s office before moving to Chicago 11 years ago to become the agency’s third CEO. Before joining the corporate ranks aged 36, he had been a cabin boy on a Norwegian tanker, peddled fake Italian leather goods to unsuspecting tourists, run a rock-and-roll record company, started a service chauffeuring drunks home from bars, worked as a doorman at a five-star hotel, been a supply teacher in some of Los Angeles’s worst schools and winged it as a novice tour guide. BR talked to him after the Romanian launch of his book, Improvise. ∫ ROMANITA OPREA You have recently opened offices in Russia and Turkey. Why now, especially with the political climate being so unstable?

We are a little unconventional as a company, so we do not always follow someone else. We like to do things our own way. We felt the timing was good. Russia is an important market; I think it will continue to be one and I am sure that over time the current issues in the political environment will abate and it will be in a good place.

The second part of the answer is that we have worked with our partner there for more than ten years – this is not a new relationship. We have a successful business and we are confident that it will continue to grow. I can say the same thing about Istanbul – we’ve been working with our partner there for four years.

It is rebranding as Golin right now, there as well, as we believe a lot in that market.

Both those countries are multicultural – European and Asian at the same time.

How do you see this combination working in PR? Do the cultures bring different perspectives and issues?

That’s what makes it so interesting. We are in a business that is about communicating with individuals. There are cultural, political and economic differences in every country. We are very sensitive to that, even when working for global clients. You have to make the message relevant to the people in that particular region, which is why we rely on people like Monica Botez and Hortensia Nastase in Romania, because they live here and understand the country and the cultural sensitivities.

So we make sure that if we do something for a certain client, it makes sense in that market. What works in US is not going to necessarily work in Moscow or Istanbul. That is what makes working in a global environment so exciting. All of our clients are global. McDonald’s is our oldest client and two thirds of its sales are outside the US. So it’s very important to understand the global landscape.

In the advertising sector, Russia did not feel the economic crisis, and clients did not cut budgets as they did in the rest of Eu-

rope. Was it the same for the PR industry?

It depends on the client. Even in the US some clients go up, some go down, whether because of the economic situation or their business. But, overall, our business in Russia continues to be healthy and grow.

Do you consider being part of a big communication group a significant advantage on the market?

Here they have the concept of “the big band” that they are all part of and I think that is increasingly the way clients will want to operate. They don’t want ten different agencies for each media channel; they want one group that can do everything for them. We are in a transition right now. It’s not happening everywhere, but I think that the future is going to be much more integrated and much faster. Because with the speed that we are working at these days it’s impossible to produce results with ten agencies.

Groups and networks are consolidating their business locally and incorporating more agencies under their roofs. How do you see this trend evolving both in Romania and worldwide? And will small and medium-sized agencies just disappear?

I think that a lot of them will be purchased by larger companies, because

they want a content creative shop or a little digital design shop. A lot will be merged into the bigger firms. But there will probably always be a market for specialists doing something really unique that big companies can’t do and doing it really fast. I think that you’ll see a lot of small content companies or advertising companies whose specialty is creating something in a few hours or a commercial in a day – something that big agencies are unable to do. If they provide a service that is unique, they will survive.

In your book you say that the best advice you can give a teenager is to improvise.

Does that apply beyond the communication industry?

I make a distinction between improvising and pretending that you know how to do a certain thing. It’s a very important distinction. I speak to a lot of colleagues and today’s students are scared and have a rigid view of their careers.

They have to take the exact same steps in order to get the perfect job the day they graduate. My advice to them is to experiment with life, try new things, get outside your comfort zone: the more experiences and ideas you have, the better for your life and career in the long run.

I think this advice applies to every-

one, whether you are an attorney, a banker or a doctor. It doesn’t mean that you don’t have to be good at what you do, that you are faking it. It just means that you have broader experience and you are open to new ideas. Even in the medical world some of the best medicines that have been created have been brought about by improvising, almost by accident. If you follow the same path and you are not open, you will never come up with anything new. So I think that all new ideas come from people who are willing to improvise, willing to think a little differently, and those ideas are important, no matter what business you are in.

What was the best advice that you received when you were younger?

I don’t know if it was advice exactly, but my father always encouraged me to travel. He was always excited about new counties and other cultures. When I was 21 I traveled around the world for three years and it was probably the most valuable experience I have ever had. I think that he was the one who gave me the idea that this could be important. For me it has been the most rewarding and most influential experience of my life. romanita.oprea@business-review.ro

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32 ENtREPRENEuR

Making a healthy profit from nutritional products Adelina Pasat, commercial director at Nutrivita, tells Business Review about the challenges of being a pioneer on a niche market, her advice for negotiating with power players and the importance of the quality of her products to her consumers. local shops have nutritional and organic products on their shelves, we’re trying to maintain our leading position on the segments on which we are active, even though a large number of rival products have appeared on the market, some of poor quality and some proper brands.

Our advantage is that consumers have trusted us for over eight years now; we have products with a tradition on the market and invest constantly in innovation and communication. We regenerate each assortment twice a year minimum and periodically run information campaigns and reward loyal consumers.

∫ ANdA SEbESI How did you enter the Romanian business scene and when?

In 2006 after I gave birth to my first child and gained weight post-pregnancy, I discovered through a nutritionist a new category of products that were not then available on the Romanian market: substitutes for weight control. They had been present in Western supermarkets since the 1990s.

As a marketing professional, I immediately saw the opportunity, as some categories of consumers had started to show interest in nutritional food. The Gerlinea products, part of the French company Nutrition et Sante, seemed to me to be the most addressable products from the marketing perspective (product, packaging, positioning on the market, price).

Based on over ten years of professional experience at companies from different industries (communications, telecommunications, FMCG, retail) and with solid knowledge of French, I went to the company’s export division. There were several months of explorations until the export manager of Nutrition et Sante, Jean Marc Sagnes, agreed to meet me in Paris.

I went with a solid business plan and after a 45-minute meeting they agreed to make me the company’s representative for Romania. After that we had to put the business plan into practice. The figures became reality but much later than we expected. We were a little bit ahead of the time as our work in the early years was to educate first retailers and then consumers.

Why did you decide to launch such a business in Romania?

The Gerlinea products helped me very much and I thought that there were other people fighting extra weight that I could help. Later, when I discovered

Nutrivita Established: 2007 2014 turnover: over EUR 1.7 million 2015 estimated turnover: EUR 2 million Number of employees: 16

the portfolio of Nutrition et Sante, the largest manufacturer of organic and health food products in Europe, I wanted to offer my family and Romanian consumers the chance to consume delicious food created using specialist recipes to help them to maintain or regain their health.

At present, our portfolio consists of products for different nutritional needs and profiles (weight management, food intolerance, diabetics, athletes and low sugar, salt or fat) and certified organic products.

What was the most difficult moment for your business and how did you manage to surmount it?

There were many difficult moments, especially with the distribution channels where initially many purchasing managers didn’t know our category of products and didn’t understand their benefits versus their price.

We launched our business in 2007 when the first signs of the economic crisis started to appear and retailers were reluctant to list niche products on their

shelves. Dozens of meetings and hundreds of emails were sent to all large retail chains.

Fortunately I also met very open partners for discussions who liked our products and gave us a chance to be on their shelves. Later, consumers confirmed the quality of our products.

If you started another business, what would you change?

I would pay more attention to the contracts negotiations with distribution partners. In the first few years, because we wanted to access as many distribution channels as possible rapidly we felt keenly the pressure and negotiating power of large retail chains.

What are the main challenges that you face in your business now and how do you manage to solve them?

Over 2007-2009 when few had the courage to invest in food micro niches, we were among the first who invested in the communication of the new categories to consumers. Now, when all large food retail chains and smaller,

How fierce is the competition in your field of activity and what do you think differentiates you from the crowd?

Over recent years more and more products have come on the nutritional and organic market. Many disappear in six to nine months because this segment has several characteristics that you get to know in time. The financial risks are also higher because the products are free of preservatives so they should be used in a shorter time. An order that is not well planned can lead to large stocks of products with imminent expiry dates and that generates big losses.

Our knowhow, a good knowledge of our consumers and constant investments in logistics, distribution and marketing are what differentiate us from the crowd. Last but not least, it is about a portfolio of high quality nutritional products. Once you have tasted them, they convince you to consume them!

What is your current market share in Romania?

We are active on more food micro niches where we have an average market share of up to 23 percent, according to data provided by Retail Zoom. But these segments are less developed than in developed countries so the monitoring is carried out within larger categories. Even so, we have a very good position in relation to market leaders from much larger categories like energy bars for athletes for example.

What are your plans?

This year we intend to extend the current range of products by 19 percent, add a new supplier to our portfolio and increase our turnover by 25 percent minimum. anda.sebesi@business-review.ro

www.business-review.eu Business Review | May, 2015

HEALtHCARE 33

Accession Mezzanine Capital III becomes shareholder of Amethyst Radiotherapy Accession Mezzanine Capital III, an investment fund managed by Mezzanine Management, has become a shareholder in Amethyst Radiotherapy Limited through a capital increase at the end of April, fund officials have announced. ∫ ANdA SEbESI It also extended the initial financing to a cumulated value of about EUR 25 million. The Accession Mezzanine Capital III offered Amethyst a mezzanine credit facility of EUR 21 million last year.

Officials say the capital will be used to support and develop the business by opening new medical centers in more European countries, including Romania.

At present, the Amethyst group has two radiotherapy centers in Bucharest and Cluj-Napoca and it intends to launch another one in Timisoara.

In addition, through its international network, Amethyst serves patients in Poland and France while the development plan includes opening new centers in Germany, France and Belgium.

“The Amethyst concept is new on the medical oncological services market and was developed to improve the chances of people with cancer, using

Growing well: Amethyst intends to extend its network to 20 radiotherapy centers by 2020 IMRT-VMAT technology, the most effective solution for treating this disease.

We opened our first center in Romania in 2012 and we are proud that we can bring this concept to other markets for the benefit of as a large a number of patients as possible,” said Eliaz Omer, executive general manager of the

Amethyst group.

According to the company’s representatives, Amethyst intends to extend its network to 20 radiotherapy centers by 2020, with investments of EUR 100 million. The founders of Amethyst have experience on the European medical services market: Ludovic Robert was

founder shareholder of A&D Pharma and Anima medical clinics. He also held management positions or was founder shareholder in companies such as Ozone Laboratories, Oxigen Plus and Optiblu.

Amethyst Radiotherapy Center, located near Bucharest, was the first one the group opened in Romania. In September 2012, the clinic started its activity, which includes oncology services, radiotherapy, brachytherapy, computer tomography, psychology and nutrition.

In October last year Amethyst launched a radiotherapy center in Cluj-Napoca.

The company has a team of 160 medical specialists and is a member of the Organization of European Cancer Institutes (OECI). It cooperates with major European medical centers such as Wurzburg University in Germany, the Curie Institute in Paris and the European Oncology Institute in Milan. anda.sebesi@business-review.ro

www.business-review.eu Business Review | May 2015

34 FinAnCe

Technology, discounts and education help banks rebuild After a tough period, Romanian retail banks are seeking to restore their sector and profits by bringing new firsts to the market. BR took a look at some of the technological and promotional efforts local lenders have adopted as they try to move forward.

Illuminating the world of finance: helping consumers keep on top of their budgets through financial education is one way local banks have tried to shore up their customer bases

∫ AnDA SebeSi As the local banking sector struggles to recover from the financial crisis, lenders have adopted new technology, cut their charges, launched new products and struck details with major high street names as means to rebuild their bottom lines and attract new customers. BRD Groupe Societe Generale, Banca Transilvania, Banca Comerciala Romana, Raiffeisen, ING and OTP have all come up with firsts for the local market over the last year or so.

Working the May 1 angle Recently Banca Transilvania launched Un Mai Muncitoresc, a new banking and shopping campaign. Throughout May, the lender targeted its customers, both individuals and companies, with offers for loans, cards, savings, insurance products, internet and mobile banking and other products, which could be accessed both online and at BT branches.

During the campaign, personal needs loans with fixed interest, Practic BT, came with lower rates of between 9 and 10 percent; BT24 Internet Bank-

ing and Mobile Banking was free for six months; the Star shopping card was issued free while the customer got 50 loyalty points (the equivalent of RON 50).

The visual and communication concept of the campaign was described by bank officials as a vintage and comic reinvention of the significance of Labor Day. “The new campaign was inspired by banking shopping events launched

by Banca Transilvania so far, namely Bank Friday and DragoBT. In May, Banca Transilvania – The Bank of Enterprising People becomes The Bank of

Hard Working PLaborious People, so we await all of those who want a new experience with us both online and at our branches nationwide,” said Sergiu Mircea, marketing and retail segments and products manager at Banca Transilvania.

Cashless payments at McDonalds Last year Asseco SEE and BRD Groupe Societe Generale launched a cashless project that enables McDonalds Romania customers to pay unassisted using any card. The project started with the

www.business-review.eu Business Review | May 2015

aim of offering the fast food giant’s customers a new card payment option with a very short transaction (less than two and a half seconds). At the end of 2014 over 430 terminals where customers could use bank cards, regardless of the technology they incorporate (chip, contactless or magnetic), were operational. Customers could put the card in the terminal themselves, in line with PCI DSS standards (Payment Card Industry Data Security Standard) while officials say the transaction is without errors and doesn’t require cashier involvement.

Asseco SEE and BRD were awarded for this project in the e-partnership category of the 12th e-Finance Gala Awards.

Paying bills with one click At the end of March, another major player on the Romanian banking scene, Raiffeisen Bank announced that it was continuing to diversify payment methods for bills by implementing, in partnership with Orange Romania, what it described as a unique, simple and rapid solution for such operations. Officials say the new option allows customers to pay Orange bills with a single click using the internet banking application Raiffeisen Online without introducing the elements from the bill. In addition, they add, the solution tells customers the minimum payment for unpaid bills to unblock access to the phone calls.

Officials say the advantages for customers are online confirmation of payment, an easier and quicker way to make transactions and a lack of transaction errors due to prior validation of the information by Orange Romania.

Raiffeisen Bank currently has over 650,000 users of its Raiffeisen Online application and an extended portfolio of utility suppliers. The annual volumes of bill payments collected by the lender reached EUR 685 million in 2014, of which over 65 percent were paid through electronic channels.

FinAnCe 35 sonal banker’ in their pockets 24/7 and also a complete perspective of their monthly incomes and personal appetite for consumption. Last but not least, it helps them to manage efficiently their personal finances.”

Officials say the BCR Financial Assistant has various functionalities to help customers analyze their budgets in a user-friendly way and a range of graphics. Customers can identify future expenses and make estimations, compare their profile with similar ones, be notified about forthcoming bills and visualize the evolution of their portfolio over time, say bank representatives.

The BCR Financial Assistant was designed, officials say, to give a global perspective on the user’s budget and affords complete control of his or her money. According to the lender’s representatives, within six months of the launch 30 percent of total active internet banking customers had used the application. In addition, the majority of BCR’s existing customers collect their monthly income at BCR and manage it later through alternative non-cash channels.

OTP Bank Romania made a similar move this year when it launched MyMentor, designed to let users plan efficiently both personal expenses and incomes. It is accessible from the OTPdirekt platform-Internet Banking and the mobile banking application OTPdirekt-SmartBank. “According to recent market research, data confirmed by the online study conducted recently by OTP Bank, the majority of Romanians don’t have a plan for managing their personal finances, despite the current economic climate. So we offered our customers a new and useful tool to manage their income and expenses,” said Dragos Mindreci, manager of the digital banking division at OTP Bank Romania.

inG focuses on discounts

ING Bank chose to inform its customers about shopping discounts. ING bCR launches personal fi- Bazar features customized offers and negotiated discounts at major retailers nancial assistant At the end of last year, Banca Comer- (Carrefour, Mol, Sensiblu, Flanco, Samciala Romana (BCR) launched the Fi- sung, Bata, Enzo Bertini, Benvenuti, nancial Assistant application for adidas, adidas kids, Reebok, BSB, La smartphones and tablets that use iOS Femme, Mobexpert, Autograf, L’Occi(Apple) and Android operational sys- tane, Douglas and Lego so far). The aptems, designed to help users stay on plication is said to adapt to users’ top of their budgets. It can be down- preferences and in time will present loaded from the App Store or Google them customized offers, say bank offiPlay depending on the operational sys- cials.

It enables customers to stock loyalty tem used by the phone.

“As part of BCR strategy’s to develop cards from the partner retailers and use the digital channels, the Financial As- them when they pay. Representatives sistant is the third bank application say that ING Bazar is free of charge and available to our customers in the App integrated into ING Home’Bank so the Store and Google Play, in addition to user can access discounts from everyeToken and the Touch 24 mobile bank- where by phone. He or she books an ing application. These applications are offer then pays at the shop with an ING free for all users of 24 Banking BCR card and receives the discount as using either a smartphone or a tablet,” points in the electronic wallet. In addisaid Marian Ignat, executive manager tion, the application stocks the history of the management of retail channels of purchases showing how much he or at BCR. “With the launch of the BCR Fi- she saved over a specific period. nancial Assistant for mobiles, we give customers the chance to have a ‘per- anda.sebesi@business-review.ro

PARTneR COnTenT

eximbank has consistently improved its activity

by Traian Halalai, Executive President of EximBank

EximBank has registered in 2014 a net profit of 46.6 Million Lei (10.5 Million Euro appx.), that amounts the cumulative net profits of the bank at almost 92 Million Lei between 20132014. ”EximBank has consistently improved its activity during the last two years reaching performance indicators above the financial market average. In 2014, as the total loss of the local banking systems amounted at more than 4 Billion Lei as per preliminary data avaliable, EximBank has managed to maintain its positioning among the few banks that are registering profits. The bank increased its total exposure at 4.7 Billion Lei last year as compared to 4.5 Billion Lei in 2013, acting on a corporate banking market with low demand for crediting and a very powerful competition.”, said Traian Halalai, President of EximBank.

During last year EximBank has granted new credits of a total value reaching almost 900 Million Lei in line with the figures registered the previous year. The main beneficiaries of the new financing facilities have been big companies (57%) followed by small and medium enterprises (41%). ”EximBank had a very important role in supporting the local business environment by diversifying and increasing the usage of the specific support instruments both in own name and account and in the name and account of the State. Thus, the new approved exposure to the real economy has reached 3.4 Billion Lei between 2013 - 2014, in spite of the challenges that the Romanian banking sector has to face. The impact on the national economy is significantly higher having in mind the multiplying effect of the specific instruments used in the support activity by the bank.”, explained Traian Halalai.

This increased support for the Romanian economy between 20132014 has been taking place along with the modernizing process that has focused on re-defining and increasing efficiency of the operational flows, significant improvement of the products and services portfolio (treasury, trade finance, factoring and cash management) as well as on the expansion of the network by 9 units.

EximBank is a specialized institution whose threefold product portfolio focused on financing, guarantees and insurance, enables it to grant assistance to current activities and development of exporters, SME-s and companies involved in projects pertaining to key economic sectors.

The financing products portfolio of EximBank consists in both credits for current activity, exports or investments and products from the state aid category such as the subsidized interest rate credit or the partial compensation of the interest rate allowing companies to receive up to 50% of the interest rate paid for the investments credits contracted in RON form any commercial bank.

EximBank completed its offer for financing solutions with factoring and cash management services as well as with a wide range of treasury products.

The guarantees in EximBank’s portfolio are issued under the Romanian State name and account, are sovereign, reduce the risks associated with the crediting activity and facilitate the companies’ access to financing. The bank is offering guarantees for exporters, SMEs and other companies, involved in projects funded by European funds or those developing projects in key economic sectors such as infrastructure development and environment protection.

In terms of risks mitigation, EximBank is offering to companies the option of substantially reduce the commercial and political risks associated with commercial international transactions through its wide offer of insurance products.

Along with its subsidiary EximAsig – a company specialized in insuring the financial and other complementary risks - EximBank may cover the risks of exporting companies active on all international markets both in European Union and in high risk areas such as Middle East, Asia, Africa or Latin America.

www.business-review.eu Business Review | May 2015

36 MANAGEMENT

CEO CORNER Dan Bulucea, country director at Google and Franco Del Fabbro, CEO at Heidi Chocolat tell Business Review about innovation in business and its importance for both companies and their customers.

Dan Bulucea, Google

How do you describe innovation in business?

DB: Innovation tends to be an overly used buzzword these days. In general, for a business it means transformation, driving competitive advantage, launching new products or services, adopting new business models and even just increasing the pace of change.

But technology is disrupting every part of our lives, businesses, industries and society as a whole. As technology accelerates exponentially and is being digitized, it becomes disruptive. Faster and cheaper computing power, sensors, digital manufacturing, artificial intelligence, robotics, biotech – they all enable not only new products and services, but also new business models; they create new markets and new opportunities. In this context, innovation becomes a much broader term.

FF: Going out of your comfort zone and coming up with something that nobody has done before. It is like getting up from your sofa and going for a run: sure, it is hard and requires more effort, but how much better off you are afterwards!

How crucial is innovation for a business now, regardless of its field of activity?

DB: Remember Kodak? It had 90 percent market share in photographic film and invented the “Kodak Moment” – a synonym for a picture. But it did not transition to digital technology in spite of having invented the core technology in modern digital cameras.

Franco Del Fabbro, Heidi Chocolat

The reason disruptive technologies are very important to all leaders – whether they’re CEOs or policy makers – is because, for the first time, we now have technology affecting every single sector of the economy. Every industry now takes input and uses technology to drive much of what it does. The difficulty lies not so much in developing new ideas as in escaping old ones – great ideas are captivating, but great businesses are self-sustaining.

FF: Innovate or die. Innovation is part of the natural evolution of things. It is an integral part of nature and life. Ask the dinosaurs about the price they paid for not being able to keep up and evolve!

How can a company keep up with the need for innovation?

DB: Innovation can’t be imposed. However, you can create an environment where it will evolve organically. At Google we don’t see innovation as instant perfection, but treat it as a process – it’s about changing habits and behaviors when understanding and defining problems, brainstorming or finding solutions. Our approach relies on three key principles: know the user (ensuring we have full understanding of the need we try to address), think 10x (avoid incremental progress, open our mind for breakthrough ideas) and be prototypedriven (launch and iterate, fail fast and try something else – the more ideas you try and the more “failures” you experience, the more learning you get and the more successes you’ll enjoy).

FF: Staying ahead of the needs curve.

Planning for the next decade, not the next quarter. Look beyond what hap-

pens in your own category or business and see what inspiration and learning you can get. Single-serve packs started many years ago with tea bags; now you find them in dishwasher detergents and other totally unrelated categories. If the consumer need is there, it is not necessarily exclusive to one type of goods. It may take a different spin in the form of convenience/correct dosing/portion control, but the result is a happier consumer and better company profits.

Is it enough to be innovative now or does an organization also need other capabilities in order to survive on a competitive market?

DB: There is a natural, human resistance to change. It applies to companies as well, and it is crucial to overcome it.

Usually industry disruption happens faster than anyone anticipates. Things look like business as usual to the slowmoving incumbents, who have often not faced a real market threat for a while.

Then the incumbent’s business may undergo sudden and violent collapse. For example, companies like Airbnb and Uber are such game changers in their industry.

FF: Innovation needs to have a purpose, otherwise the outcome will only end up in an art gallery. Also, it is often easier than many think: a different packaging shape or format, a “contamination” from a different business, a different spin given to the traditional and familiar.

What does it mean to be innovative in a competitive world like that of today?

DB: Disrupt or be disrupted. As already

mentioned, companies need to identify new business models leveraging abundant data/information (essentially free and ubiquitous). Approaching collaboration in a very open manner and financing new projects through crowdsourced platforms are already the norm in today’s digital world.

At the same time, users’ expectations are totally different. We can almost say modern users are spoiled – what used to be amazing is now expected. Simple incremental improvement is guaranteed to be obsolete over time – and again this applies to any sector or industry. As William Gibson put it, “The future is here – it's just not evenly distributed.”

FF: Innovation is not just a process: it needs to be in the genes of a company and the people that make that company. Endless curiosity and a certain degree of “dissatisfaction” with the status quo are the key pillars. Not everyone can be a disruptor of their category like Apple or Nespresso, but there is plenty of ground for everyone to do their bit.

Authors are members of

www.business-review.eu Business Review | May 2015

MANAGEMENT 37

Expat managers upgrade perception of local management culture Romania was ranked second out of six countries in a pan-regional survey conducted for Target Executive Search

by GfK and CEU Business School that measured the perception of expat managers on issues such as general business environment, managers and management style, transparency and cross-cultural issues. ∫ SIMONA BAZAVAN Humor is important for working relations in Romania, Bulgarian female managers tend to be more effective than men, Poles are customer service oriented but also individualistic and the Czechs work in a planned way but are less good at dealing with overseas customers and colleagues. These are just some findings of the Target Executive Search study. Some 1,100 senior expat managers in the region were surveyed on four key areas: general business environment, management style, managers and the market, transparency and cross-cultural issues.

Despite each country’s specific strong suits and weaknesses, a constant throughout the region is that bureaucracy, corruption, poor customer service and reluctance to take managerial responsibility remain the biggest obstacles to improving economic competitiveness, say Target Executive Search representatives.

Compared to a similar study put together in 2009, the overall satisfaction scores in the 2015 version are lower in all of the countries. Poland reported the highest overall marks followed by Romania, which saw an improvement on the 2009 ranking when it landed second from last.

The full half of the glass…

Back in 2009, the worst ranked categories for Romania were related to organization, responsibility and leadership, but since then the country has reported progress in almost all the analyzed areas, Felicia Beldean, managing partner for Romania and Bulgaria with Target Executive Search CEE, told BR. What sticks out is a significant improvement in the perception of agreeability level of Romania as a working and living destination, a slight decrease in bureaucracy – perceived as an improvement in the general social and business environment and a greater customer focus, she added.

Overall, Romanian managers are now seen as working in a more planned way than in the past. “Deadlines and timetables are taken seriously and respected in most cases. In short, business itself is more organized and efficient,” she said. Another area where there has been improvement is the level of responsibility assumed by local management, alongside showing more

Felicia Beldean, managing partner for Romania and Bulgaria with Target Executive Search CEE

proactivity and creativity in solving problems. “We should be especially proud of the fact that, increasingly, women in managerial roles are perceived as being more efficient, more organized and more committed than their male counterparts,” added Beldean.

This is on a positive trend in Romania while in all the other countries this factor is decreasing or stagnating, shows the report.

What sets Romania apart in the region? “I would mention here the importance for us of building strong relationships at the workplace – with our colleagues, bosses, subordinates, as well as with our clients. And these close relationships are crucial for working well within a certain team or company, as is having a good partnership with our clients,” she commented.

Romanians are also appreciated for their flexibility and adaptability, creativity and ability when dealing with unexpected situations, having come top in the region for these characteristics.

… and the empty half At the other end of the spectrum, bureaucracy remains a major issue for the local business environment despite a slight improvement compared to the 2009 findings, found the study. In fact, Romania came last in the region (out of six) while Poland was perceived as being the least bureaucratic.

“Another major drawback for Romania that has remained and deepened during this period is the corruption. It is perceived as the main factor blocking progress here. While bureaucracy is improving, unfortunately, corruption has worsened,” said Beldean.

Romania also fared poorly against its peers for “presenteeism”, meaning working hours just for show and a rather “show-off style”, the efficacy and planning of activity and the business it-

self, strategic thinking and the implementation of agreed decisions. “Almost all of these factors are on an ascending ‘slope’ of improvement – but still need some more development steps,” added the Target Executive Search representative.

A common finding in the region and in Romania as well is a certain lack of customer orientation. However, some progress has been made in this direction.

“Romania was ranked second regarding customer service orientation and understanding of market competitiveness, after Poland, of course. Nevertheless, since 2009, Romania has made significant progress in this respect, recording improvements in the area. Moreover, we’ve also evolved positively in understanding our market and our competitive advantages, compared with the previous findings of 2009,” noted Beldean.

Some 1,100 senior expat managers were surveyed for the study. Respondents were asked to express their level of agreement with statements describing local management culture in the six analyzed countries (Bulgaria, the Czech Republic, Hungary, Poland, Romania and Slovakia) and answer a series of socio-demographic questions.

The study, by Target Executive Search and CEU Business School, is a somewhat extended follow-up of one conducted in 2009 by Target and Henley Business School. simona.bazavan@business-review.ro

Top 5 statements about Romania marking a positive change* l It is easy to find well-trained managers in this country l I enjoy living here l In this country business and commerce are highly customer service ori-

ented l Business deadlines and timetables are taken seriously in this country l Local management is dedicated to excellent customer service

* the share of agreement has increased Source: Target Executive Search

Top 3 statements about Romania marking a negative change l The business environment is very active and dynamic l Corruption is not a significant problem in doing business here l There is a strong entrepreneurial spirit among managers here

* the share of disagreement has increased Source: Target Executive Search

www.business-review.eu Business Review | May 2015

38 GReen CORneR

Retailers team up with Austrian embassy for educational project Seven retailers are partnering the commercial division of the Embassy of Austria to launch an educational project. ∫ AndA SebeSi Billa, C&A, Deichmann, dm drogerie markt, Hervis, Humanic and the embassy will launch o’SCAR (the Austrian Commercial School in Romania) in September at the Costin C. Kiritescu Economic College. The project is intended to train students as shopkeepers and sales professionals. The retailers will provide the practical training with help from retail professionals.

“Both the embassy and the seven companies see this public-private partnership as an investment in Romanian society, based on the need for retail professionals. The o’SCAR project is based on the dual system, a part of the education system in countries such as Austria and Germany that focuses mainly on practical training and includes cooperation between schools and employers,” said Rudolf Lukavsky, commercial counselor at the Embassy of Austria in Bucharest.

And the o’SCAR goes to... Seven retailers are partnering the embassy

Loredana Viorela Popescu, manager of the Costin C Kiritescu Economic College, welcomed the project and the resulting close contact between students and professionals. “We hope that this

initiative will help increase trust in professional education and its importancefor both the economy and society.

There is a need for innovation in education and a program based on a dual

system offers training adapted to the current demands of the labor market,” she added.

The course will combine theoretical and practical elements. A three-year program, it will provide eighth-graders with training as a shopkeeper/salesperson in food and non-food fields (footwear, fashion, sports and furniture).

The program’s theory-practice ratio increases from 80:20 in year one to 40:60 in year two and 28:72 percent in year three. Graduates of the o’SCAR program will have priority in the seven retailers’ recruitment processes, say officials. Students will receive a monthly scholarship of up to RON 400 depending on their results and will have transportation costs supported during their studies. After graduation, they will receive a professional certificate recognized at European level, add program officials. anda.sebesi@business-review.ro

FPMR and Raiffeisen bank launch social centers for young and old The Princess Margaret of Romania Foundation (FPMR) and Raiffeisen Bank have joined forces to launch social centers for disadvantaged children and elderly people. ∫ AndA SebeSi The project Generations – the Center of Community is being rolled out in afterschool educational centers in Bucharest, Urlati, Tarnaveni, Sfantu Gheorghe and Alba Iulia, with the support of community foundations, local organizations set up to foster philanthropy, initiative and community spirit, and to provide funds.

The founders say the purpose is for seniors and children from low-income families to socialize, learn new things, help each other and get support with their studies.

“We started the project to offer children from troubled families the chance of a future,” said Mugurel Margarit Enescu, executive director of the FMPR. “Often they have poor school results as early as their first year. Community support is required to help meet their needs, both in terms of coping with school and social integration. This project draws on the professionalism of the

Lending a hand: Raiffeisen Bank is supporting the young and old employees of these educational centers with the work of young volunteers and older ones who serve as role models.”

The founders of the project say that the exchange of values and knowledge between generations brings added

value for all involved. Children benefit from respectable models and assimilate some social behaviors that they do not learn at home. The children’s energy, vitality and affection helps the seniors feel less lonely and excluded, find purpose and regain their self-esteem by participating in different activities, they add.

“The project brings back to the public attention a resource that we often ignore: the life experience and knowledge of seniors. They offer children a part of their life and get recognition and joy. It is an excellent way to re-build social cohesion in the relevant communities,” said Corina Vasile, communication and PR director at Raiffeisen Bank.

Through the project, 150 disadvantaged six- to sixteen-year-olds do their homework in an afterschool program.

The founders say this helps them gain confidence, improve their results at school and integrate into society with the help of senior volunteers. anda.sebesi@business-review.ro

www.business-review.eu Business Review | May 2015

GReen CORneR 39

Metro Cash&Carry Romania to reward community-minded entrepreneurs

PARTneR COnTenT

enel and MaiMultVerde plant an additional 9,000 ‘Mega Trees’ in Comana natural Park

Metro Cash&Carry Romania has launched the second run of its CSR program, Metro – Starurile Comunitatii.

Community spirit: the contest is for entrepreneurs

∫ AndA SebeSi The competition is dedicated to entrepreneurs and aims to show the importance of small businesses in the development of local communities, and encourage SMEs’ social responsibility initiatives, said organizers.

“Whether it’s about turning a business location into a cultural center to educate the local community, entrepreneurs who started social businesses to help vulnerable groups or restaurants that donated products to the community, last year’s projects touched us with the entrepreneurs’ dedication to their community. Their stories persuaded us to repeat Metro – Starurile Comunitatii,” said Gilles Roudy, general manager at Metro Cash&Carry Romania.

From April 23-July 23, entrepreneurs can register their stories, images and videos on www.metro.ro/starurilecomunitatii, for a public ballot. The ten that attract the most votes will enter the field visit stages, with a selection then evaluated by a jury formed of Roudy, Radu Merica of the Romanian German Chamber of Commerce and Industry, entrepreneur Marius Ghenea, Lacramioara Botezatu of CSRmedia.ro, the Fundatia pentru Dezvoltarea Soci-

etatii Civile (FDSC)’s Ionut Sibian and Alice Stavride of the Concordia Development SRL and Concordia Humanitarian Organization.

Prizes totaling RON 70,000 are on offer (RON 30,000, RON 20,000 and RON 15,000 for first, second and third place respectively). The seven losing finalists will receive RON 5,000 of Metro vouchers. Like last year, Metro – Starurile Comunitatii is being partnered and supported by the FDSC, which will select the ten finalists.

“This is the first time when a company in Romania recognizes the importance of entrepreneurs’ social responsibility activities,” said Ionut Sibian, executive director at the FDSC. “We believe projects like this boost quality of life in underprivileged communities and generate positive changes where people need help,” added Alice Stavride, administrator of Concordia Development and administrative director of the Concordia humanitarian organization.

Metro-Starurile Comunitatii is part of the retailer’s CSR strategy and it is in line with its new positioning – You&Metro – which company officials say sums up its efforts to become the best partner for independent entrepreneurs. anda.sebesi@business-review.ro

“Mega Tree” is a program Enel started in November 2012, when the company committed, in partnership with MaiMultVerde association, to plant a tree for each 10 MWh of Green energy consumed by its clients. The Green energy package, available only for clients on the free market, offers companies in Romania the opportunity to purchase electricity from renewable sources and support the carbon footprint reduction. An independently-certified process (SRAC certification by IQNet) gives customers who choose Green energy package the guarantee that they have access to renewable energy.

The Green energy package can be bought by any company that wishes to act responsibly towards the community, environment and future generations. It has already been chosen by companies active in various industries such as tourism, retail, and telecommunications.

“Our customers purchased 15 percent more green energy in 2014 compared with the previous year, thus proving their interest in reducing the impact of their businesses on the environment.

We are happy they embraced with enthusiasm our initiative, and we will continue to develop products that not only reduce the carbon footprint but also provide solutions for more efficient energy consumption, contributing in this way to a sustainable future”, said Michele Grassi, general director of Enel Energie and Enel Energie Muntenia.

The Comana Natural Park is a protected area of national interest, located in Giurgiu County, near Bucharest, and very popular with tourists. With a surface of 24,963 ha, the park is a special conservation area in terms of protection of various species of plants and birds, and it was included in the Ramsar sites list. The oak tree was the pre-

dominant species in the area, in the past, but in the last decades, it has been replaced by invasive species or less valuable species in ecologic terms (improvement of air and soil quality, CO2 absorption, O2 emission).

In this context, the plan of forests authority Ocolul Silvic Comana and the Park’s Administration are to reintroduce the oak tree through controlled planting actions (certain areas and certain helping species) to improve the quality of the environment and help to restore the biodiversity that made the area be declared protected area of national and international interest.

The “Mega Tree” program started in November 2012 when Enel and MaiMultVerde volunteers planted 700 trees, according to the Green energy consumption registered until that date.

All the activities were done with the support of forests authority Ocolul Silvic Comana. With the plantation actions from this year, a total number of 22,000 trees have been planted in Comana Natural Park, from the launch of the “Mega Tree”.

The employees of Enel Green Power Romania have joined the initiative of Enel, and Mai Mult Verde association this year as well and actively participated in the tree planting effort, as volunteers for creating a greener environment. Enel is keenly involved in promoting green energy and a sustainable development through a wide range of activities, while the renewable energy represents one of the main pillars of the company’s strategy, at Group level. In Romania, Enel Green Power completed a large investments plan in developing wind and photo voltaic power plants in Banat, Oltenia, Muntenia and Dobrogea Regions, being one of the largest renewable players, with 533 MW installed capacity operational at the end of 2013, out of which 498 MW in wind plants and 35 MW in PV plants.

www.business-review.eu Business Review | May 2015

40 eXPAt eYe

dampened spirits on the Bucharest concert circuit In a new regular column, Business Review explores Bucharest and Romania from an outsider’s point of view, from the fun and frustrations of daily life to international events that impact the country. This month, concert complications, a political storm embroils an unwitting pop singer, the UK election and what it means for Europe, and a small advance in the smoking wars.

∫ deBBIe stowe One of the things we foreigners love most about Bucharest (apart from the low cost of living, obviously) is the music scene. Not maybe the manele (though even that has its foot-tapping charms), but the array of accessible classical, jazz and pop concerts and festivals.

From the affordable productions at the handsome opera house, to the regular programs at Sala Radio and the Athenaeum, Bucharest offers high culture at low prices, and it’s probably happening much nearer to where you live than it would be back home.

For jazz lovers, there are quirky bars like Green Hours and Jazzbook. And pop pickers can’t complain about the caliber of the stars who’ve performed here in recent years, from Madonna and Kylie to the Rolling Stones and Bob Dylan. Next up is Robbie Williams.

Okay, we’re still waiting for U2, and some world and European tours do leave Bucharest off the list. But with prices still much lower than back home, and with the special atmosphere generated by the local crowd – concerts still seem to mean more to fans here, with the country having been closed for so long, whereas Westerners have always taken it for granted that they’d get to see their favorite acts play live sooner or later – it’s a great experience.

But while we love the concert circuit, the feeling doesn’t appear to be mutual: some venues seem to do their best to deter the foreign visitor. It’s not solely targeted at us – sometimes the organizers are equal opportunities unhelpful.

Running out of water at summer stadium gigs (this has also happened at the opera), overheated venues, late starts and huge queues because the powersthat-be decide not use all the doors at their disposal are annoying for Romani-

ans and non-Romanians alike.

But newcomers also have to contend with unsigned layouts and box offices that the managers seem to want to hide from the public. Enter a major concert hall brandishing your ticket for, say, section J, row 16, and you might hope to see a sign pointing you to section J. Unlikely. The ticketless may be keen to find the box office. Can be tricky.

My thoughts turned to this as I slid down a muddy bank while trying to flee the deluge at the Roxette concert in May. Now, it’s not the concert organizers’ fault that it rained heavily, nor that the Romanian Arena (a beautiful, old amphitheater) has only one entrance and is in a park. Maybe it’s expensive to put in proper steps to cater to the several thousand arriving, rather than leave them to teeter down a narrow, rickety old flight of steps you might expect to find at a medieval castle. But they could at least prune the overhanging branches that force fans to stoop to go up or down.

And they could also have a better plan in place to deal with events like the crowd surge that built up as concertgoers rushed to take shelter from the downpour than to tell them (falsely) that the gig had been cancelled.

Anyway, once we’d returned home, changed into dry clothes and returned just in time for the second song of the night, it was a super show at a lovely venue with an appreciative audience and I was a fan of Bucharest’s music scene once again.

Basescu”, giving the impression it was a Romanian-language pleasantry.

Ignoring the fact that Traian Basescu exited Romania’s political stage months ago, and so the cheap trick was utterly pointless, what an underhand, unprofessional and childish thing to do.

Will the presenter do the decent thing and resign after such a high-profile lapse in journalistic integrity? With another presenter still in her juror’s chair on a TV talent show despite ignorantly comparing gay people to terrorists last month, don’t hold your breath.

Around the time that the woman’s homophobic rant caused controversy in Romania, Northern Ireland’s health minister made similarly bigoted comments linking gay couples to child abuse. Within days he had stepped down. Maybe one day we’ll see similar accountability among public figures here.

Butt out

In out, in out

Julio hoopla A storm of a different sort accompanied another performer in Bucharest for a show: Julio Iglesias’s son (no, not Enrique, he has others). On an Antena 3 talk show to promote the forthcoming concert at Sala Palatului at which he will support his father, a presenter tricked JI Jr (top of the page, right) into saying, “Jos

but rare in the UK until recently owing to its first-past-the-post voting system).

UKIP, the anti-Europe party whose leader, Nigel Farage, attracted widespread condemnation after commenting “Any normal and fair-minded person would have a perfect right to be concerned if a group of Romanian people suddenly moved in next door,” had been tipped to do well.

In the end, the party had only one Member of Parliament elected. However, this was again due to the workings of the British system – the party won almost 4 million votes. This will help fuel the UK’s Euro-skeptics as the Conservatives press ahead with their pledge to hold an in-out referendum on Britain’s EU membership.

When I first moved to Bucharest in 2002, all the talk was of whether Romania would be in or out of the EU. Ironic that now I’m worried about whether the UK will be.

The major news in UK politics was of course May’s general election with its shock outright win for the Conservative Party (led by David Cameron, above).

There had been fears of another hung Parliament, requiring a coalition (common in Romania and in much of Europe

One area where I wish Romania was a bit more like Britain is in its smoke-free legislation. It’s not new for expats (and increasing numbers of locals) to complain that we return from nights out coughing and stinking of ashtrays.

But I sense change in the air (rather than just fumes). Over the past year or so, three new splendid cafes have opened up in my neighborhood (Black Eye Coffee, Coffee Factory and Origo).

All have opted to go non-smoking. A sign of things to come? Maybe so, maybe not, but definitely a breath of fresh air.

BR has launched this column to get an outsider’s take on life in Bucharest. Comments and contributions (from expats and locals alike) are welcome: please send them to the address below with the subject line Expat Eye. debbie.stowe@business-review.ro

www.business-review.eu Business Review | May 2015

42 lIfestYle/fIlm

spa-reaching towards a younger, local clientele The four-star Europa Hotel & Spa in Eforie Nord wants to increase the revenues of its Ana Aslan Health Spa by 23 percent in 2015, mostly by increasing awareness on the domestic market, Iuliana Tasie, the hotel’s GM, tells BR. ∫ sImonA BAzAvAn Some 40 percent of the tourists that check into the Europa Hotel & Spa in Eforie Nord each year are foreigners, the spa being the main reason they choose to come to the Romanian Black Sea resort. While visitors from countries such as Germany, France, the Netherlands, Luxembourg, Belgium, Russia and Israel have been coming here for healthcare and spa treatments for 50 years, the spa is less popular among locals.

One reason for this is that until 1990, the hotel was open only to foreigners.

“They know Eforie Nord as a spa resort and they know local brands such as Ana Aslan and Gerovital – so much so that when we opened the hotel (e.n. it was fully renovated in 2003 after being taken over by Ana Hotels) we were approached by international tour operators who wanted to send tourists here, not the other way round,” said Tasie.

On the domestic market, however,

Spa power: Iuliana Tasie, GM of Europa Hotel & Spa the authorities have done next to nothing to promote Eforie Nord or any of the other local spa resorts for that matter.

As a result, they are often perceived by Romanians, especially by the young generation, as treatment centers targeting mostly seniors. The hotel’s management has determined to change this and wants to increase awareness of spa

benefits on the local market, particularly among this age group. “We want to become known not only as a treatment center but also as a wellness center. And this mentality is beginning to change as young people are increasingly interested in the concept of wellness,” said Tasie. Indeed, in addition to procedures with salt water and Techirghiol mud,

the spa offers massages and baths, antiageing and facial treatments, detox, hydrotherapy and slimming procedures.

Overall, the hotel’s GM wants to increase the spa’s revenues by 23 percent in 2015. The hotel itself reported a 56 percent occupancy in 2014. “This was up by 2 percentage points compared to the previous year. We want to maintain this growth trend in 2015 as well and we’re planning an increase of at least 2 percent. This will be done both by increasing the number of tourists at the beginning and the end of the season (e.n. the hotel is open seven months each year) and during peak season in July and August. We have kept rates the same and the VAT cut to 9 percent will also help, especially for longer stays,” said Tasie.

The 221-room Europa Hotel & Spa in Eforie Nord is one of the six hotels in the Ana Hotels group, owned by the Copos family. simona.bazavan@business-review.ro

fIlm revIew

Pasolini ∫ deBBIe stowe director: Abel Ferrara starring: Willem Dafoe, Maria de Medeiros, Ninetto Davoli, Riccardo Scamarcio on at: Patria, Scala, Corso, Elvira Popescu, Hollywood Multiplex, Grand Cinema Digiplex

Friend or Dafoe: the US actor brings out the dark side of Italian director Pasolini

Abel Ferrara’s movie starts off with the Italian-language scenes unsuba film within a film – but not your titled – but the overall impact is average film. Scenes of a naked, powerful – haunting, artistic and frightened woman being paraded thoughtful. before four austere men in suits In another discordant, but effecsoon develop into a sadomasochis- tive move, Pasolini is played by the tic orgy. It doesn’t get much less American actor Willem Dafoe, who weird from there. bears a close resemblance. Dafoe The movie, set in the 1970s, speaks mostly in English. The chartraces the final hours in the life of acter’s family, friends and colthe title character, Pier Paolo Pa- leagues, however, are all played by solini, the Italian film director, Italians, who, despite the artifice of writer and thinker, interspersed it, converse with him in English and with scenes and ideas from his each other in Italian. works, actual and planned.

While we’re used to hearing The resulting story has a patch- heavily accented English (of the work quality, sometimes confusing “Vat iz zis?” variety) spoken by panand hard to follow – especially as European actors meant to be Nazis the director chose to leave some of in hundreds of war films, having a

predominantly authentic European cast around one English speaker, especially in such a serious movie, adds to the strangeness.

Pasolini’s life, as seen here, is one of stark contrast. His mama, whom he appears to live with like a good Italian boy, wakes him up tenderly in the morning and politely welcomes the rather radical friends that a director of sadomasochistic films is likely to acquire.

At night, however, he cruises the seedy part of town, looking for rent boys to pick up and take to some waste ground for sex (not before taking them out for pasta – he is a gentleman). It is the seamier part of his life that predictably lands the di-

rector in trouble.

In its episodic and dreamy meander among the darker side of Rome’s high society, boundarypushing artists and literati, the movie invites comparisons with Paolo Sorrentino’s La Grande Bellezza, and it leaves a similarly profound impression, even while frustrating attempts to piece it together.

There is also profundity in the screenplay. Ferrara mined Pasolini’s own words for the script, and the result is intellectually probing discourses on the future of Western civilization, freedom, religion and consumerism (the director referred to himself as a Catholic Marxist).

Few films focused on great thinkers go as deeply into their ideas.

The waywardness is anchored by an impressive performance from Dafoe, whose understated but steely depth is well suited to the self-assured director. His Italian seems pretty decent too.

With bacchanalian orgies, sadomasochistic sex, full-frontal nudity and graphic rendering of fellatio, the biopic won’t be everyone’s cup of tea, and viewers will need an open mind. But it’s Pasolini’s open mind that makes the movie such an intriguing and memorable curiosity. debbie.stowe@business-review.ro

www.business-review.eu Business Review | May 2015

lIfestYle 43

Harnessing the benefits of hippotherapy It is over 60 years since doctors discovered the advantages of animal therapy, with dogs, horses, dolphins and lamas as the typical choices. BR asked Anda Pacurar, a well-known psychologist who specializes in hippotherapy, how it works. justing. A child’s basic emotional needs are to be connected (the horse is very attentive and responds to verbal commands and the child’s body), capable to contribute (including an energy exchange which takes place by the horse and child balancing each other) and to have courage (the child feels s/he can, gains control and self-control). what does a hippotherapy session include?

An instructor leads the horse, while I focus on the client and check the condition of the horse, who can provide valuable information. For example, strong breath from the horse shows me how emotionally charged the person is.

I have a good relationship with the horse and the client notices this and makes a reliable transfer, meaning s/he develops a good relationship with the horse. The client approaches the horse

∫ tAtIAnA lAzAr what is hippotherapy?

Hippotherapy is a psychotherapeutic technique that involves a horse. Is a very effective physiotherapy in medical terms, stimulating areas that a doctor cannot stimulate by traditional means.

Almost any animal can provide physical support for therapy, but horses have the advantage that they have a natural affinity with human beings, and that they can be ridden – meaning they can raise the patient from her/his reality, at the same time maintaining a natural walk. what are the most common conditions that can be treated by hippotherapy?

Autistic spectrum disorders, anxiety, depression, social integration difficulties, social reintegration of victims of abuse such as bullying, eating disorders and learning disorders are the most common ones. Most of the patients who come for therapeutic horse-riding have tried psychotherapeutic methods unsuccessfully.

How important is contact with horses for children? At what age can a child start

riding a horse?

The horse is 50 percent physical and 50 percent emotional and children are in need of emotional support for their development. In the first years of life, means of expression, including verbal, are limited and so often they cannot alert adults to their needs, because they do not understand.

While working with children and horses I noticed that as soon as there is physical contact between the child and the horse they relax, smile or even become emotional, sometimes crying, after which they become very calm.

There isn’t a specific age to begin. A very young child can ride accompanied by a psychotherapist or a family member. The youngest child I have worked with was less than two years old, and had been diagnosed with autism and delayed intellectual development.

After one year the child began to develop normally, speaking, expressing themselves and responding to the condition. Some theories claim that while riding a child feels like they are in the mother’s womb – this is because the animal is going dimensional, like a human being.

Often, children are afraid of contact with others and have great difficulty ad-

in his/her own rhythm, so s/he can observe the horse, hear my stories about each animal, brush and shower the horse, clean its hooves, and so on.

How much does this kind of therapy cost?

It isn’t cheap but the advantage is the complexity of it, being emotional, cognitive and relational at the same time.

For example, a child with autism who was totally dependent on the mother took only four sessions to ride, walk and talk to us in a relaxed way. Therapy does not stop here but progress is very important. City Arts Association has often managed to find people willing to provide financial support to those in need.

Whenever someone wants this type of psychotherapy, funding solutions are found. A session costs RON 200 and the person must travel to Tancabesti. editorial@business-review.ro

www.business-review.eu Business Review | May 2015

44 FILM FESTIVAL

What’s on at TIFF 2015 The biggest entry on Romania’s movie calendar, Transilvania International Film Festival (TIFF), will reach its 14th run at the end of this month, bringing to Cluj-Napoca highly acclaimed and garlanded productions selected by critics from around the world. BR shares its pick of the program. ∫ TATIANA LAZAR

All photos: TIFF

The 14th run opens with Wild Tales/Relatos Salvajes, nominated in the Best Foreign Film category at this year's Oscars. A box office hit in its native Argentina, this dark revenge comedy will be shown in Unirii Square on Friday, May 29, at 20:45. Wild Tales will be screened during TIFF as part of the Focus Argentina special program, which will feature the top films from the Latin American country, screened in the presence of many of the directors, actors and producers. On the bill are comedy-drama Dos Disparos/Two Shots Fired, by Martin Rejtman, a writer, director and one of the founders of the New Argentinean Cinema; El cinco, the second feature from the award-winning director of Gigante (2009), Adrián Biniez; and the impressive feature debut, Historia del miedo/History of Fear, from Benjamin Naishtat, which competed in the Berlinale last year.

A dozen movies will go head-tohead this year for the Transilvania Trophy – five debut features and seven by second-time directors – from Argentina, Belgium, Bulgaria, Denmark, France, Germany, Greece, Iran, Iceland, Great Britain, Mexico, Spain and the USA. Rams (directed by Grímur Hákonarson), which comes to TIFF from Cannes’ Un Certain Regard competition, tells the story of two brothers who haven’t talked to each other for the past four decades and whose lives change when they have to save their most precious possession: their sheep. The heartbreaking Radiator (Tom Browne) looks at the way in which, with old age, parents become like children. Venice sends to Cluj Summer Nights (Mario Fanfani), in which Michel, one half of an apparently perfect couple, has a secret life as Mylène. From the 2014 Karlovy Vary competition comes Paris of the North (Hafsteinn Gunnar Sigurðsson), a drama in which a school teacher decides to meet his father after a couple of AA meetings. Suspense and action are the key ingredients in both Six Year Plan (Santiago Cendejas), a noir thriller whose themes are voyeurism and invasion, and in The King's Surrender (Philipp Leinemann), in which policemen seek revenge after two of their colleagues die during a violent confrontation. The suspense continues in The Lesson (Kristina Grozeva and Petar Valchanov), a realistic drama about a teacher pushed to extremes because of her debts, and in Melbourne

Night flicks: TIFF attendees can watch movies in Unirii Square, under the stars

(Nima Javidi), the Best Screenplay award recipient in Stockholm, which tells the story of a couple faced with a difficult moral dilemma triggered by a tragic incident. In the lively 600 miles (Gabriel Ripstein), winner of the Best Debut Film at Berlin 2015, Tim Roth plays an American agent whose fate is inexorably connected to the young smuggler he’s chasing. Another Best Debut Film winner, from the 2015 Goya Awards, is 10,000 kilometers (Carlos Marques-Marcet), a passionate love story which unfolds through Skype.

This and the troubling The Fire (Juan Schnitman) and Melody (Bernard Bellefroid) are two-handers.

The Supernova category includes productions such as Magical Girl (Carlos Vermut), the main winner at San Sebastian, an impressive neo-noir about a father submitted to a range of strange blackmail in order to fulfill the one last wish of his cancer-stricken daughter.

Vie Sauvage (Cédric Kahn), starring Mathieu Kassovitz, which won the San Sebastian Special Jury Prize, tells the story of another father, so obsessed with life away from the big city that he takes his two children around the world for 11 years. The Fool/Durak (Iuri Bikov), last year’s most influential Russian film after Leviathan, is the desperate chronicle of a profoundly corrupt country.

Life in a Fishbowl (Baldvin Zophonías-

Wild Tales will open the 14th edition of TIFF son), Iceland's Foreign Language Oscar submission, follows the crisscrossing destinies of three people. A Spanish True Detective, cop thriller La isla mínima (Alberto Rodríguez) won the Best Film Award, in addition to another nine trophies, at the 2014 Goya Awards.

From the Cannes line-up, local audiences can view Force Majeure (Ruben Ostlund), a Golden Globe nominee in

the Best Foreign Film category; Clouds of Sils Maria (Olivier Assayas), a personal drama of an actress at the end of her career, starring Juliette Binoche and Kristen Stewart; and Timbuktu (Abderrahmane Sissako), the main Prix Cesar winner (seven trophies), a film about the dramatic change in a city taken over by jihadists.

The No Limit section showcases the

www.business-review.eu Business Review | May 2015

FILM FESTIVAL 45

“This year, I favored intimate films and productions that resort, in an intelligent and surprising manner, to the conventions of genre cinema: emotion and tension. I was interested in the manner in which filmmakers on their first or second feature can make the most – through editing, great acting and directorial savoir faire – of the impact of these stories, which start from a limited set-up, budget and number of characters. There are films with only two or three characters, films whose story rarely leaves the four walls of a room, whose tense action scenes are more efficient than any Hollywood blockbuster.”

Mihai Chirilov, artistic director of TIFF. most radical films of the year, intended to push the boundaries of cinema and induce contemplation, such as The Duke of Burgundy (Peter Strickland), in which two women isolated in a small house by the forest play a complex erotic game. Ulrich Seidl’s controversial documentary, In the Basement, screened in competition in Venice, brings to the surface the strangest quirks of Austrians, from Third Reich fanatics to sexual fetishists. Another Austria-based entry is the psychological horror Goodnight Mommy (Veronika Franz and Severin Fiala) in which twin brothers suspect that something's amiss with their mother. Sub-aquatic mystery The Forbidden Room (Guy Maddin and Evan Johnson) comes to TIFF from the Forum section of the Berlinale.

Words Are Very Unnecessary includes 11 works which will compete for the FIPRESCI award, presented by the International Federation of Film Critics.

“The idea of this section came to me thanks to two films from last year,

which are completely without dialogue: Moebius, Kim Ki-duk's psycho-sexual drama which we screened during TIFF 2014, and The Tribe, a provocative Ukrainian debut whose story takes place in the world of the deaf and the mute. The title of this section, inspired by the lyrics of the Depeche Mode song Enjoy the Silence, was kind of obvious.

I was interested – and it was a challenge to find them – in those films in which words are unnecessary and whose power resides in the force and narrative flux of the images,” said Chirilov.

Full house: most of the film projections are sold out

New view: TIFF screens movies in unconventional places like Banffy castle

Pacsay has composed a brand new score which will be performed live during the film by the Hungarian Opera orchestra of Cluj. The highly influential Hungarian-born American Curtiz, renowned for Casablanca, one of the best loved films of all times, made over 50 movies in his native land before leaving for America, but very few have survived the passing of time. The only copy of The Exile was discovered by chance in 2008, in the basement of the Hungarian Institute in New York, and was restored in Budapest laboratories.

Local director Mircea Daneliuc will be celebrated this year in a TIFF retroSpecial features The Hungarian Opera of Cluj- spective, 40 years after the release of his Napoca will host one of the most spec- first feature, Cursa. The ample retrotacular TIFF 2015 events: the showing spective includes 12 films, a poster exof a restored copy of the once lost and hibition, photos from sets and other now found A tolonc/The Exile (June 2, rare documents. The program features at 20.30), directed by Michael Curtiz some of his most important films, preand screened in the presence of its leg- sented in digitally restored copies, with endary director, for the first time ever, new English translations: Cursa (1975), 100 years ago in Cluj. For its TIFF trans- Vânătoarea de vulpi (1980), Probă de mission, acclaimed composer Attila microfon (1980), Croaziera (1981), Glis-

sando (1984), Iacob (1988), A unsprezecea poruncă (1991), Patul conjugal /The Conjugal Bed(1993), Această lehamite (1994), Senatorul melcilor/The Snails' Senator (1995), Cele ce plutesc/The Floating Things (2009) and his graduation short, Dus-întors (1972).

TIFF stages will also host celebrated musicians and bands such as Zenzile (on May 31, 21.45, Banffy Castle), the best known French dub reggae outfit in the past 20 years or so; Norwegian jazz pianist Tord Gustavsen (May 31, the Students' House) and the Romanian bands a ROA and Moebius. Concerts will take place in Casa TIFF, the Students' House, Banffy Castle in Bontida, the Film Deposit, and the newest TIFF location, TIFF Campus.

Transilvania International Film Festival will take place in several locations around Cluj-Napoca, from May 29 to June 7. Tickets can be bought in advance from www.biletemaster.ro. editorial@business-review.ro

www.business-review.eu Business Review | May 2015

46 CIty

Calendar ∫ tAtIANA LAZAR Bt Street May 23-24, May 30-31, Lipscani Street, 10.00 to 21.00

the licentious modern world.

This new production, which premiered in 2014 at Covent Garden, in London, takes a fresh approach to the character of Manon, who falls victim to the consumerism and media obses-

Bucharest National Opera is showcasing a new staging of this romantic ballet, by choreographers Johan Kobborg, artistic director of the Romanian National Ballet, and Ethan Stiefel.

The version was acclaimed after its 2012 premiere, when it was performed by the Royal New Zealand Ballet in their home country.

Street Delivery June 12-14, Arthur Verona Street

Bucharest’s Old Town will get a new “street”, as various spectacles including parades and exhibitions liven up Lipscani over two weekends. The event is divided into six categories: theater, dance, music, entertainment for children, arts and sports.

The Arthur Murray Dancing School is hosting sessions during the first weekend, while tango lovers can enjoy the milonga. The event will have a graffiti wall and several other art projects. Kung-fu and handball demonstrations will also take place. The full program of the event is available at www.bancatransilvania.ro/stradabt

Opera premiere: Manon Lescaut May 23, Bucharest National Opera Director Jonathan Kent and set designer Paul Brown have transposed the Abbé Prévost story – the source material for the opera’s libretto – to

Now on its 22nd run, the event – the biggest annual festival of performing arts in Romania – is a platform for the debating of ideas and the cultures of the participating countries. The ten-day festival typically sees participants from around 70 nations staging some 300 events.

The European Commission has declared it “the third most important performing arts festival”, after long established events in Edinburgh and Avignon. The program aims to pro-

sion of today’s world.

One Republic June 4, Arenele Romane One of the most successful alternative rock bands in recent years, One Republic are coming to Romania for the first time. Singer/songwriter Ryan Tedder and his bandmates will perform here as part of their tour to promote the US group’s latest album, Native, which includes singles Counting Stars, Feel Again and I Lived. The set list will likely include hits from previous albums such as Apologize, Stop and Stare, Secrets, Good Life and Marching on. Tickets are available on myticket.ro with prices ranging from RON 120 to RON 235.

Ballet premiere: Giselle June 6, Bucharest National Opera During the 2014-2015 season, the

Street Delivery, the manifesto-event dedicated to architecture, urban living and culture, now on its 10th run, is a free-of-charge, environmentally friendly event that challenges its audience to imagine a city where pedestrians own the streets as much if not more than cars – a city where people are the priority and life is worth living.

This year’s topic is global warming, and the organizers are currently open for projects to finance that deliver a better life in the city.

Sibiu International theatre Festival June 12 – 21, Sibiu, several venues

vide a top-quality cultural range courtesy of some of the most dynamic theater companies. Some 7,500 tickets are on sale for 41 theater, dance and music performances, but no information about the 2015 lineup had been made public by the time BR went to press.

Tickets are on sale from the Theater Agency in Sibiu, the national networks of Domo, Germanos, Orange and Vodafone stores, the Humanitas and Carturesti bookshops and online at www.eventim.ro.

editorial@business-review.ro