Budapest Business Journal 21/03 by Business Publishing Services Kft.

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VOL. 21. NUMBER 03 FEB 08, 2013 – FEB 21, 2013

Budapest Business Journal

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BKV: Out of order? 1972

was the year that saw the first plans for a fourth metro line in Budapest. More than four decades later, the Metro 4 project is still in the making. But it is not the only plan of the transport authority to fall victim to politics. PAGES 8-9

NEWS

SPECIAL REPORT

SOCIALITE

EU deficit scrutiny lingers

Language under threat?

Hungarian designed takeover

Prime Minister Viktor Orbán came home from Brussels without the trophy he had hoped for, namely a promise that the European Commission would suspend an ongoing Excessive Deficit Procedure against Hungary. PAGE 03

Many European languages are unlikely to survive the digital age, a new study by Europe’s leading language technology experts warns. Will be Hungarian be one of them? What are the biggest challenges the language has to face? PAGE 18

Hungary has no shortage of designers, but so far only those hired by large firms have made it abroad. Now Showroom Budapest, a project to show off Hungarian design flair in the United States has put the limelight on a sector that is as yet untapped abroad: Hungarian fashion. PAGE 26

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Going full circle with the IMF

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The government has put an end to any speculation that it is genuinely interested in signing an agreement with the International Monetary Fund in fitting fashion: double-talk, going full circle in the process. Prime Minister Viktor Orbán said that the main reason the process had collapsed was because the IMF is unwilling to give Hungary the flexible credit instrument it asked for, one that is precautionary and entails no strict preconditions. However, looking back at the events of the past nearly year and a half, one will find that this piece of information is not new, since a Flexible Credit Line was never on the table to begin with. In fact, Economy Minister György Matolcsy publicly stated that Hungary would be seeking a Precautionary Credit Line—now replaced by the Precautionary and Liquidity Line, a framework that is indeed precautionary and comes with few strings attached. There was even more flexibility in government rhetoric when markets started collapsing last January, prompting renewed commitment to an IMF deal and readiness to submit to any terms presented.

In contrast, the latest communication from the IMF only reveals that its position hasn’t changed one iota over the past year or, indeed, essentially from the point when the whole process started. From the very first time the fund publicly discussed the specifics of an agreement with the Hungarian authorities, it clearly stated that none of its flexible frameworks could be considered an option. It was the Stand-By Arrangement then, and it’s the SBA now. While the fund said that the SBA can be handled on a precautionary basis – i.e. only calling on the funds if necessary – it was always clear that Hungary could only have obtained a similar package to that it was granted in 2008, one that entailed reforms and regular oversight. Orbán has never shied away from using the IMF as a boogeyman in his rhetoric, sometimes making claims about the negotiations that were quickly proven false, knowing full well that the fund seldom responds to political attacks. It will be interesting to see how the double-talk machine shifts gear should further domestic and international turmoil threaten the country’s economy in the future.

The language barrier Hungarians seem to have trouble mastering second languages, an issue that has featured prominently on all government agendas in the past years with the goal of somehow making positive changes in the education system. The success rate is deplorable, to the extent of putting Hungary dead last in a European Commission survey released last year in terms of familiarity with second languages among European Union countries. Despite the government’s declared priority of creating jobs and boosting employment, language education, which could go a long way to achieving that, suffered even more during the past year. The revision of the subsidy system means that, basically, the only affordable way to take classes is if companies pay for it, since courses are far from cheap. Adding an all-too-Hungarian flavor to the situation, it would seem that the money that is available in the form of grants is being spent questionably, with plenty of the avail-

able budget going to a handful of recipients only. This competitive disadvantage for Hungary is present not only in employment, but much earlier, in school. The recent changes to the tertiary education system often set incredibly high entry level score requirements for certain state-funded majors that make it impossible to gain admission without already having a language certificate. As the case shows, the secondary system hasn’t exactly excelled at making this a reality on a large scale. In the ailing global economy, where new developments are few and far between, and compounded by Hungary’s tarnished reputation as a destination for capital, states and governments must give the workforce any edge they can, something that clearly isn’t happening when it comes to teaching the public to speak a foreign language. The language barrier mustn’t be allowed to bar people from finding work they are otherwise fully qualified to do.

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Malév collapsed a year ago Bajnai: 2014-2020 will be hard

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EU deficit scrutiny still lingers Photo: Barna Burger/Prime Minister’s Office

Hungary still cannot be certain that central efforts to keep its budget gap in check will lead to the European Commission ending its scrutiny, as the EU and the IMF both have concerns about the feasibility of the government’s economic plans. BBJ GERGŐ RÁCZ

Prime Minister Viktor Orbán concluded a trip to Brussels at the end of January where he went with the principal intent of convincing the European Commission and its president José Manuel Barroso that all is sound in the Hungarian economy and that the country should no longer be subjected to investigation for its budget deficit. Hungary has been under a so-called excessive deficit procedure for having annual deficits larger than the 3% of gross domestic product margin the bloc demands since its accession in 2004. The country now faces losing sorely needed EU development funds as a penalty. “The issue for the future is whether there is any sense to upholding a threat – as the excessive deficit procedure is a threat against countries performing inadequately – that is no longer warranted by the state of the Hungarian economy,” Orbán said during his regular interview on public radio. “What we ask for is to receive the respect that Hungary deserves based on the performance of the past two, two and a half years,” he added. NOT SUSTAINABLE While Barroso told reporters that the Commission acknowledged Hungary’s efforts, it still sees the need for further and better measures to help keep the deficit under the 3% tolerance threshold in a sustainable way. In its latest projections the Commission accepted the government’s forecast of a deficit that is within the accepted bounds, but said that the gap would widen to above 3% in 2014, since the planned revenues aren’t sustainable. This of course weighs against the country’s chances of exiting the EDP. Brussels’ projections for the economy largely coincide with another report published by the International Monetary Fund, which reiterated

PRIME MINISTER VIKTOR ORBÁN AND EUROPEAN COMMISSION PRESIDENT JOSÉ MANUEL BARROSO POSE FOR PHOTOS IN BRUSSELS

its earlier observations about the need to identify sources of sustainable growth. The IMF expects that, absent any in-depth structural reforms, 2013 will see stagnation only at best after the recession of 2012. The fund actually projected worse results that the Commission in terms of the deficit, seeing the figure at 3.25% of GDP already in 2013 because of doubts related to the ability to collect newly launched taxes. As Hungary oriented its priorities over the course of last year by focusing more on the deficit (as expected by the European Commission), over growth (as favored by the IMF), Orbán’s reaction to the latest development came as no surprise. Just as the government wasn’t swayed by the IMF’s suggestions then, Orbán has also shrugged off the comments in relation to revenue doubts now. “Hungarians have reality as their biggest ally in this debate,” Orbán said, pointing out that the country has a convincing track record and though the future is unpredictable, it is equally unpredictable everywhere. CREDIT LINE TALKS OVER In the meantime, he essentially stated that Hungary’s credit line talks with the IMF are over, causing little to no surprise to observers. He reiterated what the government has previously voiced since it motioned the start of negotiations in late 2011, namely that Hungary only

wants one of the IMF’s flexible instruments, like the Precautionary and Liquidity Line. The government has always stressed that the economy is in a good shape – significantly better than investors perceive – and that it only needs an IMF package as a backstop if turmoil escalates on international financial markets. However, early on, the fund’s negotiator at the time Christoph Rosenberg issued a statement clearly stating the IMF would only negotiate a Stand-By Arrangement, which is a similar loan to the one Hungary received at the height of the Lehman Brothers crisis in 2008, and which has a stricter framework that entails meeting certain conditions and submitting to regular oversight.

Orbán stressed that the IMF wouldn’t give Hungary the framework his government wanted, which was the main reason why negotiations had not borne fruit thus far. “The talks are still under way but we come ever closer to that ‘no’,” Orbán said in Brussels. “Talks have gone on for a while now, we know everything there is to know about each other. I should add that not all knowledge is a source of joy,” he added. The premier maintained that Hungary would reject the IMF’s pro-bank agenda and keep special taxes on the fi nance sector in place. The IMF said in its latest report – as it had in earlier publications about Hungary – that the country’s banking industry is in bad shape because of the domestic environment within which it operates, and which the fund sees as the primary cause of muted lending and consequently little to no overall growth. “It took me a while to clearly understand, but it is evident now that the IMF is a bank, and what should we expect from a bank but to demand that the burdens on the finance sector be lowered,” Orbán said, adding that “in this matter, unfortunately, I see little chance of reaching an agreement with each other.” Orbán also hinted that it was a lack of willingness on the IMF’s behalf that resulted in the talks ending without results. “It [the getting of a flexible credit line] is not a question of eligibility but of will. They could have given it to us if they’d wanted to,” he said. The director of the IMF’s External Relations Department Gerry Rice said that the negotiating sides had only ever talked about an SBA that could be treated as precautionary; nothing else had ever been on the table. “As we have stated in recent weeks, these discussions have been put on hold,” Rice said at a regular IMF press briefing. Last November he had said that negotiations wouldn’t recommence until Hungary showed that it considered the EC and IMF as “valuable” partners. ■

PwC Hungary presents the introductory video message of CEO Nick Kós, who talks about teamwork, the operation of the company and things that employees are proud of.

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Budapest Business Journal | Feb 08 – Feb 21

bi-weekly

QUOTE OF THE WEEK

It’s not a matter of the level of the currency, but the stability of the currency. What we need here is a much improved business climate. We need confidence-building, trust-building measures.” ECONOMY MINISTER AND MASTERMIND OF HUNGARY’S ECONOMIC UNORTHODOXY, GYÖRGY MATOLCSY, IN AN INTERVIEW WITH WALL STREET JOURNAL. MATOLCSY’S POLICIES HAVE DRAMATICALLY ERODED THE TRUST AND CONFIDENCE OF INTERNATIONAL INVESTORS AND ECONOMIC PARTNERS OF HUNGARY IN THE PAST TWO YEARS.

NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.

One year passes after Malév’s ﬁnal landing

Photo: MTI / Zsolt Szigetváry

It has been a year since national carrier Malév collapsed under the weight of debts amassed over the years. The company’s passing caused a heavy blow to Hungarian air travel in general since Malév accounted for some 40% of the Budapest international airport’s annual passenger numbers. Despite repeated comments from the government about the necessity of a national airline, no notable progress has been made since. About 1,000 people gathered in Budapest to commemorate the anniversary.

ECONOMY NOVEMBER SURPLUS REVISED DOWN Hungary had a €659.5 mln trade surplus in November 2012, €44 mln down from the preliminary figure and up from €693.4 mln one year earlier, the Central Statistics Office (KSH) said. Rising exports from the new Daimler plant failed to offset the drop caused by Nokia’s transfer of production from Hungary to Asia, the figures suggest. November exports fell 2% in 12 months in euro terms to €7.296 bln. Imports dropped 1.7% to €6.637 bln. The drops were sharper in volume terms, with export volume dropping 4.3% and imports dropping 4.6% yr/ yr, reflecting that export prices rose 2.4% in euro terms and import prices were up 3.1% in the period.

“WORST-CASE SCENARIOS UNLIKELY” Worst-case scenarios are unlikely to materialize even after the new management of Hungary’s central bank takes over from the current governor and his deputies later this year, London-

based emerging markets analysts said. In a research note titled How Unorthodox Can The MNB Get?, released to investors in London, economists at Morgan Stanley said their worst-case scenario is one whereby the government seeks somehow to appropriate FX reserves and use them for external debt repayments. However, “this is mostly a hypothetical and we think rather remote risk”. The government’s standard modus operandi has been to issue HUF paper and swap it for FX at the MNB, and the debt management agency already sits on substantial cash reserves, plus some shares in MOL.

GOV’T TO USE 60% OF EU FUNDING FOR DEVELOPMENT The government plans to use 60% of Hungary’s 2014-2020 European Union funding for economic development in order to promote growth, National Economy Ministry State Secretary Zoltán Cséfalvay said. Cséfalvay noted that Hungary has used only 16% of the country’s EU funding for the budgetary period ending at the end of 2013 for economic development.

FOOD-INDUSTRY PURCHASES 70% OF AGRI-PRODUCTION

GRABOPLAST SEES PRODUCTION STARTING IN EARLY 2014

Hungary’s food industry purchases 70% of the HUF 1.8 tln in annual domestic agricultural-production, Rural Development Minister Sándor Fazekas said. He added that Hungary’s food industry produces HUF 2.3 tln in goods annually.

Hungarian f looring maker Graboplast could start production at a HUF 5.6 bln plant it plans to build in Tatabánya (northwest Hungary) in the spring of 2014, chairman-CEO Peter Jancsó told MTI. Graboplast has applied for a European Union grant to cover one-third of the cost of the investment but is still looking for ways to finance the rest, Jancsó said. He added that the state could contribute to the investment and acquire a minority stake in the company. Construction of the 4,500 sqm plant could start in the second half of 2013.

BUSINESS OUTGOING HUNGARIAN CENTRAL BANK CHIEF TO GET JOB AT ERSTE Hungary’s outgoing central bank Governor András Simor will take a leading post at Erste Bank Hungary after his mandate expires on March 3, business portal Portfolio reported citing local daily Magyar Nemzet. The paper’s online version recalled that Simor was the founderCEO of Creditanstalt after 1989. Simor then managed Deloitte’s Hungarian unit, from which position he was appointed by then Socialist Prime Minister Ferenc Gyurcsány to head the central bank, Portfolio wrote.

TROUBLED E-STAR FAILS TO REACH AGREEMENT WITH CREDITORS Creditors of energy services company E-Start Alternative rejected the company’s proposals at negotiations in the framework of a bankruptcy procedure, CEO Csaba Soós said on the website of the Budapest Stock Exchange. The creditors would not extend E-Star’s payment deadline by 120 days, Soós said. In late January, the company said it aimed to settle its debts with

creditors during a 15-year reorganization program. E-Star said it would ensure about HUF 9.3 bln for the purpose and use its entire stock of cash. The company, which has been under bankruptcy protection since last December, said it wanted to convince its bondholders, lenders and suppliers to amend payment deadlines and help the company implement its reorganization program.

MVM PARTNER TO SUPPLY POWER TO TROUBLED MAL MVM Partner, a unit of the state-owned Hungarian Electricity Works (MVM), decided to supply troubled alumina maker MAL with power from February 1, the National Development Ministry said. “In the interest of the national economy and the protection of the environment, the government will ensure MAL continuous supply of electricity by means of MVM Partner,” the ministry said. “The sides will continue negotiations on financial guarantees offered [by MAL] as well as on maintaining its ability to operate,” it added.

ALTEO ANNOUNCES PLAN TO BUY WIND TURBINE Hungarian energy supplier and trader Alteo said it plans to buy a 1.5MW wind turbine, without disclosing any further details. Last spring, Alteo bought three wind turbines with a combined capacity of 5.8MW from Raiffeisen Energiaszolgáltató for about HUF 3 bln. Alteo said at the time that it could make further acquisitions.

SWIETELSKY-WHB CONSORTIUM SIGNS HUF 9 BLN CONTRACT A consortium of Austriabased Swietelsky and Hungarian-owned WHB signed a contract worth almost HUF 9 bln net, on the reconstruction of a landmark bazaar at the foot of Castle Hill in Budapest. The contract was signed with Várgondoksag Nonprofit and the District I local council. In addition to renovating the bazaar, Swietelsky-WHB will build an underground garage at the site, a tram stop and an escalator to take people up to Buda Castle. The project could be completed by the spring of 2014.

SZENTKIRÁLYI TO EXPORT MINERAL WATER TO SAUDI ARABIA

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INSULATION MAKER NIKECELL TO MERGE WITH BACHL Hungarian insulation maker Nikecell will merge with peer Bachl, which acquired it last year, to create a business that controls 40% of the domestic market, Bachl managing director András Varga said at a press conference. The merged businesses will operate under the Bachl name, Varga said. The merger is scheduled to be completed in May, and Bachl expects revenue to reach HUF 6.8 bln this year.

IKEA HUNGARY SALES EDGE UP TO HUF 34.2 BLN IN 2011/12 Sales at Swedish home furnishings company IKEA in Hungary edged up 1% to HUF 34.2 bln in the business year ended August 31, IKEA regional director Marek Feltl said at a press conference in Budapest. IKEA stores in Hungary drew 4.6 million visitors during the period, though the number who purchased fell 2% to 2.5 million. The company’s profit margin in Hungary was 2% in the 2011/12 business year, Feltl said.

SZÉCHENYI CAPITAL FUND MANAGER TO INVEST HUF 4 BLN IN SMES Széchenyi Capital Fund Manager (SzTA) wants to invest more than HUF 4 bln in Hungarian SMEs in the coming 12 months, chairman-CEO Imre Csuhaj said at a press conference. Hungarian companies were

awarded about HUF 1 bln from the Széchenyi Capital Investment Fund in 2012, Csuhaj added. The fund started operating in June 2011 as a 100% state-owned company with ownership rights exercised by the National Development Agency to decide on investment of about HUF 14 bln from EU resources.

DOMESTIC FIRST FINAL SENTENCE IN HUNGARY FOR HOLOCAUST DENIAL The first sentence meted out for Holocaust denial in Hungary has become final, business weekly HVG said, as cited by news website Politics.hu. The 42-year old culprit attended a demonstration on October 23, 2011 and held up a banner with the Hebrew-language inscrip-

SPAR MAGYARORSZÁG MANAGING DIRECTOR ERWIN SCHMUCK AND RURAL DEVELOPMENT MINISTER SÁNDOR FAZEKAS

SPAR TO INVEST HUF 11.5 BLN IN HUNGARY THIS YEAR Retailer Spar plans to invest HUF 11.5 bln in its business in Hungary this year, creating more than 160 new jobs, it was announced during a visit by farm minister Sándor Fazekas to the group’s meat processing plant in Bicske, near Budapest. Spar has about 400 supermarkets in Hungary, which generate some HUF 400 bln in annual turnover. The group employs more than 11,000 people in the country. Spar’s plant in Bicske processes 300,000 hogs and 2,000 cattle a year. About 64% of the livestock already comes from Hungarian farms, and Spar aims to raise the proportion to 90% by 2015.

RURAL DEVELOPMENT MINISTER SÁNDOR FAZEKAS VISITS SAUSAGE MAKER

Photo: MTI / Balázs Mohai

tion “The Holocaust did not happen”. The man is obliged to visit the Holocaust Memorial Center in Budapest’s Páva utca at least three times and sum up his ideas on the basis of what he sees there. Alternatively, he may visit the Auschwitz memorial site or Yad Vashem in Jerusalem for the same purpose. He was also banned from attending demonstrations and other political events.

WITH MALÉV BANKRUPT, AIRPORT PASSENGER NUMBERS FALL

LOCAL COUNCIL EXPECTS TO MAKE SAUSAGE-MAKING BUSINESS PROFITABLE Gyulahús, a company established to take over the assets of troubled sausage maker Gyulai Húskombinát, targets profit of HUF 43 mln on revenues of HUF 5.26 bln this year, Gyula mayor Ernő Görgényi said. Speaking after a local council meeting decided to raise Gyulahús’ capital by HUF 700 mln, Görgényi said the company would employ 282 people initially. The municipal council of Gyula (southeast Hungary) established Gyulahús in January and lent it HUF 200 mln to buy raw materials. Contracts on leasing the assets of Gyulai Húskombinát were signed with the company’s liquidator on Wednesday. Gyulahús started production on February 4.

Passenger numbers at Budapest Liszt Ferenc International Airport fell 4.7% to 8,504,020 in 2012 – a year that started with the grounding of troubled national carrier Malév – airport operator Budapest Airport said. The number of departures and arrivals at the airport plunged more than 20% to 87,560, a level

last seen ten years ago, the operator said. Passenger turnover at the airport has not fallen since the global financial and economic crisis. Numbers were up 8.9% in 2011 and 11.7% in 2012, according to data from the Central Statistics Office

ZOLTÁN BALOG NEGOTIATES WITH ART UNIVERSITY RECTORS Minister of Human Resources Zoltán Balog has held talks on financing and development with members of the Art Universities Rectors Chair (MERSz). The Minister of Human Resources emphasized that the teaching of applied and fine arts, theater and film, dance and music is not just a question of education, but it is also an important cultural activity. The special features may be different: education does not begin at the same age, but teaching is always elite and

conducted in small groups, and so cannot be compared to mass education.

EST MÉDIA SUSPENDS BUDAPEST PROGRAM GUIDE EXIT Est Média said it is suspending publication of EXIT Magazin, a program guide distributed free of charge in Budapest, because of the contracting advertising market. Est Média will continue to publish and develop further its flagship Pesti Est program guide, which is available – also free of charge – in print, online and mobile formats. Est Média will reposition EXIT during the suspension of its publication and could re-launch the guide on several platforms depending on the local advertising market. The company wants to launch EXIT this year in Romania. Est Média is listed on the Budapest Stock Exchange. ■

Photo: MTI / László Beliczay

Hungarian mineral water bottler Szentkirályi has signed a cooperation agreement with a Saudi partner on exports to the Middle East. Tamás Tóth, in charge of export sales at Szentkirályi, said the bottler would make its first shipment of about 134,000 liters to Saudi Arabia in March. Hopefully, more deliveries will follow, he added.

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HUNGARY BUYS E.ON GAS BUSINESS FOR WELL UNDER MAX PRICE, PM SAYS Hungary has purchased the local gas units of German utility E.ON, for well under the maximum price decided by the government, Prime Minister Viktor Orbán said on public radio on February 1. Orbán said all agreements on the transaction had been reached and only technical details remain to be worked out. Orbán and ChairmanCEO of E.ON Johannes Teyssen signed a declaration of intent in November on the transfer of E.ON’s gas business to Hungarian Electricity Works (MVM). The acquisition includes four gas storage facilities as well as Hungary’s contract for gas deliveries from Russia, Orbán said on Kossuth Rádió’s 180 Perc program. Orbán said reports that put the purchase price of the gas business around €800 mln ($1.1 bln) were “not unrealistic”. According to the website of daily Népszabadság, the Hungarian National

regional LATVIA CLEARS PATH TO APPLY FOR 2014 EURO ADOPTION Latvian lawmakers passed legislation that allows the Baltic country to apply for euroregion membership next year. The legislature voted 52-40 on January 31 to pass the euroadoption law in its second and final reading, media reported. Latvia, which exited a €7.5 bln ($10.2 bln) bailout last year, is vying to follow neighboring Estonia by becoming the 18th euro-area member in 2014 and meets all of the European Union’s criteria to join, Prime Minister Valdis Dombrovskis told Parliament before the vote. The government will submit its application to adopt the euro in February or March, he said last week in an interview. GREY ECONOMY IN BULGARIA SHRINKING The share of the grey economy in Bulgaria is shrinking but the pace is unsatisfactory, local media reported citing a survey by the Center for the Study of Democracy (CSD). Bulgaria is one of 24 countries, out of a total of 59, where the share of the grey economy has contracted, but it still sits at the bottom of the competitiveness ranking,

Asset Management Company (MNV) authorized MVM to purchase E.ON’s gas storage and wholesale company for a maximum €875 mln. CZECH PXE TO CREATE NATURAL GAS MARKET Czech-based Power Exchange Central Europe (PXE) said it would launch a spot market for trading natural gas this year in cooperation with Austria’s Central European Gas Hub. The move is part of central Europe’s efforts to create borderless energy markets that are in line with European Union directives for a common market and enhanced energy security. PXE – a trading platform for electricity deliveries in Czech Republic, Hungary and Slovakia that is owned by the Vienna Stock Exchange AGcontrolled CEE Stock Exchange Group – would offer gas derivatives with delivery on Czech gas market. PXE said it is setting up the electronic trading platform using the same system it uses to trade electricity derivatives.

The company hasn’t yet set a date for the launch. GAZPROM TO LOWER GAS PRICES FOR SOME EUROPEAN COUNTRIES Russian gas giant Gazprom intends to lower the price of natural gas in some European countries, Bulgarian and Bosnian electronic media reported citing a report by daily Izvestija. The Russian publication forecasts “more moderate” Gazprom prices for 2013 over decreasing demand and the European Commission’s probe of violations of anti-cartel laws committed by the Russian company. As reported, Gazprom will attempt to increase volumes sold by offering prices in the vicinity of $360 per 1,000 cubic meters in 2013, meaning a 14% price drop, and 8% increase of sales. The average price for Europe in the first six months of 2012 was $413/tcm, while Macedonia paid the highest price of $564, followed by Poland with $526, Bosnia $515, Czech Republic $503 and Bulgaria $501. The price of Russian gas

for the UK was cheapest at $313/tcm. Gazprom may lower the price of gas for Poland by 27%, for Czech Republic by 26%, in Bosnia by 21% and in Serbia by 12%, the Sarajevo Times wrote.

four parallel lines are set up. Gazprom South Stream partners French EDF, Germany’s Wintershall and Italian group ENI, will pay half the costs, but not including the Russian domestic upgrade.

GAZPROM SEES SOUTH STREAM COSTING $39 BLN Russian giant Gazprom said it will have to spend RUB 510 bln ($16.9 bln) on upgrading its domestic gas pipeline system for the planned South Stream undersea link to Europe, increasing the project’s costs. The overall cost for South Stream, which will go under the Black Sea, is now seen at €29 bln ($39 bln). Russia’s gas export monopoly had previously estimated costs at €16 bln. Construction of South Stream, with an offshore section stretching 900 kilometers, began on December 7. The official launch of gas flows is scheduled for late 2015 at an annual pace of 15.75 billion cubic meters, with full capacity of 63 bcm set to be reached in 2018 when all

POWER EXCHANGE PRICES ON HUPX FALL 25% AFTER COUPLING Electricity prices on the Hungarian Power Exchange (HUPX) have dropped more than 25% since markets in Hungary were coupled with those in Czech Republic and Slovakia last September, business daily Napi Gazdaság said on January 28. Electricity sold for an average unit price of €45.65 between September 12, when the markets were connected, and the end of the year, HUPX told the paper. About 13.7 terawatts per hour were exchanged on the power bourse last year, more than one-third of the total amount consumed in Hungary. HUPX turnover adds up to a combined 19.2TWh since the exchange was launched in the summer of 2010.

BULGARIA SET TO ABANDON NEW NUCLEAR PLANT Bulgaria’s government will use its majority in parliament to enforce its decision not to build a new nuclear power plant, despite citizens backing its construction in a referendum just months before a national election. Although 60.6% of those who voted supported building the plant at Belene on the Danube, hoping it would create jobs and cut power bills, official data showed turnout on January 27 was 20.2% – too low to make it binding. But because turnout scraped over the 20% threshold, and more than half of those voted in favor, the issue has to return to Parliament for a final decision. The Cabinet last March cancelled the €10 bln ($13.5 bln) project to build a 2,000MW nuclear power plant at Belene with Russia’s Rosatom Corp, after failing to agree on costs. The Socialists collected about 770,000 signatures under a proposal to hold a referendum on whether to continue with construction of the plant. ■

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the study said. The survey indicates a substantial reduction in the number of people working without employment contracts over the past 10 years from a level of 6% in 2003 to 3% in 2012. The labor relations of people with a second job also became increasingly legal. In 2003, a total of 77.44% of those earning extra income failed to report it, while in 2012 the share was 29%. SLOVAK BANKING SECTOR PROFITS FALL 27% ON BANK TAX Banks operating in Slovakia posted a 27% drop in profits in 2012 as net interest revenue fell and costs were boosted by a special bank levy. Net income fell to €488 mln ($662 mln) from €669 mln in 2011, according to data released on January 31 by the central bank in Bratislava. Total assets of Slovak banks grew 3.8% to €57.9 bln. The levy on client deposits, in place since last January, reduced profits by €170 mln, according to the Slovak Banking Association. Net interest income fell 3% to €1.76 bln, the first drop ever, the association said. Slovakia, a euro-area member since 2009, is relying on tax increases, including

How would you compare the current democratic system to the former Communist regime? (%)

special levies for selected industries, to cut the fiscal deficit at a time when the slowing economy is reducing budget revenues and demand for bank loans. BRITISH GOV’T MULLS WAYS TO CURB IMMIGRATION Britain said on January 28 it was looking at ways of curbing immigration before the European Union eases work and travel rules for Romanian and Bulgarian citizens by the end of this year. The lift ing of the restrictions has triggered warnings of “hordes” of immigrants and a “flood” of new arrivals in Britain’s right-leaning media, Reuters wrote. That piles pressure on the Conservative Party ahead of polls in 2015, in which the increasingly popular UK Independence Party – which has pledged to end “mass, uncontrolled immigration” – could split the rightist vote. Immigration is a sensitive issue in Britain, where many Eastern Europeans, including Czechs, Hungarians and Poles, have come to work following their countries’ accession to the EU.

FEWER CZECHS THINK CURRENT SYSTEM BETTER THAN COMMUNISM According to a new survey by the STEM polling agency, 46% of Czechs (down from 53% a year ago) say the current democratic system is better than the former communist regime in Czechoslovakia before 1989. One-third surveyed said the opposite was true, while 22% said the two systems measured up almost the same. More than 1,100 people over the age of 18 took part in the survey which was conducted from January 4-11.

EX-PREMIER ZEMAN WINS CZECH PRESIDENTIAL VOTE Former Prime Minister Milos Zeman was elected Czech President in the country’s first direct vote following a campaign slamming the government’s austerity measures in the midst of a recession. Zeman got 54.8% of votes after two days of balloting in a runoff that ended January 26, the Czech Statistics Office said. He defeated Karel Schwarzenberg, the millionaire prince and foreign minister, who promoted closer ties with the European Union following a decade under Vaclav Klaus, a critic of the

bloc and the euro. Klaus’ second term will end on March 6. Zeman becomes the country’s third president since it became an independent state 20 years ago. Unlike Klaus, who refused to fly the EU flag above his Prague castle seat, Zeman envisages the transition of the EU into a federation with common foreign and defense policies, and supports the future adoption of the euro. BRIBERY IN POLAND DROPS, BUT SUMS ARE LARGER Police data indicates that instances of bribery in Poland have dropped by 11.4% since

2011, but that much bigger sums are now changing hands, Radio Poland reported, citing data from the National Police Headquarters (KGP). According to statistics, 10,805 cases of bribery were confirmed in 2012, almost 1,400 less than in 2011. However, as regards the cases that came to light, the overall quantity of money that changed hands in 2012 was PLN 15.63 mln (€3.7 mln), compared to PLN 6.39 mln in 2011. Police noted that the vast majority of bribes take place in the sphere of healthcare, and across the web of officialdom of public offices throughout the country. ■

1 News 07

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Budapest Business Journal | Feb 08 – Feb 21

Bajnai: 2014-2020 will be hard BBJ KRISZTIÁN KUMMER

“Since Gordon Bajnai’s landmark speech on the national holiday of October 23, 2012, everyone has been awaiting with an almost exaggerated impatience to hear what the former Prime Minister has to say to his potential electors and also to prominent players in Hungary’s economy. So it was not too much of a surprise that the grand ballroom of the Budapest Marriott Hotel was filled to near capacity when Bajnai spoke to guests of AmCham and a swarm of media representatives. “It is clear by now, that the recent crisis is not a crisis of capitalism, but one crisis in the history of capitalism. However, its consequences are not to be underestimated, as it brought sig-

nificant changes,” Bajnai speaking in Hungarian, started his speech. He pointed out changes in the relationship of the state, citizens and companies everywhere. This crisis was mainly the making of the state, which couldn’t adapt to the fast changing economic and social challenges, he added. Since Fidesz had overwhelmingly won the general election of 2010, Hungarian economy policy had demolished the competitiveness and growth potential of the country, Bajnai said. Potential growth is drifting further away from the European average. That would cause a generation of lagging behind, he added. Bajnai expressed his deepest fear, that Hungary ever more seriously lags behind its possibilities. “These years will decide if Hungary shifts from the center to the periphery, from convergence to drifting away,” he said. The economic difficulties of Hungary are due to the global crisis to a lesser extent, but for the most part are caused by “bad governance”, he said, which has been on-going since around the year 2000 and has three main causes. First of all, the rules of keeping power contradict to rules of economic rationality. Next came a lack of professionalism. And last but not least, a small but powerful group of oligarchs influence the government so much, that it affects

Photo: MTI / Lajos Soós

The economic difficulties of Hungary are due to the global crisis only to a lesser extent; for the most part they are caused by “bad governance” former Prime Minister Gordon Bajnai told an AmCham business forum on January 29, 2013.

most significantly the operation of the Hungarian governance. From now on economic growth will be much slower than what Europe had been used to previously, said the former prime minister. While the core countries are going off one direction together, peripheral countries are trying to keep the pace on their own courses. It is highly likely, that the future of Europe will see a two-speed development. “I’d like to think that the second speed is not reverse,” he joked. According to the usual script of a Bajnai speech, resembling more a macroeconomic analysis than a political statement, the former prime minister shared his thoughts about the current and future state of Hungary. The level of investment has fallen to that of the early ’90s and cannot even keep up with amortization, he said. The country has fallen back ten places on the global list of competitiveness. Despite efforts to decrease public debt, its level is still around 80% and an annual HUF 130 billion surplus has to be paid

to finance the government’s so called “guerilla war” against international markets. In doing so, the debt has shifted on to an unmanageable trajectory. Due to sectoral taxes and bad employment policies, 50,000 workplaces have been lost. The flat income tax had caused a tax increase for two-thirds of the working population, he added. Bajnai also outlined the four most important tasks a new government has to accomplish after next year’s election: recovering trust from society and the economy; supporting new investments, increasing the rate of employment and reorganizing the Hungarian education. “The 2014-2020 period will be really difficult for the country. Hungary has to climb, but at least we will go up. The country didn’t change fundamentally in the last years, it’s still the same hard working and innovative country it used to be. The country is cursed by bad governance, but it is easy to change,” he concluded. ■

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Retail chains soldier on amid harsh conditions Manager sentiment index returns to positive territory

10-11 13

Enterprise

BKV: out of order? As the New Year arrived, the Budapest Transport Company (BKV) and the Budapest Transport Authority (BKK) made ‘new’ promises. In fact some of these plans aren’t new at all, but actually several years old and still in preparatory phase due to a lack of funds, political infighting or simple bureaucracy.

1972

The first plans for Metro 4 designating its route from south Buda to Rákospalota

BBJ KRISZTIÁN KUMMER

The New Year brought elevated ticket prices but also some promising transportation projects around the city. A fair number of these ‘new’ projects are, however, already several years old and we’re not only talking about the continuously delayed opening date of Metro 4. DELAYED PROJECTS From projects co-financed by the EU, the reconstruction of the two priority circular tramlines, numbers 1 and 3, might finally start this year. The conditional tense here is absolutely legitimate as construction should have been started last summer, however, the procurement details have still not been published. The reconstruction aims at reducing environmental impact, increasing speed of travel and accessibility to stations. According to the communications department of BKK, the prepara-

1992

Decision made on the construction of Metro 4 from Etele tér to Keleti pályaudvar

1997

tory work will begin this year on the extension of tramline 1 through Rákóczi (Lágymányosi) bridge to Fehérvári út. But the Budai Fonódó Villamoshálózat project to merge tramlines is still in the planning phase thanks to disputes with district 2, despite the fact that it should already be underway, says Lajos Dorner, president of the Urban and Suburban Transport Association (VEKE). The socalled FUTÁR (traffic control and passenger information) project was supposed to be ready by last March, yet is still very far from being finished. Not directly related to public transport, the expansion of the M0 circular highway to a three-lane motorway in each direction is undergoing an at least one and a half year delay. Major projects in the capital are similarly behind schedule, due to bureaucracy, legal zigzags and, frankly, incompetence at every level of the process. It seems that once proj-

Decision on financing: the ECU 514 mln budget is to be financed by the capital and government on 40-60% basis

1998

ects have slipped, they will be timed to the elections next year, VEKE said. We tried to reach BKK to comment on VEKE’s statements, but we haven’t received their answer until deadline. PRE-OWNED NEW VEHICLES The aging transport vehicle f leet requires major acquisitions as well. BKK announced the withdrawal of the more than outworn Soviet-era ZIU trolleybuses from January 1 and promised the arrival of more modern, MAN articulated vehicles, which are more environmentally- and passenger friendly (low f loor), with a 2% increase in overall passenger seats. But VEKE says the promised improvements have not materialized, at least yet, and that BKV has been using articulated trolley, and in some cases conventional articulated buses, fewer in number and not low f loor. More new trolleys are promised to come, how-

The government withdraws all previous decisions on state’s assistance. However, preparatory works continue

1999

The Municipal Assembly sues the Government for not supporting Metro4

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Budapest Business Journal | Feb 08 – Feb 21

ever, the public procurement procedure hasn’t been published yet, so no new vehicles will arrive this year. So what about the buses rolling on the streets of Budapest? It is not unusual to find yourself following a decades-old vehicle on wobbling wheels rattling through the capital’s streets. Since its establishment, BKK has tried to alleviate the crisis and increase comfort for passengers by buying around 100 used, low f loor vehicles. Also, according to a tender announced by BKK last year, won by VTTransman, 150 buses will be introduced in May in an attempt to improve the quality of Budapest bus services, which have degraded quickly in recent years. But the future seems slightly cloudy from the point of view of the transport association. VEKE wants Dávid Vitézy, CEO of BKK to explain why he is now so attached to buying used buses, which some years ago he had derided as “worn, scrapped vehicles in bad technical condition”. (A piquant little detail: Vitézy was the spokesman of VEKE before becoming CEO of the transport authority.) Some of the recently ordered secondhand Volvo buses brought from Geneva have already been seen on the streets replacing missing trams, but have suffered a lot of technical problems. And four years of standing idle outdoors has hardly improved their condition, so it seems very likely that several million forints will need to be spent on each vehicle before they can enter service. However, there is not much room left for BKK to maneuver. Resources are already sparse and the government keeps withdrawing money from the transport sector. Only this year public transport loses HUF 32 billion in funding under to government’s Széll Kálmán development plan ( 20% of the annual budget). HÉV In the first days of the New Year, Budapest Mayor István Tarlós dropped a bombshell by suggesting that the popular if antiquated HÉV suburban railway lines should be re-assigned to the MÁV Hungarian railway company. But Dorner is sure that this idea was only floated as a communication

2001

Setting aside the financing agreement by the government was illegal, the Supreme Court says. However, the government is not obliged to put in further financing

trick of the mayor, as neither MÁV nor the transport ministry have ever asked for anything like this. “The profitable bus services of the capital have been taken from him so Tarlós wanted get free from the losses of HÉV as well. But even if the suburban railway traffic is very heavy, keeping the lines alive needs hundreds of billions of forints and nobody wants to take on this burden.” METRO 4 No doubt, Metro 4 is the heaviest burden the capital has taken on since the collapse of communism in 1990. Originally slated for completion in 2010, the grand opening for the line’s first section, from Kelenföld to Keleti Pályaudvar, is now due in spring 2014. (Also scheduled for just before general elections.) The total budget for the project has increased exponentially, with costs for the first phase rising from a planned HUF 130 bln in 1998 to HUF 452.5 bln in 2012. “Metro 4 can be concluded as a completely spoiled, badly organized, enormously expensive and from a point of view of transport organization a very feeble project,” Dorner said witheringly. “The maintenance costs alone are so high the mayor had to announce a new ticket price increase, although they are already extremely expensive; we are slowly reaching and then passing levels seen in Vienna,” he added. And it isn’t just ticket prices that have fallen victim to the new subway line, but car transport too. Congestion charges must be introduced no later then 2015 as a condition for EU funding support for the project. SMALLER PROJECTS ARE ON THE WAY However, some smaller projects managed by the district governments do seem to be making faster progress, proving that in some cases public institutions can take action with striking speed, VEKE said. The reconstruction of Várbazár and parts of the Castle have received additional funds so initial works should kick off this year. The area will receive a new port, electric buses and a tram station too. But reconstruction of Kőbánya city center, Ferenciek tere and roads around districts 7, 8 and 16 are also relatively well advanced. ■

2002

Presidency of the EIB approves credit terms for the project

2003

WHAT IS BKK? Following a decision by Budapest Municipal Assembly in 2010 the capital’s transport institutional system was transformed. The BKK transport authority was created to take on new customer management and organizational tasks, leaving BKV with operational tasks only. It was also decided that development of EU transport projects would be handled by BKK. “According to the original proposal made by our association, BKK was created as the Hungarian equivalent of Transport for London. We had tremendous difficulties to define its functions as a transport organizer – or transport authority as it is known in English-speaking territories,” Dorner said. “However, Hungarian politicians did not understand and still do not understand what this is all about. On the top of this, nationalization is the new trend Hungary, the opposite of the opening towards markets emphasized by EU directives.” In the case of public bus transport services, BKK should work with an open market, but of the authority’s last eight public procurement procedures, the same company has won five, while the other three has been unsuccessful, Dorner said. [The site www.kozbeszerzes.hu, which collects public procurement procedures, has not sufficient information on the procurements of BKK and BKV, possibly due to a delay in the mandatory uploading of detailed information.] So the situation has achieved the opposite of its first intentions: now the city depends on the service provider and not vice versa. “The situation was aggravated by the too aggressive actions of BKK’s young leader, Dávid Vitézy, which resulted in him gaining a lot of enemies, including the Mayor István Tarlós himself. So, contrary to our intentions, BKK didn’t became a professional company, but part of the political machinery, its operation is non-transparent, stubborn, arrogant and aggressive. Its future is totally dark, as there is hardly one political actor who would like to keep it in this form. As it appears now, individual political ambitions are stronger in Hungary than professionalism, and thus are able to ruin even the best professional initiatives,” he lamented.

The capital and the government sign the agreement on metro building. Work can begin

2006

Building of stations begins. The two drill shields start to work one year later

2014

The current anticipated opening of Metro 4

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Budapest Business Journal | Feb 08 – Feb 21

Retail chains soldier on BBJ ZSOLT BALLA

Although there are negative and positive examples for everything, the trends are clear: despite the fact that substantial growth and exorbitant profits have been out of the question in the past few years, the average payment deadline in the FMCG sector has still decreased by some 22%, according to a recently published analysis by the Credit Management Group. While the study is based on data from 2011, these are the most up-to-date, as 2012 data will only become available sometime in May. The industry is getting more familiar with the new EU directive concerning late payments (see A Farewell To Late Payment? published in our first issue of 2013 for a detailed explanation of the subject), and the recent weeks saw the publication of the first draft of the Hungarian regulation based on the these EU standards. The analysis of the Credit Management Group looks into the business figures and the payment habits of 10 Hungarian retail chains and store networks from the perspective of the new proposal. The participants of the survey included Cora and Csemege-Match, both of whom have since left the Hungarian market. It also needs to be highlighted that the triple structure of CBA-COOP-Reál is somewhat unique. The basic structure of these store chains is that their operate as a single company from the perspective of purchasing and sales, but the stores, purchasing centers and regional centers are separate business entities. This makes processing their business figures and efficiency virtually impossible to analyze, since hun-

dreds of individual companies should be analyzed one-by-one. Thus, in the case of these chains, the industry analysis is based on their publicly communicated results and figures. INCOMES The aggregate income of the 13 surveyed chains totaled HUF 3.3 trillion, meaning that the revenue has stagnated compared to previous years. The top three ranking companies are also the same as previously: Tesco, CBA and COOP respectively. The runner-ups’ league is also basically unchanged. In spite of the continuous growth of both Aldi and Lidl, they as yet have relatively little weight on the market. As for business results, it immediately becomes obvious that the past three years were not exactly focused on making big money. The post-tax losses registered by the companies rose to HUF 69 bln, up from HUF 12.8 bln in 2009. The unfavorable change can be considered substantial even if you calculate that HUF 18 bln of the above amount was a result of the weakening forint and the consequential losses on the currency exchange ratio. There are four critical elements that dominate the expenditure-structure of the companies in question: acquisition costs of commercial goods; the price of services used; wages; and material costs. Analyzing these structures, it becomes immediately apparent that in the case of four companies, these costs alone exceed revenues, meaning that losses are inevitable even without calculating in other, relatively minor costs. The above ratio is very close to 100% in the case of another two companies. When exploring the changes and the tendencies in profitability, it is obvious that the only two companies that managed to improve on their previous figures are the two firms in rapid growth: Aldi and Lidl. All others posted figures reflecting stagnating or worsening results, the only other exception being Tesco, whose profitability has stood out from the crowd for years now.

(around 25 days) were found at Penny Market, Metro, Match and Auchan. Finally, the million-dollar question: how did payment structures and payment deadlines change over the past few years. While harsh payment conditions and excessive deadlines is a favorite topic when it comes to retail chains, it appears there have been focused efforts to improve on the dire situation – both from market players and from government circles. And while the industry still has room for improvement in this area, tangible positive changes can be seen in this field, CMG reported.

OPERATING PROFIT MARGIN (ROS) (%)

6,16 6,15

0,98

ke t M

Pr o

ny -

et M

Pe n

M eeg

Te s

1,63

-5,00 Li

82,16

Metro

5,60

at ch

0,00 Penny-Market

9,59

5,00

2,76

78,56

8,97

11,76

Co r

78,68

8,82

10,07

10,00

Profi

12,11

2,54

Au c

66,54

9,52

8,57

71,43

TESCO

EXPENDITURE STRUCTURE

SPAR

INVENTORY MANAGEMENT The analysis of inventories, and the ratio of inventories and yearly revenues, is of primary importance when it comes to retail companies. The inventory turnover ratio is an indicator of the average length of stock turnover throughout the year. While the longest stock turnover, and as a result the biggest inventory was observed at the dynamic newcomers (37-40 days in the case of Aldi and Lidl), other well-established chains managed to get along with substantially lower reserves. The lowest inventories

77,83

Lidl

4,23 6,52

70,36

Csemege-Match

15,66

78,52

Cora

6,40 7,13

76,17

ALDI

commercial costs

services

12,82 16,99

84,05

AUCHAN

18,19

wage

-10,00

3,66

material costs

4,25 10,15

-15,00 2,40

-20,00

1,80 9,69

1,94

-25,00

2009

-30,00

2010

-35,00

2011

Charts on this page by CMG

Stagnating revenues, dwindling profits and faster payment times proved to be the most significant tendencies for retail chains in 2011, according to a recently published analysis by the Credit Management Group.

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Budapest Business Journal | Feb 08 â&#x20AC;&#x201C; Feb 21

amid harsh conditions INVENTORY TURNOVER RATIO (DAYS) 40,00

37,50

35,00

32,50

30,00

!# 27,50

25,00

22,50 20,00

PAYMENT DEADLINES (DAYS) 75,00

70,00

65,00

60,00

55,00

â&#x20AC;&#x153;THE PAST THREE YEARS WERE NOT EXACTLY FOCUSED ON MAKING BIG MONEY. THE POST-TAX LOSSES REGISTERED BY THE COMPANIES ROSE TO HUF 69 BLN, UP FROM HUF 12.8 BLN IN 2009.â&#x20AC;? Although payment deadlines vary on a broad spectrum from 31 days to 62 days, basically all the market players have managed to shorten their deadlines in the past three years. Penny Market was the promptest payer with an average deadline of around 30 days, while the slowest companies include Cora and Auchan, whose payment deadlines were in the neighborhood of 60 days. The aggregate data shows that the 10 analyzed companies have managed to shorten payment deadlines by an average of 22% over the course of three years, bringing down the average from 54 days in 2009 to 42.6 in 2011. While this figure still fails to meet the new EU target deadline of a maximum of 30 days, the distance between the two is significantly smaller

than it used to be, the study notes. Clearly, the financial crisis has left its mark on the retail industry as well. Stagnating revenues and lowered profit rates are only two of the unfavorable symptoms. Market players still seem optimistic on the short- to mid-term, which is clearly signaled by new developments and continuous increases in capital invested. While FMCG is a relatively cost-intensive area, experts agree that maintaining high service standards and soldiering on with investments will pay off on the long run. As for payment delays, business owners still have a lot to do, but analysts say that FMCG could be among the first industries to comply with the new EU directive, even if there is still a relatively long way to go. â&#x2013;

50,00

45,00

40,00

35,00

30,00 25,00 %##&

%#$#

%#$$

PAYMENT DEADLINES (DAYS)

#! $& ! # ! " & # !

12 2 Business BBJ

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Budapest Business Journal | Feb 08 – Feb 21

M&A: investors are still shy According to Ernst & Young’s mergers and acquisitions barometer, the total number of deals and their value decreased in 2012 in Central and Southeastern Europe. BBJ KRISZTIÁN KIMMER

The Mergers & Acquisitions Barometer of Ernst & Young tracks trends in 11 Central and Southeastern European (CSE) countries: namely Bulgaria, Croatia, Czech Republic, Greece, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia, and Turkey. Although the countries under review vary in size, background and economic growth, six of them experienced decreased M&A activity in terms of deal numbers in 2012 compared to 2011, while in the other five the market had increased. The total number of deals in CSE decreased by 1.8% overall, with a 17.6% decline in total estimated transaction value in 2012 compared to 2011. The total number of transactions

in the region fell from 1,128 deals in 2011 to 1,108 in 2012. However, in Czech Republic, Greece, Poland, Slovakia, and Turkey the M&A market showed an increase from 2011 to 2012 based on the number of transactions. The total 2012 estimated transaction value in CSE market was $41.8 bln, down 17.6% from the previous year. Turkey ranked ﬁrst with an estimated value of $17.6 bln, followed by Poland ($8.02 bln) and Czech Republic ($4.85 bln). The signiﬁcant decline in terms of deal value in Poland is mainly attributable to the lack of similar mega transactions compared to 2011. Similarly, the increase in Slovakia is due to one large transaction with a value over $1 bln. The CSE transaction market was dominated by domestic transactions in 2012 (53% of the total number of deals), which represents a 4% decrease compared to 2011 in favor of an increase in inbound and outbound. Domestic transactions were most popular in Hungary, Czech Republic, and Poland and in Serbia. Turkey and Poland had the most number of outbound transactions (34 and 28 deals), which targeted Italy (six deals)

2011 2012

and Germany (five). The proportional share of outbound transactions was the highest in Greece, Slovenia and Croatia. The proportional share of inbound transactions was the highest in Slovakia followed by Romania, Croatia and Bulgaria. Transacting within the region, most active was Czech Republic (12 deals) and Poland (nine deals). The manufacturing sector was the most active target industry (by number of transactions), accounting for 135 deals in 2012. This was followed by services, and energy and mining. In terms of value, the largest transactions occurred in the banking and financial services, and food and beverages sectors. The decrease on the domestic M&A market is in line with international trends. Investors still prefer to wait and watch. “The current international economic outlook, the often unpre-

dictable future and changing domestic regulatory environment all make market participants uncertain,” says Margaret Dezső, Ernst & Young Transaction Advisory Services managing partner. Only around one third of transactions were published, with an average value of $ 6.7 mln. On this basis, it may be stated that the M&A market in Hungary shrunk to less than one third of its estimated size in 2011, having dropped to $0.5 bln from $1.8 bln. The decline in the size of transactions is a good indication that in 2012 not a single transaction with a value higher than $100 mln has been made public. In Hungary, the telecom/IT and media sectors were most attractive to investors, representing 15 and 11 transactions respectively. Domestic operations still dominate the current trends, both in the domestic and regional market. ■

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Cheaper utility buzz

Head for the bank

Conﬁdence boost

Ministry launches utility price cuts hotline

Interest on bank deposits continued to drop in January

Manager sentiment index returns to positive territory

1,400

7.5%

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Highest attainable interests in January*

Changes in PMI

Volksbank 7.50% Erste 7.10% FHB Bank 7% Raiffesisen 6.75% AXA 6.25% MKB 6% Budapest Bank 565% Banks ranked based on the highest yielding products *Various banks raise different conditions to attaining maximum interest Source: Bankmonitor.hu

PMI INDICATOR MEASURED IN JANUARY

Hungary’s Purchasing Managers Index (PMI) climbed to 55.9 in January from 49.1 in December, marking a return to positive territory and also showing a strong increase in business sentiment over the course of a month. The indicator, published monthly by the Hungarian Association of Logistics, Purchasing and Inventory Management (MLBKT), reflects positive sentiment when the figure is over 50 and negative if it falls below that. MLBKT noted that the figure is above average when compared to the same months in previous years and is the highest of the past 10 months, going back to the 56.6 recorded last March. January was the second month in the past four to produce growth, while the 6.8 percentage point month-on-month increase is also notable since January is usually a month that produces lowerthan-average results when projected on the whole year. The long-term January average on record since 1995 is 51.9. Most components of the PMI, such as output volumes, new orders, purchased stocks and employment showed expansion. Purchased stock produced the eighth highest result of the past 14 years. In contrast, imports dropped compared to December, a correction downwards from 11 consecutive months of expansion. Exports on the other hand went the other way, having dipped below the 50 mark in December, which ended an uninterrupted stay in positive territory for 42 months. Respondents to the MLBKT survey reported notable price increases for glass and glass materials, industrial gases, steel, supplements, cooking products, chemicals, ammonium sulfate, water, and packaging materials. They only mentioned supply shortages in a few, very specific product groups, such as various plastic components and nonalcoholic sparkling wine. BBJ

Commercial banks continued to lower their interest rates in January, a study by Bankmonitor.hu found. By and large, banks lowered interest by 0.25 percentage points, reflecting the latest cut to the central bank’s base rate. The survey, covering 13 banks active at a national level, also found that the differences in interest rates between various banks continued to widen, adding to confusion for customers in making the best choice for their financial needs. Bankmonitor.hu noted that several banks bind investment options to various preconditions, while some options are available exclusively in the case of long-term deposits. Unsurprisingly, this is especially true in the case of the products promising the highest yields. For deposits that are available without conditions, 6.34% is the highest attainable interest, ranking it 11th of the 20 bank products surveyed. The portal also found that different banks have different motivations with their interest rate policies. While some are in need of capital and want to attract liquidity through the prospect of high interests, others are more focused on keeping and expanding their client base via their offers. Bankmonitor.hu analyst Balázs Bonda advised those looking to make deposits to sign an agreement as soon as possible, since the National Bank of Hungary (MNB) is likely to continue cutting the key rate, meaning interest rates are set to go lower in the near future. Bonda added that conditions are prompting clients to seek out alternative investment options, which has mainly led to increased demand for investment funds, where it is not uncommon to see average yields of more than 10%, and even up to 15%. BBJ

The National Development Ministry has launched an information line to informing the general public about the specifics of the government measure to introduce a 10% reduction on household energy prices. The number is available free of charge and is jointly operated by the ministry and the Hungarian Energy Office. The service was launched in midJanuary and has already received more than 1,400 calls, the ministry said. Callers were mostly interested in matters related to electricity in natural gas with somewhat less interest for district heating. Most questions involved how the price cuts will be calculated and how they will be clarified on the monthly utility bills. The most common FAQs have been published on the energy office’s website. More complex matters are fixed in writing and will be answered in three days. The ministry reported 50 such enquiries so far. Lines are open from Monday to Thursday between 8 am and 4 pm and on Friday between 8 am and 2 pm. The government made the reduction of household overheads costs a key policy area. After deciding on the 10% reduction, officials stated that further cuts are to be expected not only in the case of energy, but also water and sewage prices. The cuts come little more than a year ahead of the next general elections in 2014, with the additional benefits likely arriving closer to the polls opening. The development ministry has also released a sample form for the revised utility bills, where it is clearly displayed that the lower totals are thanks to the government’s decision. BBJ

Hotline for cheaper utility prices

55.9

THE HIGHEST ATTAINABLE INTEREST RATE

Source: MLBKT

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Vatera hammers online rivals eBay is one of the most successful and profitable online sites, with an income of $ 9.52 billion in 2012. So it was no surprise that investors in Hungary wanted to create something similar here. Founded in 2000, Vatera.hu now can be considered the Hungarian eBay.

TOTAL PURCHASES AND PURCHASES THROUGH SMART DEVICES ON ALLEGROUP.HU’S SITES (HUF MILLION)

400

Turnover generated from iPhone

PROFITABLE So what is the secret behind this success, and how does Vatera stay ahead of free auction sites? The business model is smart and fair: you only have to pay after the sale of your product, there is no subscription fee. Of course, Vatera.hu Ltd. didn’t invent the wheel here, but this model paired with public awareness of Vatera (and also TeszVesz.hu, and Lealkudtuk.hu, all of which have been merged into one company called Allegroup. hu) made their company the leader in the online auction business. “In 2012 our websites: Vatera.hu, Teszvesz. hu, Grando.hu and Lealkudtuk.hu together made HUF 32.5 bln of turnover, which is a growth of 7% compared to 2011,” Attila Bakonyi, PR specialist at Allegroup told the Budapest Business Journal. HUMBLE RIVALS Other auction websites which are free seem

Turnover generated from Android

300

200

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Before you can make an actual profit from a website, the keyword is popularity, which can be measured in the form of daily visitors, subscribers, or, in the case of auction sites, the percentage share which comes from the users’ successful sales. The online auction site Vatera has been successful in each of these. By 2006 its take had surpassed a yearly HUF 5 billion, which was double that of 2005. By 2007 its user base had reached 440,000 and in May of that year “vatera” was the most searched keyword on Google in Hungary. In 2006 and in 2007 it won the national “Internet Trading Site of the Year” title. In September 2008 Vatera.hu Ltd. was bought by MIH Europe, a susidiary of South African media company Naspers. Vatera also took care of its rivals. TeszVesz. hu was the other leading online auction site in Hungary. Prior to 2009 Vatera.hu Ltd. already owned 35% of shares in TeszVesz.hu, but that year the company took a 100% stake. In April 2009 Vatera introduced a fee (paid after the item is sold) for uploading products with a value greater than HUF 5,000. After that the fee rises slowly from an initial HUF 5, but even at a value of HUF 60,000 it is only HUF 50. Even so, the number of items on offer initially shrank from two million to 600,000. Since 2009 this number has risen inexorably to approximately five million now. In the summer of 2012, Vatera.hu had more than two million registered users.

Total turnover

100

0 Q4, 2011

Q1, 2012

Q2, 2012

Q3, 2012

Q4, 2012

Source: Allegroup.hu Kft

VATERA TOP 10 SEARCH WORDS, PRODUCTS 1 2 3 4 5 6 7 8 9 10

TABLET LAPTOP BOOTS COAT SOFA RUG AIRGUN PENDRIVE SPEAKER TV

TOP 10 MOST BIDDED CATEGORIES ON VATERA 1 2 3 4 5 6 7 8

WOMAN CLOTHES COINS, PAPER MONEY STAMP AQUARIUM WATCH COSMETICS, DRUGSTORE MOBILE PHONES BABY CLOTHES, BABY STUFF 9 MENSWEAR 10 CHILDREN, TEENAGERS CLOTHING Source: www.netkutatasok.hu

to have a hard time making money from advertisements. We contacted Port Kft, the owner of Licit.hu, a free online auction website. “We only have income from the sale of the top banner on the site,” László Bordák, CEO of Port Kft, told the BBJ. Looking on their website, there is indeed only a small top banner and no other kind of advertisement. We asked him whether this is enough to make the site profitable. “Of course,” said Bordák laconically. However he wouldn’t tell us how much the yearly income from Licit. hu is, nor how much it costs to maintain the site, and he didn’t know the figures for monthly successful trades. “We have about 12,000 website hits daily,” he said, which paired with one lonely top banner must make a humble profit. Licitaljunk.hu, another free online auction website, doesn’t even have ads. In the course of the registration process users must give their tax ID, and read and sign a long user agreement, but there is no fee to pay. However the real problem with these free websites is in the level of public awareness: there are too many of them, and none are as well known as vatera.hu or teszvesz.hu. Another free website we visited, viszik.hu, displays the exact number of its registered user base: it has 480 users, five of whom were online on a Monday afternoon. It’s rather pointless to try to sell anything on a more or less empty website, hence the big success of vatera.hu and teszvesz.hu; both may involve a fee, but sellers can shift their wares a lot faster than on a free, unknown site. SIDE EFFECTS While some online auction sites are extremely successful in Hungary, retail sales were hurt in the latest year. According to data published by the Central Statistics Office, in November 2012 retail sales were down by 4.1%. While there are no direct

proofs this is caused by the success of online auction sites, there is an undeniable parallel. Of course, the government wants its part from the profit made by online auction sellers as well. Last May the National Tax and Customs Administration published on its webpage that there is a tax obligation for selling wares on auction websites from that day, if the seller makes more than HUF 600,000 a year. “The tax administration has not discouraged those who are using Vatera and TeszVesz.hu,” Bakonyi told the BBJ. “Actually there is the possibility to give invoices on our sites, so we help our users to comply with legislation,” he added. The question is rather whether the user wants to comply with legislation or not. As one user who asked to remain anonymous told us: “I am not that stupid. I sell some of my stuff in my own name and others through that of my girlfriend. Of course I take care that both stay under HUF 600,000, so that I don’t need to pay taxes. Paying taxes for Vatera auctions to our dear government? Yeah, right.” PRESENT AND FUTURE Progress is important to Vatera if it wants to stay ahead, which in the field of auction sites means the speed and simplicity of purchases for even bigger profit. “That’s why we introduced the possibility for our buyers to buy wares without the hassle of registering. We are also introduced mobile applications which are constantly updated and we have a rather new Windows 8 application as well. Mobile applications are so successful, that in less than a year our company’s share in auction sales increased from 1.5% to more than 3%”, Bakonyi said. Making business on the go, with your smartphone in hand is already popular, so it’s no surprise that you can do the same with online auctions as well. ■

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Government must tighten rules for households to save on utility bills Hungarian buildings are low performers in terms of energy efficiency, a fact slack regulation has not helped change. BBJ ZSÓFIA VÉGH

Average households are rarely concerned about terms like geopolitics or supply security. But when in January, many Hungarians received their annual energy bills, things such as the Syrian conflict and its effect on fuel supply, and thus energy costs, did snap into sharper focus. Shrinking supplies and political considerations have made energy prices soar in the past decade, a process not helped by the financial crisis. To offset price hikes, the Hungarian government introduced a 10% cut in the retail price of natural gas, electricity and central heating for every household in January. Many energy analysts, however, argue the move will not ease households’ burden considerably, but will add to those of suppliers. Citigroup analyst Eszter Gárgyán puts the overall cost of the measure at HUF 110 billion, or 0.4% of GDP. Economic news portal Portfolio. hu has calculated the move will result in costs of

HUF 90 bln for the energy companies and HUF 23.5 bln in budget revenue losses. Market players have recently turned to the courts; should they win, prices will likely quickly go back up. To save on utility fees, households cannot rely on state subsidies; rather, they need to save energy itself. People have started swapping incandescent light bulbs for compact fluorescents but this hardly translates into huge savings, at least in the short-term. Small changes like these do count, but most households lose more because of poor insulation and outdated heating systems in the first place. Since those systems come with the home, tenants can’t do much about them (unless they have the option of choosing to move into a newly-built flat.) To try and tackle the problem, the European Union adopted an energy performance of buildings directive in 2010, which sets requirements for technical systems. Countries have to calculate cost-optimal levels of minimum energy performance requirements for buildings and then set a benchmark both for existing buildings and new stock. The figures will be used when constructing new building or renovating existing ones. The EU originally gave member states until July 2012 to make the calculations, but since not one had done so within the deadline, they

were given more time to finish. Hungary says it has only a few more assessments to make and will present all the results by the end of February to the National Affairs Ministry. Once the ministry receives the data, it will decide whether to modify the thresholds or leave them as they are. Energiaklub, an NGO commissioned to make the calculations, says that the current requirements are lax and result in unnecessary energy use and spending. “Figures have shown that, calculating with a 30-year lifespan for any type of building would result in higher costs if present remodeling methods are used,” said Orsolya Fülöp, an economist and energy efficiency project manager at Energiaklub. In other words, stricter building energy performance requirements would enable households and offices to save more. The government moved towards more stringent regulation when it modified the law that applies to building energy. Starting this year, designers need to assess ways and means of installing alternative energy systems. The rule has applied to the construction, renovation or expansion of public buildings of more than 1,000 sqm of useable floor area since January of this year, and will apply to all properties, private and public, from July 2013.

The modifications are unlikely to have a major impact on the construction sector. Designers and developers have already been looking at options for alternative energy use. “It is part of our practice to constantly monitor buildings’ energy performance. In fact, we perform cost-optimizing calculations at a much higher rate than the legislation requires,” said Adrienn Lovro, executive director of property developer Ablon Group. The company makes cost estimations using data sourced from its own property maintenance experience and decides on the appropriate technology based on that. “Since return of investment is a major consideration for us, the selected method needs to operate reliably in the first place,” Lovro added. The Ablon Group head believes the state or energy suppliers should make alternative methods a more favorable option for developers. “That would improve these methods’ ROI rates during assessment.” Recommendations are all very good, of course, but owners who can’t afford to apply alternative energy technologies tend to ditch most such suggestions. In a survey by Energiaklub in 2010 involving some 2,000 households, less than 1% used alternative energy in any form. Fülöp, along with many other analysts, finds the top-down approach useful. “Setting an example is important or would be, should the government accomplish all the prerequisites,” Fülöp insists. She also wants wider support for households’ attempts to install green energy attempt of equal weight. “The financial framework for residential buildings is very narrow and is take up almost immediately once a tender is called.” Meanwhile the government continues with its plans to forcibly lower utility bills; the National Development Ministry has now started to discuss ways to reduce water, sewage and waste collection fees. ■

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Photo: MTI / Tibor Rosta

Fidesz: The year ahead

PRO-GOVERNMENT DEMONSTRATORS SHOW THEIR SUPPORT IN GYULA, WHERE THE GOVERNING FIDESZ PARTY’S CAUCUS HOLDS ITS CONGRESS.

Fidesz is experiencing a slight tailwind going into 2013, reinforcing an already relatively strong position. After the Constitutional Court scuttled its main strategy for keeping the biggest risk factor, disaffected voters, at home during the election, the strategic choices available to the governing party for the remainder of its term are also more significant electorally. One obvious option is a piece of budget populism. A financially depressed electorate might welcome splurging a bit, after years of recession. This scenario is, of course, limited by the still pressing debt problem, but the government will likely use whatever latitude it has. It might, moreover, decide to become a bit more conciliatory, seeking to change its divisive image. That is not a certainty, however: some incumbents have fared better with polarization, and this may be the last time Fidesz has access to a constitutional supermajority, which is a major temptation to wreak some more havoc.

Over the Christmas break, Fidesz’ re-election effort was dealt a huge blow by the Constitutional Court, which found the voter registration scheme adopted in the context of the new Act on Electoral Procedure unconstitutional. Fidesz’ most combative ideologist, the president of the Hungarian Parliament, László Kövér, lamented the Court’s politically motivated decision, oblivious to the irony that Fidesz had nominated the majority of judges on the current Court. Politicized or not, it is true that the Court did not mince words as it ruled against the government on this issue, noting that the registration scheme constitutes an undue burden on citizens’ suffrage that the government had failed to justify. There are signs that taxpayers will pay dearly for the Constitutional Court’s decision to let the “idiots”, as one Fidesz politician referred to the masses of voters his party would have preferred to see at home during the elections, near the ballot box again in 2014. In line with previous elections, when governments have sought (but usually failed) to secure re-election with lavish

spending and promises of even more, Fidesz, too, appears inclined to open the purse for some publicly funded campaign spending. SPEND ALL If you can’t keep them at home, then you must buy them off to make sure they enter the voting booth with a slightly better disposition then most people tend to have now, with Hungary seemingly incapable of leaving the enduring crisis behind and stagnation making itself felt in their pocketbooks, too. Shortly after the Constitutional Court’s decision, the idea of an additional 13th month of pension payments popped up. An additional monthly pension is a perennial hit of Hungarian populist politics, with both major parties having promised it at one time or another. The previous Socialist MSzP government even introduced it as law, only to abolish it once the budgetary situation got out of control. Though many of its methods have been dubious at best, Fidesz has managed to keep

the budget deficit in check thus far. There are growing doubts whether it will be able to do so in the short- to medium-term, however, and part of the concern pertains to anticipated election spending. However, Fidesz has its own unique measures to ease the burdens of voters before the elections without spending state money: they spend the money of multinational companies instead. After forcing the mostly foreignowned utility companies to cut household energy prices by ten percent in January, the government plans to reduce the costs of gas, water and energy by another 10+10 percent within a year. CONSOLIDATION OR CONFRONTATION? Fidesz is expected to increasingly subordinate its politics to the real or perceived needs of an electoral victory in 2014, but there are at least two different ways in which this could play out. One theory is that Fidesz will translate into practice the previously announced policy

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of “consolidation”, that is it will move away from controversial policies and seek to portray itself as a party that is best capable of bringing some level of peace into the heavily divided Hungarian social and political realm. That may be a tough sell in the case of those who have actually paid attention to Hungarian politics over the past years, but political memories are notoriously short, and an adept use of the year and a half ahead might actually do the trick. Some signs in this direction are Fidesz’ tactical retreat on its higher education reform and Antal Rogán’s declaration that though it could enact voter registration in spite of the Constitutional Court’s ruling, the government won’t use the raw force of its supermajority to do so. These might be construed as signs of a more conciliatory Fidesz going into the 2014 campaign. Yet Fidesz has often chosen a course of confrontation at critical junctures in the past, and it may decide again that with the huge numbers of disaffected voters who are likely to stay home, it may profit more from energizing its remnant base with a polarizing campaign. As we have pointed out repeatedly before, the “remnant” camp remains quite formidable in size, leaving Fidesz well ahead of all competitors. In fact, the long drought of declining poll numbers appears temporarily halted for the

governing party; its popularity has risen slightly both among the electorate at large and likely voters. With the opposition thus far unable to rouse the vast masses of the

rather in terms of time: it stands to expire in the spring of 2014. When it’s gone, Fidesz will no longer have recourse to easy fixes for problems that require a two-thirds majority,

completely annihilate two decades of constitutional jurisprudence and forbid the judges to refer to previous case-law. Similarly, while it has reconciled itself to the fact that registration would be too hot to pass in the context of 2014, Fidesz politicians are publicly musing about the possibility of adopting a law that would introduce it in 2018; without a constitutional majority to override such a decision, even an opposition victory in 2014 would leave voters and the new government with the major problems that registration implies, and the corresponding electoral advantages for Fidesz. Fidesz starts 2013 with a massive and slightly growing edge, but also a very obvious and huge Achilles heel: vast numbers of disaffected citizens with no clear political preferences but potentially rousable by the prospect of punishing a government that has left them bereft of hope. The billion-forint question is, of course, how Fidesz can consolidate its edge and keep the disillusioned folks at home without registration. It is far from clear whether, at this point, the government has a clear electoral strategy for 2014 and it is possible that we will spend 2013 veering between conciliatory gestures and hardline, divisive interest assertion. ■

IN SHORT, THE REMAINING 14-15 MONTHS MAY BE VIKTOR ORBÁN’S LAST CHANCE TO FINALIZE HIS VISION OF HUNGARY undecided, Fidesz remains best positioned to win an overwhelming majority of singlemember constituencies, and with that the election, too. THE QUANDARIES OF LOSING A SUPERMAJORITY Some additional factors point in the confrontational direction as well. Even if Fidesz were tempted to pursue some strategy of social appeasement, there is the problem of the vanishing supermajority: even in the case of a still likely victory, Fidesz is near certain to lose its two-thirds majority. This is like a genie, though its limitation is not the number of wishes the owner is granted, but

nor will it be able to shape the constitutional order at will. In short, the remaining 14-15 months may be Viktor Orbán’s last chance to finalize his vision of Hungary. In the past, many details of this vision have proven controversial, and it appears that may continue to be the case. Two recent examples immediately come to mind, and they both illustrate the potential untenability of any effort at appearing less divisive. Dissatisfied with the Court’s recent decisions – and especially references to previous, pre-Fundamental Law (i.e. Fidesz’ new constitution) jurisprudence – the governing party is now contemplating a constitutional amendment that would

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Interpreters lost in translation Doing more for the same

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Who’s responsibility is it anyway? While there is such thing as translator’s responsibility, legal cases over translations are very rare in Hungary. The usual means of settlement in the case of mistakes, dissatisfaction or disagreement generally involves reaching a mutual agreement, often with a discount thrown in. BBJ KRISZTIÁN KUMMER

Mistranslating a poem usually lies in the bounds of “translators’ artistic freedom” and, even for mistakes in a novel there isn’t much more punishment than long days of internet mockery, as in the case of Hungarian translation of 50 Shades of Gray where the band Kings of Leon became Lion King. However, a mistranslation in a legal document could cause serious problems between the contracting parties and, potentially, damages beyond enumeration. So, while translating sitcoms or novels might be a good second job or provide some pocket money for linguistic students, legal translation require a full committed specialist with indepth knowledge. Knowing the language is not enough. “Translating a legal document is per-

haps the hardest of them all,” said Kinga Hetényi, partner at law firm Schoenherr. Without a law degree, the task is almost impossible to fulfill as in legal practice words have very specific meanings. “When a legal translation has to be very good and accurate, there are two possibilities. Either we lawyers translate the text, or we assign the work to a translator and then we verify the result,” she explains. “However, the verifying process, unless it’s a very good quality translation, is long and wearisome work. We have to check the original text, translate its meaning, than verify if the translated phrases mean the same. We have too think over the whole text in two languages simultaneously. Altogether, it’s not necessarily true that a translation is cheaper or quicker using a translator and then a verifying lawyer.” Hetényi added, however, that she had never heard of a client suing a translating agency or independent translator. Lajos Énekes, managing director of the Reflex Translating Agency, said it was clear where responsibility lay. “Of course, there is such thing as translator’s responsibility, and the service provider is always liable,” he explained. “If our translating agency makes a mistake and hence causes damage to the client, our company is responsible exclusively, as we signed the contract.” If a customer was to sue the agency, it would go after its subcontractor or employee who made the faulty translation. But the problem rarely goes to court; Énekes has never heard of someone actu-

ally suing for translation liability throughout his career. “These cases always finish with mutual agreement: the translation agency corrects the mistake at its own expense or the client cancels the order,” he said. “First of all, we examine, if the complaint is justified or not,” he explained the Reflex approach. “If yes, we fix the problem for free, and top it with a discount. Sometimes the client doesn’t want to work together with us any more. In these cases, we lose all the money and of course, our translator doesn’t get a penny. However, sometimes the complaint is not justified, for example, the customer seemingly wants only to reduce the costs of translation. In these cases, if the sum is high enough, we will start a trail, and one or two years later we get our money legally. In these cases, of course, the innocent translator gets all his allowance. Finally, preparing for the worst, we have a liability insurance for a claim of up to HUF 25 million, but we never had to used it,” he added. Freelance contract translator Ákos Müller explains that “As far as I know, translators are liable for the results of their work up to the sum of their allowances.” However, fields and boundaries of responsibility are always detailed in the contract between the agency and its subcontractor. Moreover, there is a fine method to dodge responsibility regarding legal texts: such documents usually contain a clause in which the original and authoritative language is determined.

Besides mistranslations, confidentiality is also an important issue in terms of liability, since translation agencies and their translators often have access to highly sensitive client information in the course of their work, said Daniel Bodonyi, managing partner for language services at Helpers Hungary Kft. Quite a different problems comes from the fact that, although most major universities in Hungary offer specialized translator training programs, translation quality has been decreasing due to a lack of well defined, widely accepted quality standards and increasing price pressure in the market, which has caused some agencies to reduce wages to levels unseen since the late 1990s. “The quality of the written word appears to have become less important for society in general,” Bodonyi said. “It is not rare even for major Hungarian news sites to run articles with spelling and grammar mistakes in them, and a significant number of otherwise highly competent professionals are often unfamiliar with basic spelling rules. Despite the increasing adoption of ISO and other quality assurance standards and a few general recommendations by the Association of Hungarian Translation Companies, a lot remains to be done in terms of the precise definition and large scale adoption of translation quality standards and procedures to enable the industry’s further development,” Bodonyi added. ■

What will happen to the Hungarian language? Many European languages are unlikely to survive the digital age, a new study by Europe’s leading language technology experts warns. Will be Hungarian be one of them? What are the biggest challenges the language has to face?. BBJ KRISZTIÁN KUMMER

Digital culture, new ways of interacting, shrinking planet – in whichever ways our civilization is developing, language remains a basic and crucial element to natural human communication, linguists say. But that won’t always be necessarily true of all languages:

according to latest estimates, from the nearly 6,000 languages spoken around the globe, 2,000 will become extinct in the following centuries, or at the very least lose any role in the scientific and business worlds and remain a means of communication between family and friends only. Of 30 European languages examined by Meta-Net in Europe’s Languages In The Digital Age, 21 are in the lowest categories from the point of view of digital support. Will Hungarian also become an effectively extinct language? An estimated total of 13 million people speak the language, making it the 12th most used in Europe. Outside of Hungary’s borders, the language is spoken by an estimated 1.5 million people in Transylvania (Romania), with significant minorities also using it in the other six neighboring countries, as well as in immigrant communities around the world,

most especially in the United States, Canada and Israel, according to the Magyar section of MetaNet’s whitepaper, entitled The Hungarian Language In The Digital Age. But as is often said, Hungarian is “linguistic island”; in contrast to most European languages, which have Indo-European roots, Hungarian belongs to the much smaller Finno-Ugric grouping. This is why it is so unfamiliar and strange to European expats and tourists. It has some distinct similarities with Finnish and Estonian, although its closest relatives are probably to be found deep in the forests of central Russia. Many in Hungary complain of the growing use of Anglicisms and fear that the language could be overwhelmed by English words and phrases. But this is misleading. Hungarian has proved resilient: it survived the impact of new words coming from the very different Turkish

language in the times before the conquest of the Carpathian Basin, and subsequently the strong Slavic influence found there. Later, the country was part of the Ottoman Empire for 150 years, and during the Habsburg Empire, Latin and German influences were very strong. The status of a language is not only dependent on the number of speakers, but also on how much information is present in the IT-background and software applications, studies show. A fairly active Hungarian community web existence assures that the Hungarian Wikipedia is the 19th largest, ahead of a number of other European languages, such as Turkish, Romanian or Danish, and world languages such as Arabic or Korean. Some important international software versions are available in Hungarian, but the difficult specifics of the language makes Englishbased applications hard to translate. ■

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Smart CATs: The translator’s nifty tool Translating documents can be a tricky business, if you need it done professionally. There are any number of firms in the market, most using one or another piece of computer-assisted translation (CAT) software, which have been helping translators and translating agencies for more than 20 years now. BBJ GERGELY HERPAI

“I am C-3PO, human cyborg relations. I am fluent in over six million forms of communication,” the famous gold colored robot introduced himself in the first Star Wars movie (Episode IV) in 1977. Sure, it’s science fiction, but with the help of computer-assisted translation software we are getting closer to translating text in the best way possible. Today every translation agency is using translation support software. “Our firm was founded ten years ago, and we immediately started to use translation support software,” Edina Dobocky from Hunect Ltd told the Budapest Business Journal. “Almost every client requires translation support software, only 2% of them actually ask us to not use translation support software,” she added. Miklós Urbán from Consell Pannonia Ltd agrees: “Computer-assisted translation software has been there for more than 20 years and it has indeed changed the translation market tremendously, so by today it’s nothing new. Our firm, which was founded 16 years ago, has been using them ever since with almost every document, except those that are handwritten,” he says. But that is not to say every translation agency uses these software on a daily basis. “For the biggest firms with recurrent clients computerassisted translation software is a big advantage, but there are also smaller translation agencies with clients who just walk in off the street, asking them to translate a piece of paper: for those firms computer-assisted translation software is not really needed, even if they have it,” says Rozi Kelndorfer, who works at Napos Oldal Translations. “As for our firm, almost every one of our client needs those software,” she added. WHICH ONE? There are several types of translation support software, so the question that arises is which one to choose, or rather, which would the client of a translation agency want to use? “Our smaller clients usually don’t care which software we use, they just want the translation to be done in the best way possible,” says Urbán. “However our bigger clients, such as Mercedes

and Audi, always ask for specific software re to be used for their translations. From our side, we know perfectly that we absolutely need these software, because we won’t get any work otherwise,” he added. As with any software market, there iss big oped competition. MemoQ, a software developed by the Hungarian company Kilgray in 2004 04 ket. is one of the most successful on the market. According to an article on the Hungarrian website Nyelv és Tudomány (Language ge AR and Science), it has beaten rivals like STAR Transit, Wordfast and Alchemy. “Our most preferred tool is MemoQ, our secondary one is SDL Trados. We also have clients who o are asking us to use other specific software like Wordfast,” says Urbán. “We use more than n 20 different translation support software. There here are also clients who wants us to use their own translating support software, like Microsoft osoft with their Log Studio,” Urbán adds. Kelndordorfer, from Napos Oldal, paints a similar picture. “We also have lots of clients who askk for specific translating support software and others who have their very own software which hich we must use,” she confirms You might wonder about the practical use of support software: why use software that only supports the translation? There are many ogle translating solutions out there, such as Google Translate. “Today’s translating software still needs a lot of after work and there is too much room for error in them. The Hungarian lanation guage is especially unsuitable for translation rk to software – there is simply too much work do afterwards,” says Kelndorfer. ■

THE TOP FIVE COMPUTER-ASSISTED SSISTED TRANSLATION SOFTWARE: MEMOQ een one of the most successful. Many MemoQ was launched in 2004 and has been ate MemoQ, but the software is also translation agencies in Hungary highly rate very successful abroad: it is used by the Danish Secret Service, the Danish Ford the National Bank of Ukraine. eign Office, Japan’s Financial Services and SDL TRADOS he translation technology market, and most freeSDL Trados was one of the first to appear in the lance translators and translation agencies usee this software. In many cases, firms selecting it as ibility problems with other translation software the default software, but because of compatibility DL Trados itself, it is becoming less popular. and even between the different versions of SDL WORDFAST ions began to be developed in 1999, only for MS The Wordfast translation memory applications Office applications. Initially, it understood only MS Office file formats, but now has a someuld be broadened further. For example, it still isn’t what expanded compatibility, though it could compatible with OpenOffice formats. STAR TRANSIT he oldest pieces of computer-assisted translation Besides SDL Trados, STAR Transit is one of the avored, in recent years it has increasingly lost. software. Once very successful and much favored, DÉJÀ VU y. In 1993 Atril started to develop it Déja Vu was also on the market very early. ns. Today, it has become to support the work of its own translations. one of the most dominant players.

20 2 BusinessSpecialReport//Translation BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

Interpreters lost in translation It’s certainly not an easy job being an interpreter: when politicians or business leaders speak to each other, you must take care to translate every word cautiously. However, what is a lot more worrying for interpreters is actually finding work today, as in the last few years the market has contracted considerably. BBJ GERGELY HERPAI

“If you are fresh out of the university and looking for a career, best be prepared to stay a freelance interpreter,” Éva Simon, President of the Association of Hungarian Translation Companies told the Budapest Business Journal. “Because of the economic crisis many multinational firms, which are using English anyway, prefer not to use interpreters anymore,” she added. The situation is somewhat better when it comes to the German language, however. While in 2011, according to an article in Hungarian business magazine HVG, even those interpreters who spoke German had a hard time finding a job, in Germany itself a new law dictates that German firms have to use the German language as a form of communication internally. “That’s why in Hungary there is bigger need for German interpreters and translators right now, and we have an increasing number of demands from German firms,” Simon confirmed. HOW IS YOUR RUSSIAN TOVARISH? The situation is even better for Russian and Slavic languages. In the communist era Russian language learning was obligatory in Hungarian schools, making it ironic that there is a shortage of Russian interpreters today (for many it was something of a badge of honor not to do well in Russian studies).

BY THE NUMBERS On March 22, 1974 the Translator and Interpreter Training Center was established at the Faculty of Arts of Eötvös Loránd University. There are currently three universities in Hungary where specialized translation and interpreting courses are available. However there’s also a maximum head count for student admissions: 70 students at ELTE, 60 at Pannon University and 25 at the University of Miskolc. At ELTE the fee for one semester is HUF 300,000. There are also several colleges offering specialized education in translation. At the Budapest Business School translation and interpretation are taught on an independent course for a fee. At the Budapest University of Technology and Economics (BME) graduates can apply to its Interpreter and Translator Training Center for a two-year post-secondary vocational course. The tuition fee is HUF 220,000 per semester for English, French, German, Italian, Russian and Spanish translation majors.

“Our prime minister is speaking to Putin now, so there is work available for Russian interpreters,” says Simon. Of course, an interpreter has to think further than just a meeting with Putin, and the Russian and Slavic languages are pretty promising concerning interpreting jobs. “Poland’s economic weight is also a big factor in learning that language,” Simon added. FROM THE INTERPRETER’S POINT OF VIEW “There are jobs out there, but it’s harder to actually get them,” says Judit Tauz, a Russian and Ukrainian interpreter. “In the ’90s there were tons of conferences where Russian interpreters were needed. Now-

adays there are a lot fewer possibilities. Even the Latvians and Lithuanians, who preferred to speak Russian back then, now ask for an English interpreter, even if they don’t speak good English themselves,” Tauz told the BBJ. According to her, there are many interpreters who are good at translating from one given language (English, French, Russian etc.) to Hungarian and vice versa, but very few of them who are good at translating from one foreign language to another foreign language, and that is what is really needed. “If you speak a relatively little used language, like Russian, you can only stay in business if you also speak English, or French and you are pretty good at translating from one to another,” she confirms.

WHERE TO START? We asked Simon about exact numbers regarding the demand for interpreters. “Unfortunately nobody can answer to that. We tried to get numbers from the Central Statistics Office, and even they couldn’t give us an answer. We have no idea how big the market demand for interpreters is.” So what advice would she give those who want to get a job as an interpreter? “First, the most important thing is to get an International Diploma in translation, so that he or she could be hired either at the European Union, or big companies. Unfortunately there are no other options for them, other than being freelance and having their own enterprises,” she added. ■

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BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

Language schools in turmoil Excitement might not be the first thing that springs to mind when you start reading about the language schools’ market. But never forget that these are ‘unorthodox’ times. Although you probably anticipate boring trends and unsurprising tendencies, brace yourself, because you might well tap into something completely different. A very Hungarian story lies ahead! BBJ ZSOLT BALLA

It all began with the changes implemented to the structure of the training levy a year ago. Companies back then were allowed to decrease the amount to a certain level, by paying for the training or education of their own employees. While many companies chose industry-specific programs or team building events, language education was one of the most popular and widespread uses of the training levy. A simple change to the regulation abolished this option, leaving companies speechless – and many language schools out of work in early 2012. “It was a disaster for the entire industry, and that was more or less what 2012 was all about,” says Tamás Légrádi, the founder and owner of Tudomány Nyelviskola, and vice president of NYESZE, the Association of Professional Language Schools. “The volume of privately-financed language courses has been in freefall in the past two or three years, so what kept this industry moving was basically corporate language education,” he says. With the abolition of state subsidies, this engine, too, came to a halt. According to the original plans, this state training subsidy was to be replaced by a social fund called TÁMOP (Operative Program of Social Renewal), but stating that its success is somewhat controversial is clearly a polite way of putting it. Industry insiders, who preferred to remain anonymous, unequivocally dub TÁMOP the “non plus ultra of bureaucracy and dilettantism, and the hotbed of corruption”. Especially when TÁMOP 2.1.2 entered the picture last November, with the ambitious goal of providing free or almost free language courses for 100,000 Hungarians. WHAT WENT WRONG? Make no mistake, the aim of the program is something that was more than welcomed by the entire business and that was much needed by the country as well. But it appears that in the implementation phase something, somewhere went awfully wrong. We have talked to many people in the field, including heads of well-known, major language schools as well as smaller operations, and while their views on the current developments are nearly identical, when it came to TÁMOP 2.1.1, all of

them insisted on talking off the record and remaining unnamed. It is worth highlighting that we are talking about a project with a budget of HUF 12.8 billion. Of this, HUF 9 bln can be used for educational purposes. As for the very valid question what happens with the remaining HUF 3.8 bln, “Exactly!” was the best answer the industry managed to come up with. The structure of the project is rather simple: there is a HUF 90,000 per person budget (multiple this by the 100,000 potential participants, and you get the HUF 9 bln educational chunk of the program), which can be spent on language courses at schools that are qualified to partake in the program. Of course, there are special conditions on both sides, but it’s the actual implementation, again, where things start to get tricky. After the program launch on November 7, five language schools were almost immediately granted all the necessary licenses and authorizations. Hundreds of other schools are still waiting (at various stages of the authorization procedure) to be green lit,

also immediately got all the necessary licenses. Curiously, she is a board member on the program’s accreditation committee. Another surprising early winner was Albacomp Rendszerház Kft., a company with no previous experience or references in language education, whatsoever. Neither has it any teachers, by the way. RED TAPED The bureaucracy involved is a serious obstacle for most companies, if not the chosen few. Applications take an awful lot of paperwork, hearing back from the authority takes between 30 – 45 days per round (the application takes at least two rounds, since first the programs, and later the actual classes, need to be approved), and based on general feedback, the approval rate is in the neighborhood of 5-10%. When courses can finally be launched, every class has to be documented with a photo as well as a written document of the attendance, so documentation will remain heavy at later stages, too. “A program of this volume is capable of completely re-arranging the entire industry,” says the head of a well-known

an online registration form. This means that while a language school might have prepared by running pre-registrations, checking the level of knowledge of their students, agreeing class dates and timetables, these students will have no priority over those who randomly register via an online form. So potential students, if they are not quick enough, might find that they have been waiting for months in vain, because others have immediately filled up the class they want to attend. “The problem with these strict regulations and the ill-considered processes is that they deter education-centered language schools, and spawn a complete range of companies that are not focused on quality education and students, but on the sole purpose of getting as big a chunk of the subsidies as possible,” says an industry insider we spoke to on condition of anonymity. “Since these tenders need very different skill sets and priorities compared to that of language education, and there are no valid barriers to officially becoming a language school, this area has recently become a gold-mine of projectbased companies, running for nothing else

“THE PROBLEM WITH THESE STRICT REGULATIONS AND THE ILL-CONSIDERED PROCESSES IS THAT THEY DETER EDUCATIONCENTERED LANGUAGE SCHOOLS, AND SPAWN A COMPLETE RANGE OF COMPANIES THAT ARE NOT FOCUSED ON QUALITY EDUCATION AND STUDENTS, BUT ON THE SOLE PURPOSE OF GETTING AS BIG A CHUNK OF THE SUBSIDIES AS POSSIBLE.” and hope to start their courses sometime in March, at the earliest. A closer look at the list of the “priority” participants reveals some more awkward details. Dover and International House language schools are both regarded as quality institutions, although both also maintain strong ties to the current administration. The owner of IH, Anna Sikó is a former chair of the British Chamber of Commerce in Hungary. More pertinently here, she is also the former English teacher of Prime Minister Viktor Orbán, and the premier personally thanked her for being part of Fidesz’s “mental heartland”. Dover was previously known as the preferred supplier of the Hungarian Armed Forces. Two companies from Nyíregyháza (northeast Hungary), founded by Judit Szabari Bucskóné,

language school, who insisted on being unnamed. “Those clients who are willing to participate in language courses are now waiting for the ‘free’ opportunity, and have been doing so since early November. We told our students that we have submitted our applications, and most of them are willing to be patient, but they have been waiting for quite some time now. The worst part is that we really don’t know what we can tell them: we expect that we can start the courses in early March, but we haven’t had the approval on any of our classes yet. Until then, everything is completely uncertain,” the head adds. SPEAKING A DIFFERENT LANGUAGE Another twist in the story is that once the authority approves a course, it immediately becomes open to the public through

but the money,” he adds. Urban legends have also started to spread claiming that there are ways to “lubricate” the machinery of the approval procedure. Rumor has it, for example, that the average cost of getting as many approvals as one is willing to, is one third of the state funds given back to the appropriate person involved in the decision making process. Not exactly an efficient way of teaching languages to the wider audience. All in all, the professionals we talked to agree that this is yet another example of a good goal and sufficient funding wasted by poorly designed procedures that will have minimum, if any, benefit from the perspective of the main objective. In the meantime the real problem remains: Hungarians are known for not speaking foreign languages; it seems this is unlikely to change in the foreseeable future. ■

22 2 BusinessSpecialReport//Translation BBJ

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Budapest Business Journal | Feb 08 – Feb 21

Doing more for the same Business translation is a reliable indicator of other business tendencies: when the market is on the move, when there are lots of deals, mergers and acquisitions, there is a lot to translate. When there isn’t, there isn’t. It’s as simple as that.

“I FORECAST A MARKET CONSOLIDATION IN THE NEXT FEW YEARS, WITH MANY AGENCIES CLOSING DOWN, OTHERS MERGING OR BEING ACQUIRED BY BIGGER PLAYERS.”

BBJ ZSOLT BALLA

SHAMEFUL HUNGARIANS Tight budgets are definitely a problem, but sometimes some of the most severe obstacles are found where you would least expect them. Since translation is, by nature, an international industry, and the major clients usually treat the CEE region as one unit, Hungarian translation agencies ever more often face the challenge of the country’s worsening reputation. “This symptom completely erodes trust in Hungarian companies,” a source who preferred to remain anonymous told the Budapest Business Journal. Translation agencies often find that huge international clients have mentally taken Hungary out from the CEE block and group it with the Balkans instead. As a result, many agencies, which focus on Western European clients have decided to remove all references from their websites that suggest the company is Hungarian.

bined with a very fragmented market environment and highly price sensitive customers, adds up to decreasing prices even at nominal val-

MACHINE TRANSLATION With the increase of translation volume, a decrease of available budgets and the resulting pressure for more efficient translation processes, we are witnessing a huge jump in the volume of machine translation. In recent years, the battle between two traditional directions, rule-based and statistical methodology have finally come to an end with the clear victory of statistical translations. While there are public translation engines available (most notably Google Translate), professionals use different tools, develop and fine-tune their own engines to fulfill an ever-growing market demand for cheap yet reliable translations. Although the intelligence of these engines can sometimes be breathtaking, it is worth pointing out that machine translation services on the market always include human post-editing before they are handed over to the client. For now.

ues. While most translation agencies are tiny companies with one to five employees (usually including the owners themselves), and entrance barriers to the market are extremely low, these providers are forced to undertake higher workloads for the same money, if not less, than a few years ago. And the decreasing prices cascade down through the whole ‘food chain’ of the industry: from clients to agencies, from agencies to freelancers. Translation is a relatively small industry, and one with a reactive mindset: innovations almost always come from external developments, and market players only react to these new trends when it becomes inevitable. Other than that, they try their utmost to stick to the status quo, especially in Hungary. While there are important new technologies present, and the artificial intelligence to translate text is rapidly on the rise, none of these novelties are likely to shake the world of Hungarian translation agencies in the near future. From a content perspective, there is increasing demand for the translation of applications and mobile content as opposed to traditional documents. The price pressure is tangible in this area as well. The number of languages involved is increasing while available budgets are dwindling or, in a best-case scenario, remain unchanged. The only logical answer to these challenges would be to become leaner and boost the efficiency of the competing companies, but most of the players, especially the one or two person agencies, have such minimal overheads as it is that their room to maneuver is virtually non-existent.

“I forecast a market consolidation in the next few years, with many agencies closing down, others merging or being acquired by bigger players,” says Bán. While participating in this would be a natural choice for one of the biggest companies, he appears hesitant as to whether espell will buy any of its minor competitors. “We often get offers from smaller or troubled companies, but I handle acquisitions as a strategic question; I only buy companies when I have a very good reason to do so,” he states. “When the crisis reached the industry in Q3, 2008 we decided to go against the crowd, and started substantial investments, including the acquisition of one of the very first privately owned language service provider, Multi-Data. With Multidata, we bought a significant market share on the German market. We also bought Afford a few years earlier, and made it the budget alternative of our f lagship company, espell. Although we are constantly looking into new opportunities, we will only purchase competitors if they have something special to offer – be it knowhow, a market or its staff,” he explains. ■

MOVING ON espell InterContact Napos Oldal

➔ ➔ ➔

“When I started working in this field some 13 years ago, the nominal price of a translated word roughly equaled its current price,” says Miklós Bán, head of espell translation and localization ltd. Espell, together with its sister company, Afford is a clear market leader with a yearly revenue of more than HUF 700 million, rivaled only by the official authority OFFI, which maintains monopolies in certain areas, including translation authentication. The trends in espell’s revenue structure can also be deemed diagnostic of the whole industry. “Three or four years ago the biggest chunk of our clientele came from the Hungarian enterprise sector. By today, the ratio of Hungarian enterprise customers has shrunk to the area of 15-20%,” Bán reveals. While the disappearance of corporate clients is a general tendency in Hungary, unlike most of its competitors, espell still managed to increase revenue by some 20% by focusing its effort on foreign markets. There are a very few companies that handle translations in a separate budget line. Translation costs are often part of the marketing budget, and it is well known that in difficult times marketing budgets are among the first to be cut back. Translation is often treated as a ‘necessary evil’, and therefore there is a huge pressure on price, which is worsened by a cutthroat competitive environment on the supply side. Uncertainty is also a grave issue. Many of the traditional major clients are now putting new investments on standby due to the unpredictable market conditions, or leaving the country altogether. These business decisions directly affect the volume of translation work on the market. “There is a downward spiral in the pricing of translation services,” Bán confirms. “One of the contributing factors is that translation has become more of a commodity than a professional service. Another is that the whole process of translation is somewhat vague, and not sufficiently transparent, which makes suppliers difficult to compare,” he adds. This trend, com-

+1 places -1 place -1 place

Largest changes in the list

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BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

Translation agencies

518

www.icontact.hu

HUNNECT LIMITED 3 www.hunnect.hu

CONSELL 4 PANNONIA KFT

482

399

337

482

400

337

EN 15038, ISO 90012001

1982 40 500

MSZ EN ISO 9001:2009, MSZ EN 15038:2006

1989 15 200

ISO 9001:2009, EN15038

IT, software localization, engineering, electronics, finance, marketing, healthcare MemoQ, Trados, Localization Studio, Idiom Desktop Workbench, Passolo, MS Helium, Across, Corel Catalyst, Déjà Vu, Star Transit, Translation Workspace, etc.

ISO 9001:2009, EN 15038:2006

1996 18 183

LinguaPark, GALA, Proford

EquipBM, Allianz, ment for PSZÁF, OBA, simultaneous MOL, Embassy interpreting, 68,000 68,000 of the United correction, States of subtitle America translation

Equipment for simultaneous interpreting, law enforcement, legal, financial translation, certified translation Trados

–

1990 4 180

–

– SDL Trados, SDLX, Star Transit, Across, Catalyst, Idiom Worldserver, Passolo

In preparation

1997 12 350

ISO 9001:2009, MSZ EN 15038:2006

2004 11 200

Bayer, Budapest Stock Exchange, J.P. Morgan, NNG, Shell, Telenor

Conference equipment; certificate of authenticity; final editing

European Parliament, European Commission, Translation Centre for the Bodies of the European Union, K&H Bank, OTP Bank, SanofiAventis Zrt.

Software supported translation, post-editing

–

SIMULTANEOUS

CONSECUTIVE

MAIN CLIENTS IN 2012

Multilingual localization, machine translation

INTERCONTACT BUDAPEST KFT 2

QUALITY CERTIFICATE

518

PRICES INCLUDE PROOFREADING BY NATIVE SPEAKER

YEAR ESTABLISHED NO. OF FULL TIME EMPLOYEES ON JANUARY 1, 2013 NO. OF SUBCONTRACTORS IN 2012

OTHER

CERTIFIED TRANSLATION

INTERPRETATION

DESKTOP PUBLISHING

SOFTWARE LOCALIZATION

PROOFREADING BY NATIVE

ESPELL TRANSLATION AND ESPELL FORDÍTÁS LOCALIZATION ÉS LOKALIZÁCIÓLTD ZRT www.espell.com

AVERAGE DAILY INTERPRETATION FEE (HUF)

SERVICES

TRANSLATION

TOTAL NET REVENUE (HUF MLN) 2012[1]

COMPANY WEBSITE

NET REVENUE FROM TRANSLATION AND INTERPRETATION (HUF MLN) IN 2012[1]

RANK

Ranked by net revenue from translation and interpreatiton

55,000 76,000

60,000 80,000

www.consellp.hu

L.C. BT www.lcbt.hu 5

300

NAPOS OLDAL KFT www.naposoldalkft.hu

AFFORD FORDÍTÓÉS TOLMÁCSIRODA KFT

300

–

227

–

210

–

Erste Bank Hungary Zrt, Siemens Zrt, ELMŰ Nyrt, GE Hungary Zrt

–

Fővárosi Törvényszék, Vodafone Magyarország, EDF DÉMÁSZ, DKG-EAST, Bosch, Borsodchem

Language consulting

Phoenix Contact GmbH, SAP AG, Nissan, UniCredit Bank, ENI, Nestlé

www.afford.hu

REFLEX FORDÍTÓIRODA KFT

181

183

www.reflex.hu

TRANZPRESS KFT www.tranzpress.hu 9

155

165

96,000 128,000

PRIORITY FIELD, SPECIALIZATION TRANSLATION SUPPORT SOFTWARE USED

Finance, legal, engineering, IT, life sciences memoQ, SDL Trados and MultiTerm (all versions, including Studio), SDLX, Déjà Vu, Across, DocZone, Wordfast, Swordfish, Catalyst, Passolo, Microsoft Helium, Microsoft Localization Studio, Idiom Worldserver, Sisulizer, Multilizer, Various resource editor tools

Financial, legal, medical and EU documents SDL, MemoQ, Trados

–

IT, law, medical diagnostics, finance, web translation memoQ, SDL, XTM

Justice, law, automotive, pharmaceutical, medical technology Trados

Software localization, technical translations MemoQ, Across, Idiom, SDLX, SDL Trados, Catalyst

2003 18

–

ISO 9001:2008

1983 13 513

–

ISO 9001:2008

2002 9 650

MEMBERSHIPS

OWNERSHIP TOP LOCAL (%) HUNEXECUTIVE GARIAN CFO NONMARKETING HUNGADIRECTOR RIAN

ADDRESS PHONE FAX EMAIL

ATC, Eulogia, ProFord

Individuals (100) –

Miklós Bán Edit Takács Tamás Pásztor

1075 Budapest, Károly körút 3/A (1) 238-8043, (1) 201-8575 (1) 270-0205 espell@ espell.com

Proford

Veronika Mendel Lehel (50), László Lehel (50) –

Veronika Mendel Lehel – –

1054 Budapest, Hold utca 15. (1) 269-1153 (1) 312-5408 office@ icontact.hu

Sándor Sojnóczky – –

6726 Szeged, Sepsi utca 5. (62) 556-600 (62) 556-601 mail@hunnect.hu

Individuals (50) Consell B.V. (50)

Zsuzsanna Ellmann Miklós Urbán Mark Ellmann

1073 Budapest, Erzsébet körút 23. (1) 373-0112 (1) 269-4780 consellp@ consellp.hu

Gábor Pataki (100) –

Gábor Pataki Gábor Pataki –

1026 Budapest, Rügy utca 12. (1) 394-4758 (1) 200-5740 lcbt@lcbt.hu

–

» »

Alistair Binks, Zsófia Takács – –

2890 Tata, Sport utca 20. (34) 482-910 (34) 381-915 info@ naposoldalkft.hu

GALA, Proford

(100) –

–

Lajos Énekes (32), Zsóka Énekes (31), Barbara Énekes (31), Erika Asztalos (6) –

Lajos Énekes Zsóka Énekes –

1122 Budapest, Magyar jakobinusok tere 2–3. (1) 269-4781 (1) 269-4782 contact@ reflex.hu

ELIA, ProZ

(100) –

András SzalayBerzeviczy Katinka Nagy Anita Salát

1022 Budapest, Detrekő utca 12. (1) 225-1426 (1) 225-1427 info@ tranzpress.hu

Sándor Sojnóczky (50) ATC, TAUS, ITI Anikó Sojnóczky (50) –

1053 Budapest, Katalin Varga Veres Pálné utca 14. – (1) 310-7168 – (1) 310-7169 afford@afford.hu

24 2 BusinessPartnerWatch

QUALITY CERTIFICATE

192

AVERAGE DAILY INTERPRETATION FEE (HUF)

YEAR ESTABLISHED NO. OF FULL TIME EMPLOYEES ON JANUARY 1, 2013 NO. OF SUBCONTRACTORS IN 2012

–

CompLex Kiadó Kft, Eaton Industries Kft, MÁV-Thermit Kft, Robert Bosch Kft, 80,000 80,000 Weil, Gotshal & Manges LLP., Weishaupt Hőtechnikai Kft

Legal, technical Trados, MemoQ, Across

ISO 9001:20098, MSZ EN 15038:2006

151

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

PRICES INCLUDE PROOFREADING BY NATIVE SPEAKER

ILS NEMZETKÖZI FORDÍTÓ 10 SZOLGÁLAT KFT

1989 7 98

Conference technology

AUDI, Állami Számvevőszék, Cofidis, Művészetek 55,000 90,000 Palotája, SYNERGON Group, Red Bull

Technical, financial, legal, automotive MemoQ 6.2

–

ISO 9001:2008

2005 8 250

LinguaPark Klaszter, Proford

Márta Balázs (50), Edit Balázs (50) –

Márta Balázs, Edit Balázs Edit Balázs Brigitta Béres

1113 Budapest, Tas vezér utca 18. II. em. 4. info@edimart.hu

2000 3 45

Association of Hungarian Translation Companies

Sándor Tóth (50), Balázs Fejes (50) –

Sándor Tóth – –

1078 Budapest, István utca 5. (1) 321-6606 (1) 413-0424 translations@ penna.hu

–

1998 4 15

–

Zsolt Kunos (100) –

Zsolt Kunos – –

1116 Budapest, Fehérvári út 130. (1) 464-3144 (1) 464-3145 zsolt.kunos@ emerald.hu

–

ISO 9001:2008

1999 4 837

BK IK

Roland Rácz (90), Anita Ráczné Nagy (10) –

Roland Rácz Mariann Nagy Anita Ráczné Nagy

1034 Budapest, Szőlő utca 30. (1) 250-6729 (1) 240-9291 info@ businessteam.hu

Iso, institutional accreditation

1997 4 55

Nyelviskola Klaszter

Judit Ruszkai (30), Judit Bíró (40), Zsófia Ruszkai (30) –

Judit Ruszkai – –

1132 Budapest, Váci út 14. (20) 951-6617 (1) 781-1927 info@szituaciosnyelviskola.hu

–

2008 2 200

ATA, GYMSKIK

István Elek Csóka (60), Máté Oresztész Csóka (40) –

István Elek Csóka – –

9023 Győr, Szigethy A. utca 95. (30) 639-8294 (96) 814-909 info@ mindpower.hu

ISO 9001 2009

1998 1 40 (approx.)

Association of Hungarian Translation Companies

Individuals (100) –

Zsuzsa Gáll Görög – –

1012 Budapest, Attila út 77. IV. 5 (1) 487-0283 (1) 214-0334 forditoiroda@ telecomford.hu

–

2006 5 95

–

Barbara Ürögdi (33.30), Dániel Bodonyi (33.30) Nenad Ignjatovic (33.30)

Dániel Bodonyi – –

1094 Budapest, Tompa utca 9. (1) 317-8570 (1) 328-0363 forditas@ helpers.hu

1996 7 86

Association of Hungarian Translation Companies, LinguaPark Klaszter, Proford

Individuals (100) –

Csaba Hajdú Márta Hajdú Máté Kovács, Ágnes KolossváryRajnai

8000 Székesfehérvár, Kossuth utca 8. (22) 311-653 (22) 311-653 office@ m-prospect.hu

–

www.ils.hu

EDIMART TOLMÁCSÉS FORDÍTÓIRODA www.edimart.hu 146

PENNA-EURÓPA KFT www.penna.hu

EMERALD KFT 13

www.emerald.hu

BUSINESS TEAM 14 TRANSLATIONS KFT

102

146

102

–

www.szituaciosnyelviskola.hu

MIND POWER 16 HUNGARY KFT

–

TELECOM-FORD KFT www.telecomford.hu

HELPERS 18 HUNGARY KFT www.helpers.hu/ translation

M-PROSPECT KFT www.m-prospect.hu

–

SIMULTANEOUS

Helium, LocStudio, Idiom, SDL Trados, Translation Workspace

–

Print-ready editing

–

Delta Plus Magyarország Kft, Schenker Legal translation, certified Kft, Sejtbank translation, technical Kft, Colgatefrom from translation, website Palmolive 49,000 78,000 translation, interpretation Magyarország Trados 2007, 2009, 2011 Termelő Kft, Aesthetica Kft. Sinergy Kft Ministry of Interior, National Development Agency, Budapest Business School, National Tax and Customs Administration of Hungary

–

Magyar Telekom, Siemens Zrt, Európai Unió Bizottsága, ELMŰ, Invitel, Fővárosi Vízművek

Business consulting, relocation services

E.ON Hungária Zrt, Richter Gedeon Nyrt

–

Audi Akademie Hungaria Kft, Becton Dickinson Hungary, Emerson Process Management, Commerzbank Zrt, Harman/ Becker Automotive Systems, Lukoil Magyarország

–

8,700 HUF / hour

8,700 HUF / óra

Bank terminology, public administration, law, sociology Trados

– Trados, Transit, WordFast, etc.

www.mindpower.hu

PRIORITY FIELD, SPECIALIZATION TRANSLATION SUPPORT SOFTWARE USED

www.businessteam.hu

SZITUÁCIÓS 15 NYELVISKOLA KFT

CONSECUTIVE

MAIN CLIENTS IN 2012

OTHER

CERTIFIED TRANSLATION

INTERPRETATION

DESKTOP PUBLISHING

SOFTWARE LOCALIZATION

PROOFREADING BY NATIVE

SERVICES

TRANSLATION

TOTAL NET REVENUE (HUF MLN) 2012[1]

COMPANY WEBSITE

NET REVENUE FROM TRANSLATION AND INTERPRETATION (HUF MLN) IN 2012[1]

RANK

BBJ

159

–

60,000 60,000

Telecommunications, road and railways, economy, law, finance Trados Studio, (and other earlier versions), MEMOQ Pro (and other earlier versions)

Energy, pharmaceutical, telecommunications MemoQ

Technical, economic, legal translations Trados, MemoQ, Across

–

ISO 9001:2009

OWNERSHIP TOP LOCAL (%) HUNEXECUTIVE GARIAN CFO NONMARKETING HUNGADIRECTOR RIAN

ADDRESS PHONE FAX EMAIL

MEMBERSHIPS

Association of Hungarian Translation Companies

László Reha (40), Lászlóné Reha (10), ILS Kft (50) –

László Reha Annamária Puskás Krisztina OltvaiGalambos

1114 Budapest, Móricz Zsigmond körtér 3/A (1) 209-6386 (1) 372-0136 ils@ils.hu

2 BusinessPartnerWatch 25

BBJ

WWW.BBJ.HU

–

OTHER

CERTIFIED TRANSLATION

INTERPRETATION

DESKTOP PUBLISHING

–

www.lector.hu

GlaxoSmithKline, JTI Hungary, Wizz Air, Sanoma, Ogilvy, Creaton

PRIORITY FIELD, SPECIALIZATION TRANSLATION SUPPORT SOFTWARE USED

QUALITY CERTIFICATE

SOFTWARE LOCALIZATION

PROOFREADING BY NATIVE

TRANSLATION

MAIN CLIENTS IN 2012

PRICES INCLUDE PROOFREADING BY NATIVE SPEAKER

SERVICES

SIMULTANEOUS

AVERAGE DAILY INTERPRETATION FEE (HUF)

CONSECUTIVE

LECTOR FORDÍTÓIRODA / CORPUS 20 COMMUNICATIONS KFT

TOTAL NET REVENUE (HUF MLN) 2012[1]

COMPANY WEBSITE

NET REVENUE FROM TRANSLATION AND INTERPRETATION (HUF MLN) IN 2012[1]

RANK

Budapest Business Journal | Feb 08 – Feb 21

Business, economic, technical, legal, medical, marketing technical translations MemoQ

–

YEAR ESTABLISHED NO. OF FULL TIME EMPLOYEES ON JANUARY 1, 2013 NO. OF SUBCONTRACTORS IN 2012

2000 4

MEMBERSHIPS

OWNERSHIP TOP LOCAL (%) HUNEXECUTIVE GARIAN CFO NONMARKETING HUNGADIRECTOR RIAN

ADDRESS PHONE FAX EMAIL

–

Zoltán Nagy (96.70), József Nagy (3.30) –

Zoltán Nagy – –

1025 Budapest, Csalán utca 26. (1) 321-1516 (1) 700-2250 info@lector.hu

–

Péter Csuka » ( ), Bence Györög » ( ) –

Tibor Palásti Bence Györög Mónika Tajcs

1076 Budapest, Thököly út 25/21. (30) 655-0521 (28) 389-432 apt@ apthungaria.hu

APT HUNGÁRIA KFT www.apthungaria.hu 31

H-NET LANGUAGE 22 CENTER KFT

–

Díjnet Zrt, Euro-Log Kft, FE-Group Invest Kft, HM El Zrt, Phar65,000 maPrint Kft, Systrans Rendszerintegrátor Kft, Synergon Integrator Kft

–

Aktivit, Panasonic EW, Settlers Relocation, Yamagata, Zorge

www.h-net.hu

120,000

FGSZ MOL Földgázszállító Zrt,Zrt, DHL from from Freight DHL Freight 40,000 85,000 Magyarország Kft

Energy, hydrocarbon exploration MemoQ

–

2003 4 65

– Trados, MemoQ

ISO 9001:2012

1999 3 30

LinguaPark Klaszter

Domestic individuals (100) –

Zsuzsanna Tóth Zsuzsanna Tóth Krisztina Szécsi

1132 Budapest, Nyugati tér 4. (1) 239-2254 (1) 239-2254 info@h-net.hu

–

1994 2 80

Association of Hungarian Translation Companies

– Hermann Korte (100)

Márta Pap – –

1054 Budapest, Hold utca 6. II/4B (1) 301-0424 (1) 301-0425 info@cet.eu

–

1994 1 –

Association of Hungarian Translation Companies

(100) –

János Domján – –

1118 Budapest, Beregszász út 75. (1) 246-2075 (1) 246-2075 dinno@chello.hu

–

2009 1 10

Association of Hungarian Translation Companies

Ervin Piros (100) –

Ervin Piros – –

1205 Budapest, Hitel Márton utca 41/B (30) 205-8985 (1) 285-0588 forditoiroda@ actamedica.hu

Proford

Jánosné Zsohár (50) Zsuzsanna Zsohár (50) –

Zsuzsanna Zsohár Zsuzsanna Zsohár Zsuzsanna Zsohár

1061 Budapest, Káldy Gyula utca 1. (70) 342-9383 (1) 700-2717 info@aquapr.hu

» »

–

MNV Zrt (100) –

Andrea Belényi József Veit Ágnes László

1062 Budapest, Bajza utca 52. (1) 428-9600 (1) 428-9611 budapest@offi.hu

1988

Professzionális Fordításszolgáltatók Egyesülete

» »

András Muhi – –

1025 Budapest, Pusztaszeri út 70/C (1) 336-1148 (1) 326-5670 muhi.andras@ concord.hu

LinguaPark, Proford

– Morávia IT a.s. (100)

Zoltán Riesz – –

1053 Budapest, Magyar utca 36. (1) 237-1020 (1) 237-1021 zoltanr@ moravia.com

CET TRANSLATIONS FORDÍTÓ KFT www.cet.eu 23

D-INNO BT www.dinno.hu

ACTA MEDICA 25 FORDÍTÓIRODA KFT

–

www.actamedica.hu

Trados

IT, telecommunications, electronics, AV equipment Trados

Medical translation MemoQ

AQUA PR FORDÍTÓ ÉS SZOLGÁLTATÓ KFT 26

www.aquapr.hu

NATIONAL OFFICE FOR TRANSLATIONS 27 AND ATTESTATIONS ZRT

–

Sodexo Magyarország, Illés Logistics, EGIS Gyógyszergyár, MANUTAN HUNGARIA, R. R. Donnelley

–

Largest international IT companies

45,000 65,000

Technical memoQ, Trados

» »

–

2004 2

1994

ISO:9001

www.offi.hu

CONCORD NR FORDÍTÓIRODA KFT

–

www.conford.hu

MORÁVIA IT HUNGARY INFORNR MÁCIÓTECHNOLÓGIAI KFT

294

–

www.moravia.com

Legal translation MemoQ

IT, technical areas Trados and several other

–

» »

–

1997 10 60+

NOTES: (1) Financial data, provided by the companies, is closed by accountants but not yet audited.

»= would not disclose, NR = not ranked, NA = not applicable

This list was compiled from responses to questionnaires received by February 06, 2013 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

3 Socialite

BBJ

Valentine’s Day conquers Hungary Staking a claim to good food – KNRDY

28 31

Hungarian designed takeover BBJ ZSÓFIA VÉGH

People passing by gGalery in California on February 2 were probably surprised by what they saw. Paintings had been removed from the walls and had been replaced by racks hung on a tangled net installation. Attached to the ceiling, undressed dummies were swimming freestyle in the air, stretching their arms ahead of them as if waving hello to their peers displayed on the floor. Nothing about the gallery, now shining in a golden glimmer, resembled its original look. Galery, located in the heart of Santa Monica in a busy shopping area near the sea, has given way a new form of art. The products of 12 Hungarian designers, from fashion to jewelry to furniture occupies the place for the next 10 days, during which time it has been rechristened Showroom Budapest. Gallery owner Gábor Csupó, who moved to the United States in the ’60s and is an Emmy-award winning animation artist (the Rugrats), does not seem to mind. Indeed, it was he who offered his exhibition area to the curators, who have been keen to display examples of Hungarian fashion overseas. Áron Filkey, designer made the interior design, gallery manager Károly Újfalusi also had his fair share of organizing the event. The idea of Showroom Budapest is the brainchild of Mariann Jankovics, a young photographer and stylist. Jankovics, also the heiress of the Jagermeister empire, had done a series of photo shoots for various fashion outlets with her company Arian Illusion. At one of these shoots she met the designer of Sarolt Jewelry, a Hungarian brand known for its grandiose pieces made of leather and precious metal. Jankovics saw uniqueness and potential in Sarolt. She took some photos and the two even created a new gloves line, Yessus. A few months later, Jankovics traveled to Los Angeles with jewelry, gloves and portfolios and called in at a few luxurious L.A. fashion stores. “On second thoughts, it was quite a brave move,” she recalls. “These shops don’t care to receive people from the streets, let alone without fixed appointments.” Still, she succeeded. “One of the shop owners asked when I could ship from the collection on the photos. It was then that it occurred to me, this could work on a large scale.” Why L.A.? “Because it’s very far away and I love challenges,” she laughs. “Los Angeles is the perfect location. People here love fashion, they are open and don’t hesitate to ask you what you are wearing if they like it.”

Preparations for Showroom Budapest kicked off officially when Jankovics returned to Hungary and teamed up with fashion designer Anne Amelié. In selecting other designers they applied a very strict filter. Despite her young age, Jankovics is extremely professional and takes no half-measures. Showroom Budapest looked for designers who created “clearly-defined goods of high artistic value”. Even business cards and display had to look professional. The results of the official opening, mainly attended by local investors, celebrities and journalists, are promising. “We hope that the offers we received are made as seriously as they seem,” Jankovics summarized. Taking Hungarian fashion abroad has become more popular only recently. The Orbán government, keen to forge business alliances across bor-

SHOWROOM BUDAPEST ON DISPLAY IN LOS ANGELES

Photos on this page by Mariann Jankovics

Showroom Budapest, a project to show off Hungarian design flair in the United States, has put the limelight on a sector that is yet untapped abroad: Hungarian fashion.

YESSUS BY SAROLT

SAROLT JEWELRY

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

ders, has embraced design as well. The rationale behind this should not be that surprising. National design is easily distinguished and, if well packaged or tailored to regional needs, can be an excellent export product. Hungary has no shortage of designers, but so far only those hired by multinational firms such automakers Daimler-Benz or Kia have made it abroad. Designers simply lack the funds to be discovered outside of the country: paying the fees of a stand at an international fair is usually well beyond their means. And even if they can afford it, they often return empty handed: it is not sure that prospective buyers will attend such events. Sensing the impasse, the Hungarian International Trade Agency, a government body tasked with boosting investment and exports, stepped in last year. To help designers, HITA either held its own networking events or rented

NATIONAL DESIGN IS EASILY DISTINGUISHED AND, IF WELL PACKAKED OR TAILORED TO REGIONAL NEEDS, CAN BE AN EXCELLENT EXPORT PRODUCT stands at designer fairs in London, Vienna and Paris. The costs of the stand, its installation, and support in finding prospective partners

SHOWROOM BUDAPEST ON DISPLAY IN LOS ANGELES

prior to the events are all taken on by HITA. At TENT London, an invitation-only event, eight people (glass designer Péter Borkovics, product designers Sára Kele, Gábor Kodolányi, Daniella Koós, and László Tompa, porcelain designer Zoltán Lublóy, and textile designers Réka Molnár and Zsuzsanna Sárossy) had the chance to cast light on various aspects of Hungarian design. Four of them did so literally, having designed lamps of all kinds. This year, the agency will give a chance to the winner of Gombold újra to participate at a foreign event. The annual contest for designers in Hungary (from this year opened up to designers from the other Visegrád Four countries: Czech Republic, Poland and Slovakia), is another statesubsidized event for designers to show off their flair. “It was Gombold újra that prompted HITA to support designers more; design is truly a segment of the Hungarian market/industry where we can excel,” said Erzsébet Dobos, director of HITA. “These people are creative, and offer goods at reasonable prices, yet no one has really cared about them at international levels.” HITA plans to appear again at TENT London, Blickfang (in Vienna), and Who’s Next (Paris) plus a few more events in Prague and Germany. Yet the success rate, or rather the ROI, of such events is hard to estimate. The trade agency does try to follow-up and often gets feedback from designers, but it is still hard to calculate. Sales is a better indicator to gauge effectiveness and to map out local taste. That’s also a reason why the creators of Showroom Budapest hope to extend their presence and open shops abroad. ■

28 3 Socialite BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

Will you still be sending me a valentine? Some ten years ago, Valentine’s Day was virtually non-existent in Hungary. And while many people continue lashing out at the foreign nature of the adopted Anglo-Saxon holiday, nothing seems to be able to stop the Valentine’s Day shopping spree. Well, the crisis, maybe. BBJ ZSOLT BALLA

It’s only the early days of February, but the monthly targets of design startup Freshka have almost been met already. The company sells hand-made, crochet toy animal figures, and when they started to advertise their Valentine’s Day sales, offering their toys in “couples” with a slight discount, they found themselves unexpectedly tapping into a sizeable demand. “When I put the first couple up on Facebook, orders immediately started flooding in,” says Andrea Donner, Freshka’s founder and chief designer. By the end of February 1, around half of their monthly target had been completed, and the remainder of the orders swiftly followed in the next couple of days.

While a few people aim to be creative by giving unique or original gifts to their loved one, the vast majority of the estimated 50% of Hungarians who plan to buy presents for Valentine’s Day tend to stick to the good-old recipes. “It’s not just a rose, it has to be a red rose,” exclaims László Müller, owner of flower delivery service Virágneked.hu. According to him, Valentine’s Day is the single most important day of the year for flower stores, and overtook “more traditional” holidays like Mothers’ Day (celebrated on the first Sunday of May in Hungary) or International Women’s day on March 8 long ago. “We can usually generate a month’s volume in a day on February 14, but while the turnover is massive, the day has its collateral downsides too,” he says. “First of all, retail prices are becoming exorbitant around Valentine’s Day, and result in diminishing profit rates. As of February 6, the retail price of roses grew to EUR 1.80, some 30% above the normal price, and this tendency will continue until February 14, although the exact amount is currently unpredictable. Secondly, there is a huge risk involved, as the demand is highly vague, too,” he explains. “If we want to make sure that we can serve every customer, we need to increase our reserves, which inevitably results in more waste than on a usual day.” According to Müller a third aspect to consider is that,

even though February 14 is a very busy period, January and the first half of February are practically dead months for the industry, so Valentine’s Day just about manages to offset the gaps caused by the lack of demand during the preceding weeks. As for yearly trends, the financial crisis has obviously hit the flower industry as well.

While most people consider Valentine’s Day a holiday specifically devoted to couples and lovers, some understand love in a broader sense, or at least they used to do so until the very recent years. “Men, and particularly those in the courting phase of a relationship used to be very generous on Valentine’s Day, while others bought flowers not only for their partner, but also their mothers, daughters, even colleagues or friends. Today, the number of people a man would buy flowers for on this day has strictly decreased to one,” Müller says. While most people opt for roses, international tendencies suggest that more valuable presents, like jewelry, is also taking a fair share of the Valentine’s Day gift frenzy, but in Hungary this is not the case. “Our sales figures don’t tend to show any visible sign of Valentine’s Day,” says Myrtill Hajnal-Uri, owner of premium jeweler Varga Design, adding that the same applies for more mainstream, commercial jewelers, too. “Jewelry is still a popular present for personal occasions, like anniversaries, birthdays or Christmas, but on Valentine’s Day people usually prefer inexpensive gifts,” she concludes. And considering that they only had a month and a half to recover from the Christmasrelated financial meltdown, we shouldn’t be surprised at all. ■

[ PROMOTIONAL FEATURE ]

Modern cuisine at Araz restaurant ARAZ Restaurant is located in 42-44 Dohány utca, in the historic Jewish quarter of Budapest, in the 7th district. A completely renovated exterior façade, a modern interior with a lovely terrace and with a touch of art nouveau from the turn of the century, as well as excellent cuisine and attentive service awaits lovers of gastronomy. The menu of ARAZ Restaurant offers masterpieces of Hungarian and French cuisine, which are prepared with the most modern kitchen technologies of the 21st century. We invite our guests for an exciting culinary adventure, where old and new, traditional and modern cuisine meet. French cooking is at least as exciting for the lovers of flavors as the exploration of a new continent for a globetrotter. The unique harmony of flavors, odors and sight is perhaps best expressed on a plate filled and decorated with French food. Uniquely rich basic materials, unbelievably fresh ingredients, extremely rich fantasy and the aspiration for maximal harmony of flavors characterize French cuisine, from which we offer the most exciting dishes. SIMPLE, SOPHISTICATED AND EXCITING Conscious gastronomy begins with the acquisition of ingredients. The freshest domestic ingredients are used for each and every dish. Our kitchen is characterized by uniquely rich and fresh ingredients, extraordinary fantasy, and the intention of achieving maximum harmony of flavors. Wines from the various regions of the

country and unique cocktails are also offered. Occasionally, live music, free parking in the garage, free WiFi, food vouchers accepted. WORLD-CLASS RESTAURANT STAFF Áron Barka chef de cuisine and Ákos Kovács restaurant manager became members of the world organization, Chaine des Rotisseurs on the XIIIth International Meeting of Grand Chapitre.

VALENTINE’S NTINE’S DA DAY

Surprise your ur partner part pa and compose yourself a four-course dinner menu for Valentine’s Day here in the Restaurant ARAZ! Eszter Szabó’s and Tamás Kontor’s Valentine’s Day romantic concert will be featured in the evening.

Address: 42-44 Dohány Street Budapest, 1074 Reservation: +36 1 815 1100 E-mail: araz@araz.hu www.araz.hu

30 3 Socialite BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

WHO'S NEWS

Name Onczay Gábor Current company/position Jones Lang LaSalle/ head of project development and services

Jones Lang LaSalle recently appointed Onczay head of project and development services. A lawyer by profession, he has been in the building consultancy business since 1998 and has worked for several large corporations. He started his career as facility manager, and was then assigned to Magyar Építő Kft. Later, he joined the development team of Apollo-Sundance and managed the fit-out of the 27,000 sqm Dorottya Palace office building. He spent five years at DTZ. In the past he has managed a number of building renovation and modernization projects, as well as interior fit-outs of approximately 40,000 sqm office and retail units, such as the recently opened 1,100 sqm Hard Rock Café restaurant. He is married with a daughter.

Do you know someone on the move? Send information to research@bbj.hu

Name Dániel Pintér Current company/position Eston/head of property management division

Eston’s Property Management (PM) Division has won an assignment to manage an office portfolio from January 1, 2013. The owner is a foreign property fund, which appointed Eston to handle a volume of more than 20,000 sqm, the company said in a press release. To handle the increased volume of work, Pintér took over leadership of the division at the beginning of the year. Before his current assignment, he worked as head of the office leasing team at Eston for six years. During that period he not only succeeded in providing complex office solutions, but also gained significant experience in project management, office fit-out, portfolio management and operations.

Name Tamás Pál Current company/position Eston/head of office leasing division

Pál succeeds Pintér as head of the office leasing division at Eston. He has 12 years of sales experience, of which he spent seven years in the real estate sector. Before joining Eston, he worked, among others, for Heineken Hungária, Chio Magyarország, Bosch Siemens, Vodafone and Carnation. Eston’s sales team has expanded further with Gergely Kendelényi joining the office leasing staff as a senior advisor. With the specialist having more than 10 years of professional sales experience, Eston’s office broker team has grown to six people, one of the largest sales divisions in domestic agency teams, the company says.

FEB 13

FEB 14

FEB 21

Viral Change, “Next Practice” in change management – Seminar & Cocktail sponsored by GROW OD Group LOCATION Hotel InterContinental Budapest, 1052 Bp, Apáczai Csere János u. 12-14 TIME 4:30 – 7 pm FEE No fee for members ORGANIZER American Chamber of Commerce in Hungary CONTACT www.amcham.hu

Friends of Canada: Happy Valentine’s Day! LOCATION Café Jubilee Budapest, 1055 Bp, Szent István krt 13 TIME 6:30 pm ORGANIZER Friends of Canada CONTACT www.ccch.hu

Breakfast at my company series: LeasePlan LOCATION LeasePlan Hungária Zrt, 1113 Bp, Bocskai út 134-146, Dorottya udvar, Building B, 3rd floor TIME 8:30 – 10 am FEE Members HUF 3,000 + VAT ORGANIZER The Netherlands-Hungarian Chamber of Commerce CONTACT www.dutcham.hu

Presentation by Human Resources Minister Zoltán Balog LOCATION Német-Magyar Gazdaság Háza, 1024 Bp, Lövőház u. 30 TIME 4 pm ORGANIZER German-Hungarian Chamber of Industry and Commerce CONTACT www.ahkungarn.hu

FEB 25

FEB 27

MARCH 8

MARCH 22

Business Forum with Péter Szijjártó, State Secretary for Foreign Affairs and External Economic Relations LOCATION Budapest Marriott Hotel, 1051 Bp, Apáczai Csere János u. 4 TIME 12:30 – 2 pm FEE AmCham members in good standing HUF 12,700/person; non-members HUF 31,750/person ORGANIZER American Chamber of Commerce in Hungary CONTACT www.amcham.hu

Big data, apps and the human factor

Hungarian Business Network: V4 Business Women’s Congress

Budapest International Business Center Conference 2013

LOCATION AmCham Conference room,

FEE For HBN members EUR 12/person;

LOCATION Sofitel Budapest Chain Bridge,

1051 Bp, Szent István tér 11 TIME 9 – 10:30 am FEE No fee for members ORGANIZER American Chamber of Commerce in Hungary CONTACT www.amcham.hu

for non-members EUR 29/person ORGANIZER Hungarian Business Network CONTACT www.businesswomencongress.nl

1051 Bp, Széchenyi tér 2 TIME from 9 am FEE BCCH members HUF 50,000; non-members HUF 63,500 ORGANIZER British Chamber of Commerce in Hungary CONTACT www.bcch.com

3 Socialite 31

BBJ

WWW.BBJ.HU

Budapest Business Journal | Feb 08 – Feb 21

We visited KNRDY, the new steak house in downtown Budapest, on a surprisingly sunny Wednesday noon for a casual business lunch. We have heard two main opinions about this restaurant so far: one says it is not cheap, and the other that it is worth every forint. So whether or not KNRDY really fulfils its promise, we had to figure out for ourselves. The design of the place reminded us of a state of the art bistro somewhere in Manhattan. The furniture was especially designed for the place, and the unique decoration and the light industrial touch provides the eatery with a friendly yet professional atmosphere. The menu is simple, but that is exactly what you expect from such a place. The focus is on the different kinds of steaks, providing a broad spectrum from an Omaha fillet mignon to an Australian Black Angus rib eye. Those with deep pockets can even opt for the famous Wagyu steak which weighs in at a starting price of HUF 6,600/100g. Less rampant carnivores and vegetarians can also choose from a wide variety of fish and some creative vegetable dishes or salads. We shared a Mangalica pork tasting platter (HUF 5,900) with a nice composition of Spanish cured ham, smoked/cooked ham, and two

kinds of salami to start. We could not resist the temptation of the homemade bread and the lightly salted Belgian butter, so we were almost full on the starter alone. As a main course I had an Omaha fillet mignon (HUF 12,900) and choose grilled spinach and leek gratin (HUF 1,500) and a portion of grilled asparagus (HUF 1,500) as a side dish. The steak was precisely what the waitress suggested I opt for: succulent and juicy, prepared perfectly medium-rare. The sides were amazingly fresh and tasty, the grilled tomato coming with the steak was surprisingly tomato tasting, reminding me of the real tomatoes of the summer. My friend ordered seared king scallops on cumin and coriander lentils (HUF 5,900). The scallops were light and tasty, while the lentils gave the dish a creative and slightly exotic touch. We had a glass of fruity D’Esclans Whispering Angel rosé (HUF 1,580/15 cl) each, and got fresh filtered water on the house automatically. People say one should always save some extra room for dessert, so we shared a New York Cheese Cake with plum compote (HUF 1,900). The cake was excellent, soft and delicious, and the plums were in perfect harmony with the slight saltiness of the cheese cream. All in all we found KNRDY a great place for a long, comfortable and delicious meal, be it lunch or a dinner. The staff have a passion for quality and its menu makes the restaurant stand out from the culinary venues of Budapest. Ratatouille

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Photos: KNRDY American Steakhouse and Bar

Staking a claim to good food

KNRDY American Steakhouse and Bar 1051 Budapest, Október 6. utca 15., +36 (1) 788 1685, www.knrdy.com

Price range

Speed of service

Sommelier

Business menu

Breakfast

Vegetarians welcome