INTERVIEW: Mircea Turdean, managing director of local cosmetics firm Farmec, says the company plans to add Ukraine and Russia to its list of export destinations, while continuing to focus on coming up with new products »page 12
ROMANIA’S PREMIERE BUSINESS WEEKLY
November 14 - 20, 2011 / VOLUME 16, NUMBER 40
CARD SHARP The card industry is buoyed by Romanians’ increasing use of cards as a payment method, combined with the adoption of new trends such as contactless technology and mobile phone payment »page 8 NEWS
NEWS
RESTAURANT REVIEW
Messy Finnish
One more try
A good day to dine
The Jucu plant assets of mobile maker Nokia have been seized by local tax authorities citing an unpaid USD 10 million » page 4
British jeans manufacturer Lee Cooper has signed a partnership with Kenvelo’s shareholders to expand on the local market » page 4
Villa-based Italian eatery Buongiorno comes as a welcome surprise to Business Review’s restaurant reviewer » page 14
PLUS The Skin I Live In gives our critic the shivers » page 13 WizzAir warns airfares will rise if budget carriers move to Otopeni » page 4
FRENCH COUNTRY FOCUS WITH ROMANIA’S MACROECONOMIC INDICATORS IN GOOD SHAPE IN REGIONAL TERMS, FRENCH FIRMS ARE KEEPING REALISTIC ABOUT THE ECONOMY »PAGE 10
www.business-review.ro Business Review | November 14 - 20, 2011
BUSINESS AGENDA November 14 14:00 The Bucharest City Hall and the Romanian Architects Order will organize a press conference to announce the winning design project for the Universitatea Square car park. By invitation only. November 16-18 The National Institute for Research and Development of Industrial Ecology (ECOIND) will organize the 16th International Symposium, SIMI 2011, at Hotel Crystal Palace Ballroom. By invitation only. November 16 11:00 Barni will organize an event to mark the launch of a campaign promoting childhood games at Readers Cafe. Psychologist Mirela Zivari will attend. By invitation only.
18:30 Corporate Office Solutions will organize an event to mark the launch of a new line of products for the Steelcase and InterfaceFLOR brands at The Ark. By invitation only. November 17 11:00 DLA Piper will organize a press conference to present legal updates in the renewable energy sector at its headquarters in Metropolis Center. By invitation only. November 22 09:00 Medien Conferences will organize a conference on centralized heating systems and energy efficiency at Intercontinental Hotel. By invitation only. November 24 08:30 Asseco SEE, Oracle Romania and Kofax will organize a conference on the future of IT banking at Intercontinental Hotel. By invitation only. November 29 19:30 The Institute will organize the Internetics Gala 2011, which awards prizes to the best projects in the Romanian online market, at Bucharest National Opera. By invitation only. November 30 18:00 ∫EVENT Business Review organizes the Foreign Investors’ Forum at Howard Johnson Grand Plaza Hotel. By invitation only. Details at www.businessreview.ro/events/
NEWS 3
NEWS in brief TELECOM Vodafone posts EUR 410 million revenues in H1 Telecom operator Vodafone Romania posted revenues of EUR 410.7 million in the first half of the fiscal year 2011-2012, ending on September 30, down from EUR 425.7 million in the first half of the previous tax year. The firm had 8.5 million customers at the end of the period, having added 1.3 million new clients, while also disconnecting inactive prepay users. Over the last six months, the ARPU (average revenue per user) reached EUR 7, a 1.7 percent growth compared to the same period last year. Postpay users made up 40 percent of the customer base and prepay clients 60 percent during the interval.
Cosmote reports EUR 120 million revenue, 6.5 million clients in Q3 Cosmote Romania posted total revenues of EUR 120.6 million in the third quarter of the fiscal year 2011, a 2.6 percent yearly increase. The EBITDA rose to EUR 29.5 million, up 26.6 percent versus Q3 2010. The operator’s total number of customers, including Zapp clients, reached 6.5 million at the end of September, down 7.3 percent on the previous year. Of these, 22.8 percent are postpay customers and the rest prepay. Service revenues hiked by 7 percent in Q3, compared with the same quarter last year. In the last three months, the EVDO coverage for high speed mobile internet has grown by 13.5 percent, up to 88 percent population coverage.
Romtelecom Q3 revenues fall to EUR 160 million Telecom operator Romtelecom has seen an 11.8 percent decline in its revenues, which fell to EUR 160.1 million in Q3 of the financial year 2011. The company’s EBITDA also decreased by 5.6 percent to EUR 36.9 million. “This drop in revenues was partially generated by a modification of accounting policies for recognizing anticipated revenues and a change in commercial policies,” said Anastasios Tzoulas, CFO at Romtelecom. Romtelecom’s number of landlines dropped by 4.5 percent at the end of September compared to the same period in 2010, to a total of 2.52 million. But the operator gained on the internet and TV segment. Its number of broadband subscribers went up by 16.8 percent up to 1.1 million. The number of TV subscribers increased by 20.4 percent to 1.2 million users.
FMCG Olympus hopes to see EUR 40 million turnover in 2012 Greek dairy producer Olympus hopes to report a local turnover of about EUR 40 million next year, said Dimitrios Sarantis, president of the Olympus Group, after the opening of the company’s first greenfield factory Romania. The local plant required an investment of over EUR 55 million from
the firm’s own funds. The factory is located in Halchiu, Brasov county. An additional investment of about EUR 500,000 could go into a juice bottling line in 2013, said Sarantis. The factory in Halchiu is the largest investment made by the company outside Greece. The dairy producer estimates that it will recover the outlay in about 15 years. In addition to the Romanian plant, Olympus operates three production units in Greece and a fourth in Bulgaria. The dairy firm reported a EUR 24 million turnover this year. The company’s total investment in Romania since 1999 is estimated to reach EUR 70 million by the end of this year.
Danone signs supply agreement with local dairy farm Danone Romania has announced a partnership with local DN Agrar Group, a dairy farm in Garbova, Alba county, which was set up by a group of Dutch and German investors in 2009. The French dairy producer will buy 23 tons of milk each day from DN Agrar Group, but the quantity should increase to 30 tons by yearend. About EUR 8 million has been invested in the DN Agrar project so far. The farm has 1,100 Holstein cows, out of which 900 are milking cows that produce on average between 25 and 27 liters of milk each.
POWER Petrom reports 107 percent increase in net income Petrom has reported a net income of RON 2.9 billion in the first nine months of 2011, a 107 percent increase from the RON 1.4 billion posted in the same period of 2010. The hike is attributable to the Urals crude price, which increased by 49 percent in Q3 2011 on Q3 2010. In the exploration and production section, Petrom increased sales by 23 percent to RON 8.7 billion in Q3 2011, compared to the same period of 2010, and posted an RON 3.7 billion EBIT value, which is 65 percent higher than Q3 2010. Crude oil and NGL production fell by 1 percent to 24.8 million bbl, while natural gas production rose by 3 percent to 3.96 bcm. Petrom has upped its expenditure on exploration by 209 percent to RON 383 million. In the gas and power segment, the firm increased sales by 23 percent to RON 2.4 billion at end-September and reported an EBIT value of RON 36 million. Consolidated gas sales also gained 9 percent, moving to RON 3.53 billion. The refining and marketing segment saw sales climb by 28 percent to RON 13.7 billion, achieving an EBIT value of RON 189 million, down 18 percent on the first three quarters of 2010.
Romania has 16K MW of pending capacity for wind projects Romania has signed contracts for 8,415 MW of installed wind capacity, while over 7,000 MW takes the form of stable contracts for connection to the national grid, according to Octavian Lohan, deputy GM of Transelectrica, the national grid operator. He
WEEK in numbers
14 percent of handsets in Central and Eastern Europe are smartphones, according to GfK’s CEE Telco Industry Report 2011
1,300 Logans have been delivered to the military police in Rio de Janeiro, which is updating its car fleet
added that other investors are seeking to develop wind projects totaling 14,000 MW of installed capacity. Lohan said the challenge did not lie only in the capacity of the national grid operator to acquire and transport the energy, but also in the commercial area, as Romania is not a big consumer and the energy will have to be monetized. In order to keep up with the renewable industry, Transelectrica will need to invest around EUR 500 million in setting up 1,000 km of power lines, building 21 transformation units and acquiring units that regulate tension flows.
SERVICES Romanian Post posts profit, protests inclusion in list of top 10 debtors to the state budget The Romanian Post has ended the third quarter of the year in profit, the state company has announced. The firm reported a RON 472,000 profit (about EUR 108,000) at the end of the third quarter of 2011. During the third quarter of last year, the Romanian Post had losses of RON 21.6 million (nearly EUR 5 million). It appeared on a list drawn up by the National Agency of Fiscal Administration (ANAF) of the top 10 debtors to the state budget. The Romanian Post’s debts are more than RON 108.4 million (nearly EUR 24.9 million). The company has protested its inclusion in the list, claiming that the data made public by ANAF represented mostly the fine it was given by the Competition Council (which the Romanian Post is contesting), which amounted to RON 103 million (EUR 23.6 million). The Romanian Post is currently controlled by the Ministry of Communications, which owns 75 percent of the shares, and the Property Fund, with the other 25 percent. The Competition Council fined the institution for breaking competition rules by granting a discount for its services only to some firms with which it collaborates.
www.business-review.ro Business Review | November 14 - 20, 2011
4 NEWS AIRLINES
RETAIL
Air fares will soar if low-cost carriers are forced to move to Otopeni, warns Wizz Air
Lee Cooper signs license agreement with Kenvelo to return to local market
T
Bucharest is estimated to have increased by 40 percent this year from 2010, totaling 1.48 million passengers. Earlier this year, Wizz Air and the management of the airport in Timisoara – one of the airline’s local bases – became the subject of an investigation by the European Commission (EC) under the suspicion that certain airport tax rebates and discounts given by the authorities constituted illegal state aid for the Hungarian carrier. The scheme is suspected to have given Wizz Air an unfair economic advantage over its competitors. Varadi denied the allegations and said that the EC’s final decision is likely to take a year or more. Wizz Air operates from four airports in Romania: in Bucharest, Cluj-Napoca, Tirgu Mures and Timisoara. The low-cost carrier announced last week that it had bought a new aircraft, bringing its local fleet to six Airbus A320 airplanes, and was launching a new route to Verona in Italy. For 2011, Wizz Air has reported 2.76 million passengers, about 28 percent more than the previous year, and it has plans to boost the number by another 10 percent in 2012. At European level, the carrier transported approximately 11 million passengers from 15 operating bases in eight Central and East European countries. ∫ Simona Bazavan
Courtesy of Lee Cooper
he authorities’ decision to transfer low-cost flights from their present hub at Aurel Vlaicu International Airport (Baneasa) to Henri Coanda International Airport (Otopeni) will force budget carriers to increase air fares, warned Jozsef Varadi, CEO of Hungarian company Wizz Air. The increase will be generated by 40 percent higher airport taxes at Otopeni than at Baneasa. The switch is expected to take place sometime during 2012-2013, the Ministry of Transport has previously announced. “We will remain at Baneasa for as long as we can. However, we are committed enough to the Bucharest market that if, let’s say, the Baneasa airport is shut down for various reasons, we will not leave the capital and we will relocate to Otopeni,” said Varadi. He added that in this situation his company would have no alternative but to revise its capacity plan and increase ticket prices. The CEO went on to say that the measure will affect the entire airline industry and force some players to leave Bucharest and go elsewhere. Varadi described the airport taxes at Otopeni as excessive. “Otopeni is more expensive than Warsaw or Budapest, which is ridiculous as the market does not justify this difference,” he commented.Wizz Air’s passenger traffic in
Double denim: This is Lee Cooper’s second assault on the local market
A
lmost two years after LCR Jeans, the company that previously held the license for Lee Cooper stores locally, filed for insolvency, the British jeans manufacturer has signed a new partnership for the Romanian market, this time with the shareholders of Kenvelo. Eight new Lee Cooper stores have been opened so far this autumn, some of which occupy the premises previously used by LCR Jeans, and another ten should be opened next year. The target is to reach 30 shops by the end of 2013, said Phillippe Besadoux, CEO of Kenvelo Romania. The number is similar to the total units operated by LCR Jeans in 2008, prior to the financial crisis. The denim brand’s expansion will be supported by the existing Kenvelo logistics and management platform, said Besadoux, adding that the pace of expansion is sustainable as Lee Cooper is a popular brand in Romania and consumption will pick up.
The investment in opening such a store is around EUR 100,000 with the money coming solely from the firm’s own funds, said the CEO. He revealed that the company estimates a turnover of around EUR 4,000 per sqm next year for its units. Five of the existing Lee Cooper branches are located in Bucharest and the rest are in Constanta – two outlets – and Oradea. A ninth store will be opened in Craiova by yearend. Expansion will start from large cities and continue in smaller ones, said Besadoux, adding that the company is looking to be in all major shopping centers. “Shopping malls respect you more when you have three brands,” said Besadoux, adding that this makes negotiation with retail centers easier. In addition to getting the Lee Cooper license, Kenvelo shareholders have also signed a joint venture this autumn for the German Tom Tailor brand. Besadoux added that the company intends to use its existing platform and knowledge of the local market to bring new fashion brands to Romania. “We also have the big advantage of production in China,” he added. The local Kenvelo stores are expected to post a turnover of around EUR 25 million this year, similar to last year’s figure. However, the business returned to profit in 2011, after about 25 stores from the network were closed in the past couple of years, said Besadoux. At present there are 52 Kenvelo shops in Romania. While the company is constantly looking at expansion, the business approach continues to be cautious, said the CEO. “The crisis is not over and many will fall down again,” he predicted. Besadoux became CEO of Kenvelo Romania at the end of 2008 after previously working as CFO of the Kenvelo Group, which has operations mainly in Central and Eastern Europe. ∫ Simona Bazavan
TELECOM
Nokia’s Jucu assets seized by tax authorities
T
he National Agency of Fiscal Administration (ANAF) has seized Nokia’s assets in Jucu, Cluj, citing the Finnish company’s unpaid debts of USD 10 million, the president of the agency, Sorin Blejnar, told Mediafax newswire. “Following an inspection, it became clear that the company has unpaid debts from customs taxes worth USD 10 million,” said Blejnar. At the end of September, Nokia announced that it would slash its production in Romania and close down its Jucu factory by the end of the year. Upon making the announcement, Stephen Elop, president of the group, said the company was looking for potential investors to buy the plant. Nokia started production at Jucu at the beginning of 2008, having invested EUR 60 million in the plant. The company was producing feature phones, not top-of-the-range smartphones, in Romania, which is why it made the decision to close down the factory and move
production to Vietnam, where it will invest EUR 200 million in a new facility. Last week, Nokia and leaders of local trade unions signed an agreement establishing the compensation for the former employees of the facility. The package, called Bridge, includes three months’ salary for each worker plus an extra month’s earnings for every year of service, help with re-training and financial support for ex-employees who want to start their own business, said officials. The deal differs markedly from the compensation the Finnish mobile giant paid out when it decided to close down its plant in Bochum, Germany and switch production to Romania. Nokia paid its Bochum workers for the following 12 months, at a cost of over EUR 200 million, according to an article in German publication Der Spiegel. The compensation packages for the Jucu employees will be paid out from April. ∫ Otilia Haraga
www.business-review.ro Business Review | November 14 - 20, 2011
6 NEWS AIRLINES
CLUSTER BUILDING
Lufthansa introduces direct Romanian companies could Bucharest-Berlin flights turn to clusters in tough economic times
G
WHO’S NEWS
tional might decide to open a big factory in that area," said Kisch. However, in the case of Sibiu, the decision was a result of organic growth. "I cannot put my finger on a particular event or occasion that made us increase capacity to and from Sibiu; it is more the natural growth of the market which was very positive," Kisch told BR. Speaking at a press conference, the GM added, "2011 has been a successful year for us so far and we have seen a 20 percent growth in the number of passengers on flights to and from Romania. We predict a new record number of passengers by the end of this year.” According to Kisch, the top destination of Lufthansa’s Romania-based passengers is Germany. "In most cases, the number one destination of carriers is their home country. Of course, you also have another set of people who are continuing from Frankfurt and Munich to other destinations within Europe. And then there is a smaller selection of customers who are going all over the world, to places like North America or the Far East. But I assume that between 65 to 70 percent of people flying from Romania are going to destinations in Germany and Europe," Kisch told BR. "Only Lufthansa has over 100 flights a week in Romania. If we add to these the new flights to Berlin as well as Swissair and Austrian Airlines flights, we can say we are the largest airline group in Romania. I feel like a national carrier in this country," said the GM. ∫ Otilia Haraga
Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro
Catalin Gavrilescu
Yves D’Arfeuille has been appointed head of property management by DTZ Echinox. Frenchman D’Arfeuille has been living in Romania for over 10 years. He has extensive project and property management experience, working both on the
retailer’s side – for Carrefour, where he was general services manager – and for a retail developer – EMCT Romania, where he was involved in the development of several Cora and Baumax projects as well as in the development and management of Sun Plaza Bucharest. He holds a master’s in Management of Companies from the Clermont-Ferrand University in 2000.
Florin Danescu has been elected executive president of the Romanian Banking Association (ARB). His appointment is effective as of next month. Danescu has considerable experience in the Romanian banking system having held various management positions over the years, such as head of money market and foreign exchange, head of treasury, vice-president and also executive president.
Flying hopes: aircraft makers have taken the cluster route
R
omania currently has 25 clusters, but only 12 are active, said Christiana Leucuta, deputy director at the Ministry of Economy, Trade and Business Environment, at an event where tips on cluster building and success stories were shared by German representatives. The event was organized by the German-Romanian Chamber of Commerce and Industry. The cluster concept involves strong cooperation between big companies, SMEs and academic institutions which gather in a certain region, securing employment and allowing member companies to gain additional revenue, according to Radu Merica, president of the German-Romanian Chamber of Commerce. The Bavaria region in Germany currently hosts 19 clusters representing different industries. Martin Haunschild, general manager of bavAIRia, which manages two clusters with expertise in aviation, aerospace and satellite navigation, said that national governments can ensure funding for these clusters and allow tendering for projects from the European Commission. Otherwise, SMEs are in danger of going bankrupt before receiving EC payments. Haunschild stated that bavAIRia is an organization co-founded by the Bavarian state government which initially had 40 member organizations in 2006. Today, it has 168. The state played a crucial role in the development of the aerospace cluster, granting 90 percent financing which gradually decreased to 50 percent. At present, the financing for clusters in Romania comes from member companies and the industry as a whole, while some may be granted structural funds if they are connected to projects carried out by public authorities. Leucuta said that several applications had been made to the Romanian government for funds that could prop up clusters. However, no legal mechanism has been put into place yet. Firms that are currently involved in clusters include Dacia Renault and Premium Aerotec Romania. Leucuta predicts that 2012 will bring further clusters into creative indus-
tries, IT&C, automotive and agro-food. The Brasov area should become an industrial aviation center, according to Hans Prömm, one of the founders of Transylvania Aerospace Cluster, which was registered last week as an NGO. The cluster has already attracted members like Premium Aerotec, Eurocopter, Nuarb Aerospace, Aernnova, BWB and Cenit, along with a public institution and a university. At present, it has six founding member companies, but further firms will be attracted which should allow the building of a plane at some point. Prömm commented that clusters are currently funded from private sources but that national funds should be allocated to these projects. Where performance targets are not met, funding can cease from public sources, according to the businessman, who believes that Romania should follow the German model in financing clusters. Romania could select certain clusters to receive funding through a transparent process. Prömm is confident that clusters can boost employment and additional tax revenue to the state budget, along with improved overall infrastructure. Leucuta adds that clusters help attract FDI. ∫ Ovidiu Posirca
Courtesy of the Romanian- German Chamber of Commerce
has been promoted to operations manager at Xerox Developing Markets Operations (DMO), as of November. He will report to the head of presales, implementation and operations DMO and will be based in the Xerox Romania headquarters. Before taking on this new position, Gavrilescu worked as the company’s GDO operations manager, a role that now goes to Bogdan Toma (former GDO associate operations manager). Gavrilescu has been working for Xerox since 2002 when he joined as docucare specialist. He then moved up the hierarchy, becoming operations manager of Xerox Romania and the Republic of Moldova in 2008. He graduated from the Politehnica University in Bucharest in 2000 and has taken numerous specialization modules.
Agerpres
erman carrier Lufthansa will introduce four weekly flights between Bucharest and Berlin from June 2012. Services will include both business and economy class cabins. “Our most recent market analysis shows us that there is huge growth potential regarding the number of Romanian passengers on flights to Berlin, both for business and tourism purposes,” said Ofer Kisch, general manager of Lufthansa for Central and Eastern Europe. The introduction of these flights will be facilitated by the opening of the new Willy Brandt Berlin-Brandenburg Airport in June next year. "With the opening of the new airport in Berlin, we will have flights to Bucharest and, including German Wings (ed. note: Lufthansa's low-cost division), we will become the only company that has direct flights on this route. We chose Bucharest because we see a high traffic potential between the two cities," said Kisch. The Bucharest-Berlin flights will be made with Airbus 320 and 319 aircrafts that are no more than two years old. The airline will also operate a new tariff system, allowing passengers to combine a Lufthansa and a German Wings flight on the same return ticket. Lufthansa has also announced that it will double the frequency of its Sibiu-Munich flights to 14 per week, also from next summer. "Every six months, we check the performance of the routes, the demand in a specific region and the potential for special projects as well as changes on the market such as the fact that a multina-
Cristina Leucuta, deputy director at the Ministry of Economy
www.business-review.ro Business Review | November 14 - 20, 2011
8 MONEY
Local card market finds ace up its sleeve in crisis The economic crisis has in fact boosted the card payment industry and increased cards’ visibility among other banking products. With innovation leading the way, the industry is now at a crossroads, and is calibrating the way it will integrate new developments such as contactless technology, mobile phone payment and multi-retailer schemes into electronic payments. ∫ANDA SEBESI
Courtesy of Mastercard
it cards two years ago in order to write off inactive cards. “At the same time, banks used this period and segmented their portIn the midst of the financial turmoil, the Rofolios, launching different cards depending manian card market has developed well on the different needs of their customers,” this year and seems to be avoiding the worst says the representative of MasterCard Euof the impact. In addition, Romanians rope. have started to use their cards more, not Certainly one of the most important lesonly in their dealings with traditional resons that Romanians have learned during tailers but also on the internet. Many rethe crisis was to take more control of their tailers have realized the benefits of e-compersonal finances and to ask themselves merce and set up a virtual version of their what they really wanted from a specific fioffline stores. “Despite the current econancial product and how could it help nomic crisis, the local card market has them. “Romanians realized that a card been very active in 2011, both in terms of iscan be a very useful tool to plan the mansuing and acceptance and the value and agement of their budgets,” says Vladimiresvolume of transactions,” says Cosmin cu. Asked to what extent the current downVladimirescu, country manager for Roturn has affected the local card market, Cremania and the Republic of Moldova at tu of Visa Europe says that the crisis was to MasterCard Europe. He adds that financial some extent characterized by an iminstitutions have launched new card proprovement in the card industry's pergrams that have focused mainly on techPlastic fantastic: Romanians are becoming happier to use payment cards formance and greater visibility for the nological innovation and offering some faproduct among other banking instruments. cilities such as an extended grace period, HGEM region (High Growth European “Volumes have continued to increase even volume of purchases on credit cards inthe possibility to pay in installments, online on the credit card portfolio, which was Markets), Romania is mainly a debit card creased, which shows that banks mostly access, discounts to more retailers and strongly affected by the crisis, because market and one that has not reached its cancelled inactive cards,” adds Cretu. Accomplex insurance packages. Plus, acthe general public understood that cards ofgrowth potential. “By level of development cording to Central Bank data, quoted by the cording to Vladimirescu, the number of POS fer significant benefits that cash does not. we are slightly behind Serbia but we are country manager, the average value per reached 113,000 nationwide in the second The main players on the card market have ahead of Bulgaria and the Republic of transaction slid gradually, which shows an half of the year, compared with 107,100 in realized the very big potential of these Moldova. We rank alongside countries that increased tendency to use the card for 2010. banking products and have started to invest have a tradition in using cards: we have loydaily shopping, while the use of cards at re“Cards have proven to be the most retailers' outlets has also risen significantly. alty platforms and PayPass technology, more, to stimulate the use of cards, insilient banking products during the crisis. In cluding educational and information cameven cards with display. As for chip cards the last year, the number of valid cards in “The number and value of payment transwe are ahead of many Western countries. paigns,” says the country manager. Visa, actions by card have both increased by over circulation varied between 12.5 and 13 milalong with its member banks, has investBut we need to work to the level of dis20 percent each in the last year,” he says. lion, slightly decreasing because of the ed EUR 1 million over the past two years in semination of these technologies. For exAsked about the development of the lopoor evolution of credit cards. Demand for its communication strategy alone, and the ample, more points of acceptance of Paycal card market, the Visa country managnew debit cards stayed at a level that made firm plans to maintain the same level of inPass cards will allow users that have such up for the number of cards that had expired. er says that in many respects, local credit vestment in public education campaigns a card to fully benefit from its advantages and debit products are more sophisticated Therefore, the number of debit cards in ciraimed at boosting payments by card. than those in Central and Eastern Europe. – easier and quicker transactions,” adds culation has varied between 10.4 and 10.7 Vladimirescu. million units in the last two years,” says “It is our reluctance to use a card to make Specialists say that the current ecopurchases in store that puts us behind our Catalin Cretu, country manager Romania Romanians begin greeting nomic downturn has not hit the local card neighbors. But I believe we are catching up at Visa Europe. According to him, the credcards market hard compared with other fields of fast and the new technologies and innoit card portfolio dropped below 2 million The economic turbulence has brought activity that have felt its negative effects vative products we are introducing will supunits this year, for the first time in the last about a change in Romanians’ mentality more keenly. Subsequently, lenders deport the fast pace of our card industry,” he three years, down from a peak of 2.75 milwhen it comes to managing their financial cided to reevaluate their portfolios of credsays. Like many other countries from the lion in March 2009. “Nevertheless, the resources, and people have started to
www.business-review.ro Business Review | November 14 - 20, 2011
MONEY 9
Courtesy of Visa
Courtesy of Mastercard
Cosmin Vladimirescu, country manager for Romania and Moldova at MasterCard
Catalin Cretu, country manager Romania at Visa Europe
choose banking products only after indepth research into their benefits and risks. This has made products designed to meet some well determined needs the most popular. “A significant change is that Romanians have started to look for those cards than combine their role of making payments with new benefits,” says Vladimirescu. So customers prefer cards that have a loyalty program attached, offer discounts at retailers or payment by installments, extended period grace or new technologies attached, meant to ease transactions. “The crisis has repositioned the customer at the center of the business. We are talking about a customer who gets well informed, who has opinions and who shares them with other potential customers, who
appreciates and is willing to pay for the value of a product and who has a very large range of options. The total amount of money spent on cards has stagnated, but Romanians have increasingly moved away from withdrawing money from ATMs to paying by card directly at the merchant. Over 1 in 3 transactions with a card is now made at a merchant,” reveals Cretu of Visa.
Trump cards According to Vladimirescu, cards incorporating contactless technology have been popular with customers and a source of growth this year. For example, the number of contactless cards issued by BRD Groupe Societe Generale had exceeded 30,000 by September 1. “In addition, the number of
merchants that accept contactless cards has increased since the beginning of 2011, covering significant areas of the market not only in Bucharest but also in the rest of the country,” says Vladimirescu. BRD debuted the contactless concept on the local market at national level last year and has over 1,300 contactless acceptance points so far. The PayPass contactless card can be used in a range of popular outlets such as Carrefour, Inmedio, Pizza Hut, KFC, Mic.ro, Ikea, Metrorex, RATB and many other transportation companies across Romania. According to Cretu, credit and business cards have ranked as the most dynamic products on the cards market in terms of volume growth this year. “Also, I can certainly say that 2011 is dominated by the launch of contactless technology. The main effect of this is the fact that it gets people to use their cards daily for small payments, under RON 100. Interest in these products is high, although banks that have launched them have just started to promote them, and this means that Romanians are very interested in finding new ways to make their daily life easier and to save time,” says Cretu. Co-branded and affinity cards have also done well this year. “The main condition for affinity cards to have success is to target the public they address adeptly and to promote causes they strike a chord with. Meanwhile, co-branded ones need to offer attractive benefits such as discounts, bonuses and special offers,” says Vladimirescu. For example, Raiffeisen Bank completed its card portfolio by launching two co-branded debit cards in the first half of this year: one with FC Steaua and the other with the For SMURD
Foundation (Fundatia pentru SMURD), in support of the emergency services. “We will continue to launch co-branded cards in partnership with organizations from different fields – social, educational, sports, the environment, arts and culture – because we are a responsible bank with direct involvement in the community where we are active,” said Magda Sandulescu, director of the management of the passives division at Raiffeisen Bank, earlier this year. Last but not least, the premium cards segment has grown. “We had launches mainly in the debit card area because the market needed some premium debit cards. Financial institutions identified this need and took action. Through these instruments they address a segment of customers that had not been covered previously: high earners, interested only in the premium benefits and not by the credit line,” says Vladimirescu. For example, BCR’s Gold cards are four times as popular as its standard ones. “Customers who use a Gold card have greater expectations. That’s why we studied their shopping behavior carefully and offer them appropriate benefits: discounts in clothes and accessories stores and on travel insurance,” said Ahu Atay, executive director of the card division at BCR, earlier this year. The lender’s representatives also revealed that BCR intends to increase its volume of transactions at merchants by 20 percent. In order to achieve its goal, the bank launched in January a marketing campaign giving customers five times as many loyalty points as usual when they use their cards at a merchant.
anda.sebesi@business-review.ro
www.business-review.ro Business Review | November 14 - 20, 2011
10 FRENCH COUNTRY FOCUS
French investors remain en garde for local business opportunities No major French investor has left Romania in the past couple of years and there have even been newcomers like Axa Insurance and Leroy Merlin. This shows that firms from the Hexagon have built solid businesses here and are realistic about the potential of the Romanian economy, argued company representatives attending the third annual French Business Forum, organized by BR last week. Louis Coomans, managing director, client practice leader CEE&CIS with Marsh
∫ SIMONA BAZAVAN
14.4
billion euros is the combined turnover reported by French companies active in Romania last year
France has a long tradition of investing in Romania, added Roche. Large investors like Dacia-Renault, Michelin, Or-
“The particularity of the Romanian market is its openness to innovation and change” Saulo Spaolanse, general manager of Schneider Electric Romania All photos: Laurentiu Obae
Railway and road infrastructure, the automotive industry, energy and retail are but a few of the fields catching the eye of French companies prospecting the Romanian market, disclosed company representatives present at last week’s BR event. But even more important than stated intentions remains the fact that despite the difficulties faced by the local market in the past couple of years, French companies haven’t relocated their operations outside Romania and many have continued investing, said participants. Quoting a recent barometer of the economic and business environment in Romania put together by the French Romanian Chamber of Commerce (CCIFER), Bruno Roche, the chamber’s president and general manager of Apa Nova, said that overall French investors are optimistic about the future of their business here, although the socio-political climate raises concerns. Saulo Spaolanse, general manager of Schneider Electric Romania, added that his company sees growth opportunities and interesting long-term prospects locally. He told participants that demand for energy management services was on the rise as energy related expenses and consumption will grow further over the coming years and Romanian companies are looking into cutting costs and becoming more energy efficient. Benoit Valla, director of enterprise marketing at Vodafone Romania, was similarly optimistic, saying that he sees positive signs coming from his company’s contact with corporate customers. Philippe Garcia, economic counselor and director of the Ubifrance economic mission to Bucharest, stressed that the main economic indicators for Romania are pointing to recovery and that the local macroeconomic situation is good, especially in comparison with neighboring countries.
“We see good opportunities in Romania and interesting long-term perspectives”
French investors have not abandoned their plans for Romania, said panelists Bruno Roche, president of CCIFER and general manager of Apa Nova “We are in contact with companies that still see Romania as a land of perspectives” ange, BRD-Groupe Societe Generale, Auchan, Carrefour, GDF Suez, Veolia and Lafarge all have operations locally, but in addition to these more visible players is a large number of small and medium-sized companies that are mainly involved in exports, said participants. There are 3,461 companies with active status with more than a 10 percent French shareholding registered in Romania, said Karim Kheirat, country manager of ICAP Romania, and also the event’s moderator. Among them, 1,019 firms have no real activity. In 2010, French companies active in Romania had a combined EUR 14.4 billion turnover, marking an annual increase of 6.9 percent, and employed over 118,000 workers, one percent up on the previous year. Broadening the discussion to regional level, Edouard Millot, business development manager of Finexpert, commented that competition between Romania and other economies in the region like Poland and the Czech Republic will
Philippe Garcia, director of ME – Ubifrance “This is a time when the crisis is probably behind us and we are looking to growth ”
increasingly turn into a tax attractiveness contest. Especially in the current context, Romania will have to balance its desire to collect more funds for the state budget with the need to maintain and further create fiscal incentives for investors. Sharing his professional experience in the region, Louis Coomans, managing director, client practice leader CEE&CIS with Marsh, said he finds it easier to start a service-related business in Romania than in Poland as Romanians are more open to change and innovation. He added that in the insurance and risk management domains there is room for growth in the years to come. The third French Business Forum was organized last week at the Crowne Plaza hotel in Bucharest. The event, which gathered around 70 representatives, was organized in partnership with the CCIFER and sponsored by Carrefour, Vodafone, Marsh and Schneider Electric Romania.
simona.bazavan@business-review.ro
Benoit Valla, director of enterprise marketing with Vodafone Romania “Mobile lines penetration in Romania is similar to the European average both among the public and businesses” Karim Kheirat, country manager of ICAP Romania “Among the main competitive advantages in Romania are the employees’ language skills and IT specialists”
Edouard Millot, business development manager of Finexpert “In Romania you only need 14 days to register a company compared to 29 days in Poland”
www.business-review.ro Business Review | November 14 - 20, 2011
11
www.business-review.ro Business Review | November 14 - 20, 2011
12 INTERVIEW
Cosmetics market begins to look better Mircea Turdean, managing director of Farmec, talked to BR about the company’s plans to add Ukraine and Russia to its existing export destinations and this year’s investment strategy.
Courtesy of Farmec
∫ SIMONA BAZAVAN What have you changed in the company’s strategy since you took over? I became managing director of Farmec in 2010, following in the footsteps of my father, Liviu Turdean, who held the position for more than 40 years and who was a mentor and professional example for me. I have continued the strategy he began and later changes came naturally, determined by daily activity. As before, we will continue to focus on R&D in order to come up with new and innovative products. How has the Romanian cosmetics market evolved overall this year compared to 2010? According to a Euromonitor study, the local cosmetics and personal care products market will grow by approximately 3 percent this year. As for general trends, we have noticed lately at the level of the entire market that customers are turning more to natural products, with advanced formulas which at the same time have accessible prices. This is why products targeting medium income customers have an increasingly powerful presence globally. What has Farmec’s response been to the market decline in the past couple of years? We continued to launch new products. On the other hand we also had to adjust our business to the context of the Romanian economy. We reduced costs, including those related to investments, while productivity was increased. We took measures to protect the cash flow and focused more on developing and promoting our products. We have intensified communication on all channels, both traditional ones and social media, as the crisis has generated lower advertising costs. What is the company’s export strategy? In 2010 exports generated 10 percent of our turnover. At present we export to all continents, to countries in Europe, Asia and
CV Mircea Turdean 1994 Joins Farmec as technician, later becoming researcher and department manager 2003 Promoted to technical director, responsible for coordinating production, research and new investments 2010 Appointed managing director He graduated from the Chemical Technology Faculty in Cluj Napoca and the Open University Business School. North America. Some of our main markets are in Japan, Lebanon, the United Arab Emirates and European countries like Hungary, Spain, Italy and Greece. Our best-selling product ranges outside Romania are Gerovital H3 and Gerovital H3 Evolution, both anti-aging products, and also Gerovital Plant and AslaVital. Right now we are focusing on growing our business on the Hungarian market. We are developing promotion and communication campaigns and we have also signed partnerships with several chain stores. Next year we intend to expand to the Ukrainian and Russian markets. As our strategy focuses to a larger extent on the Romanian market, on the medium run we predict faster growth for our local business. What were the company’s investments and turnover this year? In the first semester Farmec saw a 16.9 percent turnover increase compared to the same period of last year, totaling RON 54.6 million. This year we target a 7 percent growth for our business. Our investment plan for 2011 included the acquisition of new equipment but also the opening of a new cleaning products production line in accordance with GMP standards.
simona.bazavan@business-review.ro
www.business-review.ro Business Review | November 14 - 20, 2011
CITY 13
FILM REVIEW
The Skin I Live In
Independenta Film
Skin deep: Pedro Almodóvar’s thriller elevates its preposterous plot
∫ DEBBIE STOWE Directed by: Pedro Almodóvar Starring: Antonio Banderas, Elena Anaya, Marisa Paredes, Jan Cornet, Roberto Álamo and Blanca Suárez On at: (in Spanish with Romanian subtitles) Cinema City Cotroceni, Cinema City Sun Plaza, Glendale Studio, Grand Cinema Digiplex Baneasa, Hollywood Multiplex, Noul cinematograf al regizorului roman - Studioul Horia Bernea, Studio, The Light Cinema Dense, dark and gripping, Spanish director Pedro Almodóvar’s new melodrama takes a demented B-movie plot and turns it into a classy psychological thriller with echoes of Hitchcock. The Skin I Live In’s most obvious allusion, though, is to Frankenstein. Antonio Banderas plays the archetypal mad scientist, although the crazy hair and wild eyes have been replaced with sharply tailored designer suits, slicked back hair and a steely gaze that barely covers the danger raging underneath. Robert Ledgard (played with understated menace by Banderas) is a top plastic surgeon. While admired by his peers for his brilliance, his extreme methods – he is using pig skin in a dubious process called transgenesis – and cavalier attitude to medical ethics have alienated him somewhat from the scientific community. As a result, the secretive Ledgard conducts most of his experiments at his elegant mansion in Toledo, Spain, where tasteful nudes on the wall and highbrow reading material exist above an operating theater in the basement. The house is also home to Vera, a mysterious woman kept – apparently contentedly – under lock and key, who is the doctor’s guinea pig in his quest to create perfect burn-proof synthetic skin, an ambition prompted by his late wife’s horrific disfigurement in a car accident.
But his spouse’s fate is not the only past heartbreak driving Ledgard. Using flashback, the film slowly reveals the deranged doctor’s family history and the series of macabre events that have led to Vera’s current confinement. Meanwhile the present ramifications of the Spanish Frankenstein’s mad mission threaten to implode as Vera becomes increasingly unstable and the surgeon’s peers’ suspicions grow. The Skin I Live In combines elements of thriller, drama, melodrama and horror, though the latter is expressed through slow burn rather than the usual sudden shocks – no mirrored medicine cabinets are closed to reveal a psychopath in the bathroom here. Instead, the full terror of the doctor’s endeavors is divulged steadily, by a confident director at the top of his game. This is so powerfully done that the denouement, which returns to more conventional thriller-drama territory, is a marked release of tension and almost feels like a different film. Ignoring the preposterousness of the plot – which the caliber of the movie makes it easy if not inevitable to do – Almodóvar’s creation is pure quality. The performances are all perfect – the brilliant Banderas’s controlled turn in particular makes it clear how wasted his talents have been in Hollywood action schlock. Extensive care has gone into the visuals, which are rich in texture and symbolism, while the score, from longterm Almodóvar collaborator Alberto Iglesias, complements the evocative settings. Audiences familiar with the director only through Volver are in for a shock, with that film’s warm celebration of womanhood replaced by a madman’s ruthless recreation of a female in his preferred image, a pronounced allusion to Hitchcock’s Vertigo. As such, The Skin I Live In often makes for uncomfortable viewing, but it presents a darkly beautiful, compelling nightmare.
debbie.stowe@business-review.ro
www.business-review.ro Business Review | November 14 - 20, 2011
14 CITY RESTAURANT REVIEW
Hello, hi, good morning, ciao, neata… Buongiorno, Pta. Victoriei 56 Lascar Catargiu Blvd. MICHAEL BARCLAY
ISSN No. 1453 - 729X
Photo: Laurentiu Obae
Let’s face it, if you are an English speaker, you would think twice about saying to a friend “let’s see each other in ‘Good Morning’”. It sounds daft. It is equally silly to a Romanian who says “hai, sa ne intalnim in ‘Neata’”. I have no doubt an Italian would feel equally uncomfortable asking to meet a friend in ‘Buongiorno’. To put it another way, the name is plain silly. But if this is a mistake, it is the only mistake the House has made, because dining there was one of the most pleasant surprises I have encountered all year. It is in a large graceful villa which over the last five years has seen several changes of ownership and at least four changes in its direction and persona as a restaurant. And this is because villa restaurant conversions do not work anymore. If proof be needed I defy you to find one thriving villa restaurant in town! No diners want a rabbit warren of dining rooms, upstairs, downstairs and around the corner. What they want is an open-plan restaurant, with the buzz and excitement of happy diners chatting and shouting away (no music required) in an area where you can see and easily meet up with your friends – and maybe even catch a picture of an early scandal with a couple who should not be seen out in public together. This is why only open-plan restaurants work, not only in Bucharest, but all over the world. The House has cleverly overcome the ‘villa problem’ by extending the dining area into a new permanently constructed open-plan area which was formerly its terrace and car park. It worked perfectly. Blondie and I arrived at lunchtime on an otherwise ‘dead’ Tuesday, to find the place packed. The clientele were basically 30-ish and well dressed. It was apparent that every one of them could afford a car, but as parking is almost impossible most of them would have been forced to choose an alternative form of transport, and yet it was still full. We were promptly seated and given a menu which boasted 200 dishes. I would normally be rightfully skeptical about such a claim, but given that this place is an upmarket pizzeria, for once I believe that 200 dishes are possible. For instance, if you take a basic pizza, all you have to do is add or omit one topping to describe two different pizzas on the menu. Hence it doesn’t take
Good day, sunshine: BR’s reviewer found a ray of light at Buongiorno, a rare example of a successful villa restaurant fresh rosemary, basil, thyme and oregano’. I thought it was a bit overpriced at RON 56, especially in comparison with the rest of the menu. But there was no fresh oregano, and this ruined the dish for me. A further look at the menu revealed a profusion of dishes here, there and everywhere all claiming to include oregano. It is an essential Italian herb, and if the House did not have it, they should cancel them! We were too full to sample their 17 pasta dishes, including; seafood, carbonara, pesto, Milanese, al Arrabiata – come on people, you know what they are so they merit no further description. They were fairly priced an average charge of RON 23. But for me, their crowning glory was their simple but effective desserts, all priced from RON 10-12. For chocoholics there was a first class choco fondu, choco cake and crepes with choco ice cream. Blondie passed on chocolate and ordered an excellent warm apple strudel with a superb vanilla ice cream in a sweet pastry bowl. It was worth every penny of a RON 10 dessert.
too much imagination to stretch this point into making 20-30 ‘different’ pizzas. Suffice it to say that all of the usual pizzas that you know so well are available. It is difficult to make a bad pizza, but in the face of this insurmountable obstacle, so many Bucharest restaurants have studied the questionable art of destroying a pizza – and they have succeeded. Buongiorno on the other hand, has got it right! To make a perfect pizza, all you need is flour, water, salt and a fraction of oil to make pizza dough which you spin out until it is razor thin. You then bake it in a smoky wood-fired oven with fresh toppings. It is so, so simple. So we ordered the House pizza of tomato sauce, mozzarella, chicken, chorizo, mushrooms and pepper. And the price: RON 16. Beat that! The average price of other pizzas rose to around RON 25, but still good value. But I want to move on from pizzas as this House has much more to offer. We passed on their two-course business lunch at RON 20, and went straight for their mains. I chose a ‘pork fillet in Marsala sauce’ at a reasonable RON 26. Marsala is a sweet, red, fortified Italian aperitif which
went out of fashion in the 1960s. Since then it has been used to sex up mushroom-based Italian sauces. With a perfect pork fillet, my sauce was generously laced with Marsala but the kitchen screwed up by adding flour as a thickener (correct) which appeared as hundreds of tiny white lumps in my brown sauce (incorrect). It is a simple mistake to make, but so few chefs know how to correct it. All you have to do is thin the sauce out with water, wine or stock and then furiously boil it, and all the lumps disappear! We also passed on their grill section which offered generously sized portions, all reasonably priced between RON 18-25. So there was chicken served every way, either as breast, legs, schnitzel, with chili or with Gorgonzola. Blondie chose ‘chicken Corsica’, chicken breast fried with mushrooms, garlic, tomato and peperoncino (sweet Tuscan peppers) at RON 24. This is so simple to make that there is not much I can say, other than it was fresh, tender and the dish honestly adhered to its description on the menu. I ordered a ‘sliced sirloin, fried with
michaelbarclay32@gmail.com
FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi, Michael Barclay ART DIRECTOR Alexandru Oriean PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu
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