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GOING GLOBAL CONFERENCE REVIEW AND MORE PAGES 22-26
MAY 31, 2013 – JUNE 13, 2013
VOL. 21. NUMBER 11
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OUT OF THE DOGHOUSE 2.7%
Photo: European Commission
of GDP projected deficit for 2013
European Commissioner for Economic and Monetary Affairs Olli Rehn announced Hungary is finally off the hook: the government has achieved its big goal of crunching the numbers and raising taxes alongside cutting costs to the extent that Brussels has finally decided to end a nearly decade−long scrutiny of the country’s budget deficit. 03
Banks flock to MNB for stimulus Responding to unexpected high interest for its “Funding for Growth” stimulus plan, the central bank has upped the total budget for the scheme by 50%. The effort offering banks free money is set to stay popoular and therefore set to continue. 07
Shoring up the budget Hungary continues to offer foreigners residence in exchange for the purchase of a permit at a hefty price. While this is seen as a source of budget revenues, it also has the potenteil to place state assets in offshore control. 08
A matter of life and death Both the number of live births and deaths decreased in Q1. 10
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SITTING PRETTY The governing political side can rejoice and rightfully so: even as the means to the end were widely questioned, Prime Minister Viktor Orbán has squeezed the economy until, after nearly a decade, Hungary has exited the Euro− pean Union’s excessive deficit procedure. Although the European Commission’s proposal still has to be approved by the next assembly of EU finance minis− ters, the biggest question now is what Orbán will do with the economic leeway that becomes available less than a year before the next general elections in 2014. The prime worry among politicians, as well as investors, was whether the government would look to open the money taps to improve public sentiment with the aim of boosting votes. While Economy Minister Mihály Varga repeatedly stated that no such plans are on the agenda, a look at the situation shows that there is also no need. It is becoming very clear that the next elections are Orbán’s to lose and there isn’t any need for budget hand− outs. Perhaps the memory of the 2002 elections is still vivid in Orbán’s mind, when despite all the odds and all the polls, the first Fidesz government was ousted from gov− ernment and was kept in opposition for the ensuing eight years. This time, he went for sure. High on the agenda was restructuring electoral districts in several locations that now clearly favor
the conservative side. Voting rights were extended to ethnic and expat Hungarians, still relying on the assumption that the Hungarian minority in neighbor− ing countries will vote for the right, especially since the left wing campaigned against a similar measure a few years ago. The governing Fidesz party is campaigning on a virtually daily basis to point out the harmful policies enacted by former Prime Minister Gordon Bajnai in the past, who has reemerged as a challenger for 2014. (The rhetoric came fast on the heels of communication from Fidesz that it doesn’t consider Bajnai a viable threat.) The government has likely already enacted the brunt of its pre−election package by forcing the utilities to shoulder a mandatory price reduction, which may altogether reach 30% by the end of the year. This has boosted approval rat− ings without affecting the central budget. Its persistent lead in the polls is also supported by last− ing fragmentation among the political opposition, which is no closer to crystallizing the terms of any cooperation that could result in victory at the next elections. There is still time and game changing events have been known to happen, but right now, betting on another four years of Fidesz governance doesn’t seem a particularly risky bet.
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Viktor Orbán’s second government celebrated its third year in office on May 29 and marked the occasion by reliving the achievements of the tumultuous period between 2010 and the spring of 2013. According to a sur− vey published by the Századvég politi− cal think−tank, the majority of Hungari− ans think that Orbán’s government is per− forming way better than its left−liberal predecessors. A sep− arate survey by the Századvég institute found that the two− thirds government majority has already realized 75% of the things it promised before its 2010 elec− tion victory. While other anal− yses from sources that are less... sup− portive in their cover− age of Fidesz say the ratio could actually be reversed, it should also be noted that the Orbán’s success had many casualties and still carries the pros− pect of dire conse− quences in the future. The government was always more than ready to use its super majority to make in−depth changes to the fabric of society as well as the economy – often over− night, leading to all sorts of commotion – but it was also very focused regarding which layers of society are worth
putting at a disadvantage and which are sacrosanct. Accordingly, it spared no expense to keep pensions above inflation and also maintained benefits for the elderly, while revamping the education system that led to the exclusion of thousands of young people from ter− tiary education and com− pelled them to seek better opportunities abroad. It introduced a flat rate taxation system that favored the middle class and the wealthy while it limited welfare for the impoverished. It introduced crip− pling taxes on foreign− owned companies on the grounds that they should pitch in more to support a troubled economy, which only led to prices increas− ing and lending coming to a standstill. It played what could well be an election−win− ning card and reduced household utility costs at the expense of the providers, guaranteeing that necessary develop− ments to the infrastruc− ture are now off the agenda with the looming prospect of outages. It has completely reshaped the demo− cratic institutional sys− tem to its own taste and solidified it for years to come on a constitutional basis. When all is put on the scale a few years from now, let’s just hope we won’t be wishing it had done much, much less.
ORBÁN’S SUCCESS HAD MANY CASUALTIES AND STILL CARRIES THE PROSPECT OF DIRE CONSEQUENCES IN THE FUTURE
NEWS IN BRIEF
MNB continues easing cycle
Here comes the ad tax
BRUSSELS TO FINALLY LIFT DEFICIT SCRUTINY Following bout after bout of clashes over economic and political affairs, the Hungarian government has reached its coveted goal and achieved a recommendation from the European Commission to end the scrutiny targeted at its finances that has been in effect since the country joined the European Union in 2004. The EC has made similar suggestions for Latvia, Lithuania, Italy and Romania.
STORY HIGHLIGHTS ■
Commission recommends ending scrutiny of Hungary’s budget deﬁcit ■ Government pledges to keep the economy stable in the long run
EDP remains in place. They followed a hand− ful of measures announced late last year that eventually kept the 2012 gap at 1.9% of GDP. As a further option, Prime Minister Vik− tor Orbán commissioned the drafting of a bill that would introduce a tax on advertising. The
planned tax would be multi−bracketed and paid by the media publishing the ads. The tiers are drafted so as to demand the biggest contributions from the two national commer− cial television stations, since the brunt of the tax would be payable by media organizations with annual revenues exceeding HUF 10 bln. Only RTL Klub and TV2 qualify. “The plans for the advertisement tax came as a surprise to us, its volume is surprising and completely unacceptable: it will bank− rupt companies with revenues above HUF 10 bln while on the budget side it doesn’t consti− tute considerable revenues, seeing that we are
dealing with an advertising market worth less than HUF 100 bln,” TV2, one of the stations, responded in a statement. While Orbán seemed insistent that the ad tax would be introduced, a day before the EDP announcement in Brussels Varga told InfoRádió that the new levy would only be introduced if additional steps are required to leave the procedure. In contrast, government spokesman András Giró−Szász said after the EDP announcement that there would indeed be a tax on adverts, and that state secretary János Lázár will be in charge of hammering out the details with the affected parties.
The latest country−specific recommenda− tion released by the EC forecasts a deficit of 2.7% of gross domestic product this year and 2.9% in 2014, both below the 3% toler− ance threshold, warranting the termina− tion of the excessive deficit procedure. The spring forecast saw the gap at 3% and 3.3% this year and next, respectively. “After exiting the EDP, Hungary would move from the corrective arm to the preven− tive arm of the stability pact,” European Com− missioner for Economic and Monetary Affairs and the Euro, and vice president of the Euro− pean Commission Olli Rehn said. What this entails is that Hungary must now focus on mid−term economic goals that will allow it to ensure long−term stability, he added The announcement means that the Eco− nomic and Financial Affairs Council (ECO− FIN), the assembly of EU finance ministers, can pass the resolution at the next scheduled meeting in late June, ending the threat of Hungary losing up to HUF 1 trillion in sorely needed development funds as a consequence. MORE CORRECTIONS Following yet more doubts about the sustain− ability of Hungary’s budget gap targets from Brussels, Economy Minister Mihály Varga yet again announced a set of stringency mea− sures. The package is set to reduce central expenditure by a total of HUF 92.9 billion in order to assure that the deficit will be under the 3% mark in 2013 as well as next year. The set of measures includes the suspen− sion of spending at ministries and other state institutions, and the suspension of state− financed projects. Varga stressed that these are provisional decisions and will only take effect if Brussels is still unconvinced and the
ECONOMY MINISTER MIHÁLY VARGA
Photo: Lajos Soós/MTI
EYES ON 2014 The biggest concern voiced earlier by the EC about the Hungarian measures was a lack of sustainability, namely that cer− tain items on the revenue side, such as the planned treasury takings from the intro− duction of the electronic road toll system, or linking all cash registers to a central com− puter system, only exist on paper and won’t be manifest in actual budget revenues. Another concern shared by Brussels (as well as market analysts) is the fact that 2014 is an election year, when Hungarian govern− ments typically become more generous to the electorate and increase benefits to maximize votes. Unsurprisingly, Varga has taken every speaking opportunity to stress that this will not be the case and that the government has no intention whatsoever of creating an “elec− tion budget” for 2014. “Hungary didn’t make the efforts to reduce the budget gap to exit the EDP – that’s just an associated gain – but because we are commit− ted to reducing debt and to assure the coun− try is able to finance itself from the markets,” Varga said after the EC’s announcement. Hungary’s goal is to achieve disciplined finances and budget in 2013 as well as 2014, as laid out in the country’s convergence pro− gram, he added.
HUNGARY DIDN’T MAKE THE EFFORTS TO REDUCE THE BUDGET GAP TO EXIT THE EDP BUT BECAUSE WE ARE COMMITTED TO REDUCING DEBT AND TO ASSURE THE COUNTRY IS ABLE TO FINANCE ITSELF FROM THE MARKETS
NEWS FOR THESE PAGES IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, HUNGARY A.M.
Budapest Business Journal | May 31 – June 13
You, my dear Madame Merkel, aren’t even ﬁt to carry Mr. Orbán’s umbrella Eszter Dunst, deputy chairwoman of the Women for the Hungarian Nation group, voicing her defense of Prime Minister Viktor Orbán against criticism from Germany.
Some 1.5 million individuals waited until the final hours to submit their annual personal income tax or SzJA disclosure documents on May 21. In comparison, the tax authority NAV received 4.4 million packages last year. It warned that those missing the deadline may receive a fine of up to HUF 200,000. To accommodate what predictably became a last minute rush, NAV kept its customer service offices open longer in the final run−up to the deadline.
ECONOMY MNB CONTINUES EASING CYCLE, AS EXPECTED
The National Bank of Hungary’s Mon− etary Policy Council decided on May 28 to cut the central bank’s key rate by another 25bp, to 4.5%, for the tenth month in a row. The decision, in line with market expectations, brought the rate to a new historical low. In a state− ment published after the meeting on Tuesday, the council said fresh macro− economic data suggests weak demand continues to limit pass−through of higher production costs into consumer prices, and risk perceptions associated with the Hungarian economy have im− proved. “The outlook for inﬂation and the real economy point to a reduction in interest rates,” it said. The council said inﬂation risks would “remain mod− erate” in the medium term. “The coun− cil will consider a further reduction in the policy rate if the medium−term out− look for inﬂation remains in line with the bank’s 3% target and the improve− ment in ﬁnancial market sentiment is sustained,” it added.
was narrower in the case of expendi− ture, which reached 32.4% of the annual target by the end of April. Within the total, four−month central budget reve− nue reached 28.7% of the annual target as against 30.7% a year earlier. Four− month central budget expenditure stood at 32.5% of the full−year goal, and was slightly ahead of the 31.5% respec− tive ratio last year. RETAIL SALES FALL 2.9% IN MARCH
Retail sales in Hungary fell a calendar year−adjusted 2.9% year−on−year in March, accelerating from a 1.2% de− cline in the previous month, the Cen− tral Statistics Office (KSH) said. The March drop was revised slightly from a 2.8% decline in a ﬁrst reading published on May 6. Retail sales were down every month yr/yr in the past 12 months. Food sales dropped a calendar−year− adjusted 1.1% in March. Non−food sales fell 3.4% and vehicle fuel sales were down 4.8%. Unadjusted data shows retail sales edged down 0.4% in March, slowing from a 2.3% decline in February. In absolute terms, retail sales came to HUF 659.7 bln in March. Food sales reached HUF 320.9 bln and non− food sales were HUF 217.9 bln.
MINISTRY CONFIRMS HUNGARY 4-MONTH DEFICIT AT 60% OF FULL-YEAR TARGET
GROSS WAGE GROWTH ACCELERATES TO 3.2% IN MARCH
Hungary posted a cash ﬂow−based general government deﬁcit, excluding local councils, of HUF 528.6 bln in the ﬁrst four months of 2013, or 60% of the HUF 841.8 bln full−year target, the National Economy Ministry said in a second reading. All main ﬁgures for April as well as for the ﬁrst four months were unchanged from a ﬁrst reading released on May 7. Four−month central government revenue, at 30.8% of the annual total, was behind the pro−rata target. The gap to the pro−rata ﬁgure
Average gross wages in Hungary rose 3.2% year−on−year in March after a 2.7% increase in February, the Central Statistics Office (KSH) said. Gross wage growth accelerated from a low base a year earlier. Gross wage growth in the business sector, at 2.7% year− on−year in March, was up from 1.2% in February. Average gross regular wages – excluding premiums and bonuses – continued to grow at a higher pace in the sector than headline wages, rising 3.2%. The average gross wage in the
Numbers in the news
−16.7 POINTS the GKI−Erste combined consumer− business confidence index in May, rising from −21.7 points in April, reaching a two− year high.
the amount of debts owed to tax authority NAV, accumulated by 500,000 companies and 1.2 mln private individuals.
public sector rose 4.5% in March, slow− ing from a 6.5% increase in February. The average regular gross wage in the sector rose less, by 3.8%. Eliminating the effect of remuneration for fostered workers, public sector gross wages rose 4.1% in March, including a 3.4% rise of regular wages. HEALTH INSURANCE FUND RECORDS HUF 42 BLN SURPLUS IN JANUARY-APRIL
The Health Insurance Fund had a HUF 41.7 bln surplus in January− April, HUF 6.6 bln more than a year earlier according to the economy min− istry’s four−month report. The fund is targeted to break even revenue and spending of more than HUF 1,800 bln for the entire year. Four−month reve− nues exceeded the pro−rata target by HUF 20 bln, and expenditures were below the four−month equivalent of the full−year target by HUF 22.5 bln or 4%. Pharmaceutical manufacturers paid HUF 23.8 bln to the fund, 45% more than the pro−rata target, and the health tax generated revenue of HUF 48.4 bln compared to the pro− rata target of HUF 38 bln. The acci− dent tax yielded revenue of HUF 10 bln compared to the targeted HUF 8 bln, however, the public−health prod− uct tax (“chips tax”) generated HUF 6 bln, less than the targeted HUF 7 bln, the daily Napi Gazdaság reported.
DOMESTIC PARLIAMENT APPROVES E-TOLL
Parliament on May 27 approved a law introducing a proportional electronic toll on Hungarian motorways, dual car− riageways and highways. The toll will be payable on lorries weighing more than 3.5 tons from July 1, 2013. The
law was approved with 251 ayes, 86 nays and two abstentions. The exact rates will be determined in a separate decree to be issued soon. Lawmakers have authorized the government to specify details for exempting from the toll through a decree farmers transport− ing live animals and, for the harvest period, farmers’ own vehicles carrying farm produce. The government has of− fered a compensation package of more than HUF 10 bln to transporters. NUMBER OF FORECLOSED PROPERTIES DESIGNATED FOR SALE IN Q2 RISES TO 3,752
Financial institutions designated for the second quarter 3,752 foreclosed residential properties for sale, 192 more than for the ﬁrst quarter, data published by the Hungarian Financial Supervisory Authority (PSzÁF) shows. A total of 20,912 properties have been designated for forced sale since Octo− ber 1, 2011, when legislation establish− ing designation quotas came into force. The number of retail properties related to mortgage loans in arrears over 90 days was 115,076 in Q2, rising 4,406 from Q1 and up nearly 7,900 in one year, the ﬁgures show. Based on the 4% quota applying for all quarters this year, ﬁnancial institutions could have designated a maximum 5,202 proper− ties for sale for the quarter. However, they only used 72% of the quota for Q2. Use of the quota has fallen after peak− ing at 84% in Q2 2012. Banks could designate a maximum of 2% of homes under foreclosure for mandatory sale in the fourth quarter of 2011, and the quo− ta rose to 3% of such homes in 2012, to 4% this year and will rise to 5% in 2014 before being phased out in 2015. The quotas are for homes with a value up to HUF 30 million, and are distributed among counties and banks.
Photo: János Marjai/MTI
PERSONAL INCOME TAX SEASON COMES TO AN END
Budapest Business Journal | May 31 – June 13
Hungary’s state lottery company, Szerencsejáték, has announced the launch of its sports betting website www.tippmixpro.hu. Italy’s GTECH G2 wound up development and delivered the site to Szerencsejáték in December and test operation started soon thereafter.
WINE FLASH MOB IN DOWNTOWN BUDAPEST
After-tax profit of spirit maker Zwack Unicum fell 15% to HUF 1.44 bln in its business year ended March 31 as margins narrowed, the company said in an IFRS earnings report. Sales net of excise tax fell 2% to HUF 12.08 bln. Zwack Unicum noted that research shows Hungary’s spirits market as a whole contracted almost 10% during the period. Material costs climbed more than 1% to HUF 5.59 bln, causing gross margin to fall 5% to HUF 6.49 bln. The company cut its operating costs by more than 6% to HUF 5.42 bln. The board will propose to shareholders payment of a HUF 1.58 bln dividend on the business year just ended, the agenda for the company’s annual general meeting shows. If shareholders approve the proposal at the AGM on June 27, Zwack Unicum will have to dip into profit reserves to pay the dividend, as the profit and loss statement for the 2012/13 business year, calculated with Hungarian Accounting Standards, shows after-tax profit of HUF 1.20 bln. The dividend works out to HUF 775 per share.
Photo: Imre Földi / MTI
ZWACK UNICUM PROFIT FALLS AS MARGINS NARROW
OTP Bank could be in talks on acquiring Eurasia Bank of Kazakhstan, Privatban− kar.hu said, citing Kazakh news agency KazTag. The Russian banks VTB Bank, Alfa Bank OJSC and Promsvyazbank (PSB) are also interested in buying Eurasia Bank, according to KazTag. Magyar Telekom is entitled to about €17.5 mln, or HUF 5.1 bln, in dividends from Crnogorski Telekom A.D. Podgorica, its 76.53%−owned Macedonian unit based in Montenegro, Magyar Telekom announced. The shareholders of Crnogorski Telekom approved total dividend payments of €22.9 mln on 2012 at their recent annual meeting. Seventeen campgrounds valued at more than HUF 20 bln on the shores of Lake Balaton, earlier owned by property developer SCD, will be put up for sale in the coming months, business daily Napi Gazdaság said. Liquidator Vectigalis wants to get at least 70% of the appraised value of the properties. Netherlands−based TP Vision will close the company’s television factory in Székesfehérvár at the end of 2013 and move production to co−owner TPV Technol− ogy’s plant in Gorzow, Poland, TP Vision told MTI. TP Vision, which manufactures Philips television sets, will lay off 370 of its 400 workers in Székesfehérvár. Hungarian pasta maker Gyermelyi is spending HUF 330 mln on developments at its logistics units, marketing director Gábor Bokros told MTI. Gyermelyi won HUF 116 mln in European Union grant money and state co−ﬁnancing for the invest− ment, Bokros said. Hungarian IT company Synergon is acquiring peer Navigator Informatikai from Wallis Asset Management for HUF 515 mln. Navigator Informatikai provides outsourced IT services. Synergon said the transaction would raise its annual rev− enue by HUF 1.5 bln and its EBITDA by HUF 450 mln. The Hungarian unit of Dutch automotive industry supplier Bosal has completed a HUF 950 mln investment. Bosal Hungary won a HUF 226 mln European Union grant for the investment, which created 25 jobs. National Economy Minister Mihály Varga has met with Executive Vice President Toshihiro Suzuki of Japan’s Suzuki Motor Corporation regarding the company’s possible further investment in Hungary, the National Economy Ministry told MTI. The ministry offered no further detail on the talks. Rail Cargo Hungária will provide railways logistics services and rail freight sup− port to a HUF 3.5 bln trimodal logistics center being built by the Xanga group at Debrecen airport under a recently signed agreement. Xanga group is the operator of the Debrecen airport. IT products maker Hewlett−Packard (HP) Magyarország Kft is set to expand its Hungarian service center supporting Europe, the Middle East and Africa, the head
Participants drank Hungarian wine at a wine flash mob organized by the Ihatóbb Magyarországért Egyesület (association for a more drinkable Hungary) on Erzsébet tér in downtown Budapest on May 23. Pictured are rural development minister Sándor Fazekas (right) and the chairman of the association, István Gábriel Nyulasi (left).
of the company’s local arm Péter Bodacz told political daily Magyar Nemzet. The expansion to the hub currently employing 2,300 people is set to take place later this year, Bodacz said. The board of Hungarian entertainment guide publisher Est Media will propose to shareholders that the company reduce registered capital from HUF 3,959,267,400 to HUF 197,963,370, Est Media announced. It said that the measure is necessary because the company’s net assets had dropped below two−thirds of registered capi− tal, a minimum requirement, as of December 31, 2012. The government has accorded “matter of primary importance” status to the investment of Lego Manufacturing, the Hungarian unit of Danish construc− tion−toy manufacturer Lego, in the city of Nyíregyháza, the latest issue of the official gazette Magyar Közlöny reveals. Primary importance means that the investor can expect accelerated treatment from authorities, which are desig− nated by the government. ZF Lenksysteme Hungária, the Hungarian unit of German vehicle steering−sys− tem manufacturer ZF Lenksysteme, has inaugurated a HUF 4 bln production hall at the unit’s plant in Eger. ZF Lenksysteme Hungary received HUF 1 bln in sup− port for the investment through the government’s New Széchenyi Plan. Subprime lender Provident said it disagrees with a ruling of the Competition Of− ﬁce (GVH), in which it ﬁned Provident HUF 50 mln for misleading advertising. GVH said the company failed to inform consumers on key elements of participa− tion in a special offer, in which borrowers who made repayments as scheduled throughout the term of their loan were repaid one or two weeks’ repayments. U.S. automotive industry supplier BorgWarner has inaugurated an HUF 8 bln ex− pansion at its turbo charger plant in Oroszlány. The company won HUF 1.5 bln in grant money for the investment, which created almost 100 jobs, and the unit plans to increase capacity by another 50% in the coming three years. The Hungarian unit of German automotive industry supplier Brose has completed a HUF 675 mln investment at its base in Kecskemét, home to German peer Daim− ler’s plant in Hungary. Brose Hungary Automotive won HUF 106 mln in European Union funding and state co−ﬁnancing for the investment, which created 35 jobs. Regional electricity distributor EDF Démász is eliminating 198 full−time posi− tions, local daily Délmagyarország said. The affected staff – 14% of the total at EDF Démász – are leaving on a voluntary basis, swayed by attractive severance pack− ages, the paper said. OTP Ingatlan, the real estate unit of Hungary’s biggest commercial bank, plans to inaugurate a 206−unit residential park in Győr in the fourth quarter of this year, CEO Tamás Ádány said at a press conference at the site. OTP Ingatlan was commissioned to complete the development by Alexander Kft.
Budapest Business Journal | May 31 – June 13
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EU PROBES OIL MAJORS ON PRICE MANIPULATION The European Commission said on May 14 it was investigating major oil companies over suspected anti−competitive agreements related to submission of prices to reporting agency Platts. Royal Dutch Shell Plc, BP
Plc and Statoil ASA said they are being in− vestigated after the European Commission conducted raids in three countries. Platts, a division of McGraw Hill Financial Inc, which publishes pricing benchmarks used by the oil industry, said regulators also visited it. “The Commission has concerns that the compa− nies may have colluded in reporting distorted prices to a price reporting agency to manipu− late the published prices for a number of oil and biofuel products,” it said.
FALCON OIL AND GAS STARTS DRILLING IN HUNGARY Denver−based Falcon Oil and Gas has started a drilling campaign in the Makó Trough of Hungary, Proactiveinvestors said. Falcon Oil and Gas’ local unit, TXM Olaj− és Gázkutató, signed a declara− tion of intent with Naftna Industrija Srbije (NIS) of Serbia on gas production in the Makó license area in June 2011. Proactiveinves− tors said NIS will drill the ﬁrst well at a depth of around 3,000m. The rig is expected to be moved around the end of the month and spudding will begin in mid−June, it added.
FINANCIAL LOSS NUDGES ALTEO INTO RED IN Q1 Hungarian energy supplier and trader Al− teo ﬁnished the ﬁrst quarter just under the break−even mark as ﬁnancial losses pushed the company into the red. Revenue climbed 14% to HUF 2.02 bln, Alteo’s consolidated IFRS report shows. Gross proﬁt rose 8% to HUF 387 mln and EBITDA was up 44% at HUF 370 mln. But ﬁnancial losses swelled to HUF 265 mln from HUF 33 mln in the base period to give Alteo a HUF 13 mln net loss. The company had net proﬁt of HUF 168 mln in Q1 2012. Alteo had total assets of HUF 9 bln on March 31, up 6% from the end of 2012. Net assets edged down a little less than 1% to HUF 1.88 bln.ts only about a quarter of the gas it uses.
Photo: Gergely Zoltán Kelemen / MTI
EU TIGHTENS OFFSHORE-OIL REGULATION The European Union tightened safety rules for offshore oil and natural−gas exploration to curb the risk of a major accident after BP Plc’s 2010 spill in the Gulf of Mexico. The Eu− ropean Parliament approved legislation that forces oil and gas companies to submit spe− cial hazard reports and emergency−response plans before offshore operations can start, media reported. The law also requires opera− tors of offshore platforms to prove their abil− ity to cover potential liabilities and extends the zone in which businesses would be liable for damage to 370 kilometers (230 miles) off the coast from the current 22 kilometers. “The rules we are currently coming up with can be used as a template at international lev− el,” Ivo Belet, a Belgian member who steered the legislation through the 27−nation EU as− sembly in Strasbourg, was quoted as saying on May 21.
THE NABUCCO NATURAL GAS PIPELINE could be extended to supply countries across most of Eastern and Southeastern Europe, the governments of the consortium countries (Austria, Hungary, Romania, Bulgaria and Turkey) agreed on May 21.
NUMBER OF PEOPLE RELOCATING TO GERMANY, 2012
NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, REGIONAL TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE
MORE EFFORT NEEDED FROM TURKEY FOR EU ACCESSION Turkey is likely to take a long−awaited step on its path towards European Union entry next month, the EU said on May 27, after France eased its opposition to Ankara’s ac− cession talks. It is “in the interest of both par− ties that accession negotiations gain further momentum”, a statement by the EU said. But the “EU noted with deep regret that Turkey, despite repeated calls, continued refusing to fulﬁll its obligation of full, no−discriminatory implementation” of the terms set for the ne− gotiations. However, Turkish Foreign Minis− ter Ahmet Davutoglu voiced disappointment with the dawdling pace of his country’s bid to join the EU. Turkey’s EU talks have ground to a halt in recent years, in part because of opposition from France, as well as because of an intractable dispute between Ankara and Cyprus. Relations with France have im− proved since the arrival of President Francois Hollande last year. SERBIA BACKS KOSOVO IMPLEMENTATION PLAN Serbia has adopted a roadmap on implement− ing its historic deal to normalize relations with Kosovo, taking another step key to their integration into the European Union, officials said on May 27. Serbia’s Prime Minister Ivica Dacic informed the EU’s foreign policy chief Catherine Ashton that his 11−month old
cabinet backed the implementation pact “as a status neutral document”, the government’s press office said on its website May 26. Dacic and his Kosovo counterpart, Hashim Thaci, agreed on May 22 on a plan to carry out their April 19 preliminary, EU−mediated pact to normalize ties after years of conﬂict and ten− sion, paving the way for reconciliation and talks on joining the EU. SLOVENIA CHANGES CONSTITUTION TO COUNTER BAILOUT RISK Slovenia’s Parliament voted on May 24 to change the constitution to ensure govern− ments run balanced budgets from 2015. Prime Minister Alenka Bratusek’s two− month old government is racing to persuade ﬁnancial markets and the European Com− mission that it can enforce long−delayed reforms and avoid becoming the sixth euro zone country to seek aid. Slovenia is strug− gling to curb a budget deﬁcit that has soared since the global crisis ravaged its export− driven economy and is forecast to double this year to 7.9% of output. The Adriatic country is the only ex−communist state in Europe not to have sold its main banks, which are choking on most of the ﬁnancial sector’s €7 billion ($9 billion) of bad loans. PEOPLE FROM SOUTHERN AND CENTRAL EUROPE HEADING TO GERMANY Some 34,000 Greeks relocated to Germany
last year, an increase of 43% compared to 2011 when 23,800 Greeks moved there, ac− cording to German government statistics. It is not only Greeks who are increasingly seeking a better life in prosperous Germany, but a growing number of people from other debt−hit countries in Southern Europe. Last year, 29,000 Spaniards, and 42,000 Italians moved to Germany, according to the statis− tics. The largest inﬂux, however, was from Central Europe, with 176,000 Poles, 116,000 Romanians and 59,000 Bulgarians relocating to various parts of Germany.
LABOR LAW AMENDMENTS APPROVED BY POLISH GOVERNMENT On May 21, the Polish government adopt− ed the Labor Minister’s document on mea− sures directed to protect employees and businesses during economic downturn, the government press office said. The draft law introduces regulations that consider direct ﬁnancial aid to troubled businesses that could be used to subsidize payrolls. The solutions will protect jobs in a period of production or work time reduction, the gov− ernment press office said in a statement. Support will be granted to businesspersons who record an at least 15% turnover decline in six subsequent months in the period of 12 months preceding the submission of the respective motion and who will have been forced to cut working hours or suspend operations on that account, the statement reads. The beneﬁts will be granted for a pe− riod of up to six months. JUST 5% OF TAX FINES CASHED IN GREECE Less than 5% of ﬁnes imposed on taxpay− ers by administrative courts in recent years have reached public coffers, despite efforts being conducted through changes in tax legislation, ekathimerini reported. Accord− ing to the news site, Greek Finance Min− istry data shows that the ﬁnes imposed for tax cases add up to €14 bln, or 7.2% of gross domestic product. This concerns ﬁnes im− posed by the ministry’s Taxis Net monitor− ing mechanism, but which were disputed by taxpayers and ended up in court. The tax collection mechanism, however, has only managed to collect €688.5 mln, or 4.91% of the total. Notably, the €14 bln ﬁgures include €4.8−bln on the Acropolis stockbrokerage ﬁrm.
Budapest Business Journal | May 31 – June 13
HERE COMES THE AD TAX
The cabinet decided to submit a proposal to Parliament on the introduction of a tax on advertising at its meeting on Wednes− day, government spokesman András Giró− Szász confirmed. Prime Minister Orbán mentioned the advertisement tax for the first time just a week earlier, when he said it should be introduced parallel to an increase in the financial trans− actions duty, the bank levy and the energy tax to ensure that the Excessive Deficit Procedure against Hungary was lifted. The economy ministry published a draft of the tax last Fri− day and the government had already decided to accept it as a proposal at Wednesday’s reg− ular meeting, even if news regarding the EDP turned in Hungary’s favor meanwhile. A tax on advertising is not a new idea in Hungary. It was first proposed back in 2000, when the government would have been taken 6% of all advertising income of printed and electronic media in an extraordinary levy. However, the first Fidesz−government didn’t supported the idea (proposed by its own MPs), and turned it down. At a meeting of the National Reconcilia− tion Council in 2008, unions proposed a 3% tax due to the aggressive bank loan advertise− ment practice. This proposal would have col−
EXTRAORDINARY TAXES PROPOSED BY THE GOVERNMENT SINCE 2010
INTRODUCED Bank levy Telco levy Energy sector levy Retail sector levy
The negative outlook of Hungarians regarding the financial situation and future outlook didn’t improve in 2013 Q1, according to a new survey of Cofidis personal creditor. One in eight Hungarians can’t even cover monthly expenditures from their salary.
Accident tax Tax for public health (hamburger tax) Phone call tax Insurance tax Financial transaction tax Utilities tax Tightening of local business tax PLANNED Tax on advertising
Media levy (weather tax) Source: Portfolio
Another extraordinary tax – this time on advertising – was proposed to Parliament by the government at the end of May, and now looks likely even given the European Commission’s recommendation to lift the Excessive Deficit Procedure (EDP) against Hungary.
Deposit on most beverage packaging
lected the tax from the ordering companies and online sites with advertisements, but that proposal, too, failed to garner any support. Again, before the 2010 general elections, far−right party Jobbik said a tax on advertis− ing was a good idea, and it wasn’t rejected out of hand by the center−right MDF, then still a parliamentary party, or the newborn, but not yet in parliament green LMP. But with Fidesz winning the elections, all these ideas were quickly forgotten. Until now. While the government’s intention in introducing the new tax is clear, any detail
on the new tax is still subject to guesswork. Based on previous ideas, a 3−6% levy on the sector would lead to a budget income of HUF 5−10 billion, even if the Hungarian media market shows clear signs of war wea− riness, even without additional taxes. Last year, HUF 174 billion was spent on adver− tising, below even the HUF 176 billion recorded in 2006. According to the Hun− garian Advertising Association, ad spend fell by 2.9% in 2012, but in areas like tele− vision and the printed media, the decrease was more than 10%.
BANKS FLOCK TO MNB FOR STIMULUS In response to overwhelming interest from the banking sector, the National Bank of Hungary is expanding its “Funding For Growth Scheme” by 50%. GERGŐ RÁCZ
Governor György Matolcsy announced that the MNB will increase the amount available in two different pillars of the stimulus plan, seeing that interest from commercial banks had exceeded expectations. The amount of refinancing available for new loans targeted at small− and medium− sized enterprises will be raised to HUF 425 billion from HUF 250 bln. The MNB will raise the amount of refinancing for the conversion of foreign currency− denominated SME loans to HUF 325 bln from HUF 250 bln. Matolcsy said about 90% of banks could place the entire amount of refinancing for new SME loans while 96% could place all of the refinancing for FX loan conversions, whereas initially the MNB was expecting around two−thirds of banks to apply. Of
HUNGARIANS REMAIN PESSIMISTIC
40 partner institutions, 36 are getting refinancing for new SME lending and 27 are getting refinancing for FX loan conversions. “This is a slight surprise as the MNB originally said it would see how the first pilot phase went from June to August, but it shows that if you are offering free money there will be a lot of demand for it! It also shows that the MNB is willing to pump as much liquidity into the system as is required to boost lending and growth (and gain the required political capital),” Nomura analyst Peter Attard Montalto said in a comment. The MNB offers the funding at 0% interest and limits banks’ margin at 2%. Oversubscription for refinancing for new SME lending was three−fold and oversubscription for refinancing for FX loan conversions was double. Deputy governor Ádám Balog said the MNB estimates the program could contribute 0.2−0.5% to gross domestic product by the end of 2014. However, in a best−case scenario, the scheme could add 1−1.8%, he added. MNB executive director Márton Nagy said raising the amount of refinancing for new SME loans could generate HUF 150− 250 bln for new investments.
750 BLN UNDER “FUNDING FOR GROWTH” SCHEME
The increased refinancing available under the scheme equals 21% of total SME lending stock in Hungary. In addition to the refinancing pillars, the scheme has a third pillar that aims to cut the stock of MNB bills, the central bank’s main tool for soaking up liquidity, from HUF 4,500 bln to HUF 3,600 bln. The cut would result from a €3 bln reduction in the central bank’s international reserves, achieved by trimming back the country’s short−term external debt.
Some 89% of Hungarians are still pessimistic about the future, the quarterly research shows. More than half of the respondents (56%) said that their money is just enough till the end of the month after purchasing the most important things in the household. For 12% of them, though, it is not enough even to cover the basic needs. Nearly one−third of 18−69 years olds (28%) can afford extra expenses, but they are not able to save any money. Only 4% of them can put aside something from their salary. Personal loan provider Cofidis has published its quarterly survey, based on 500 interviews, since 2005. Almost half of the respondents (45%) feel that their financial situation will worsen this year, the pessimistic proportion being higher among those with incomes below the average. Indeed, 39% of 18−29 years olds believe that their financial outlook will deteriorate in the near future, and only 1% thinks that the financial stability of the household will be substantially improved. Just 10% of respondents feel the situation slightly more positive this year, while 44% said that financial conditions remain same as in 2012. Despite the fact that youths are most pessimistic about the future, they borrow more boldly. Higher educated members of 18−39 years olds with better−than−average financial conditions are planning to borrow at a higher rate than the average. Overall, compared to the first three months of last year, the proportion of those who can satisfy their basic needs but can’t afford to buy anything else increased by seven percentage points.
TRENDS: 40% of youngsters reject borrowing
TRENDS: Fewer births and deaths
SHORING UP THE BUDGET A noteworthy initiative with a few blunders in its executive phase, or yet another hotbed of state−approved corruption? These are the two radically different opinions of the Hungarian scheme offering a permanent residence permit for €250,000. On one hand it garners funding for the state budget. On the other, companies registered in offshore tax havens including the Cayman Islands, Malta and Cyprus are granted a monopoly to handle state assets. ZSOLT BALLA
According to early ministry projections, some 1,500 people are expected to pur− chase state bonds in the foreseeable future in excess of €250,000 each in order to be granted a permanent residence permit, but more than three months after the new leg− islation took effect, only five actual deals have been closed. While the concept of the Hungarian offer might have the potential to draw in some serious cash to beef up the country’s economy, the pace of develop− ments is modest, at best. This, topped with concerns raised by handing over exclu− sive rights to offshore companies allow− ing them to sell state bonds to foreigners with very little, if any, government control, changes the perception of the entire initia− tive completely. “If all goes well, recent changes to the legislation, along with the relatively favor− able tax environment, might have the abil− ity to attract a significant amount of capital to the country, especially if Hungary man− ages to become the primary destination of investors who are currently fleeing Cyprus due to the local hardships,” says Attila Imecs, manager of tax services at PwC Hungary, who emphasizes that in spite of all the controversies, one should be focused
STORY HIGHLIGHTS ■
Hungary offers permanent residence permit for €250,000 ■ Attracting foreign capital could boost the economy ■ Offshore companies have exclusive rights to trade with state bonds
on the potential and the positive impacts this might have on the state budget. Replacing state debt with much more favorable state bonds with a rate of 2% is one thing, but drawing people wealthy enough to invest €250,000 into the country is likely to have other important benefits, too. “These people are likely to be entrepre− neurs, who will bring businesses to Hun− gary, create jobs, and contribute to the tax and the healthcare systems,” Imecs says. THE NEXT TAX PARADISE? Even more important than that, a relatively favorable tax environment paired with the scheme of a permanent residence permit in return for state bonds might have poten− tial way beyond attracting rich third−world individuals to Hungary. “A detailed analy− sis shows that current tax rates are not all that different between Cyprus and Hun− gary, and in some respect, Hungary can be even more favorable than the prior,” the tax professional suggests. “That opens up a very realistic chance of more owners of complex holding structures deciding to move their headquarters to Hungary in the near future,” he says. While this transition might be a slow and lasting process, a few financial and legal companies have already formed an alliance to back this. Three of the Big Four companies, PwC, KPMG and Deloitte, along with tax consultants RSM DTM and Mazars, and legal firms CMS Cameron McKenna, DLA Piper, Baker & McKenzie and Faludi Wolf Theiss are participating in a lobby group that aims to encourage investors leaving Cyprus to consider Hun− gary as a potential destination for their capital, and push Hungarian lawmakers to create an attractive and transparent envi− ronment that is capable of competing with other possible destinations.
FOREIGNERS CAN START OVER FOR A PRICE
While the potential and opportunities might be beyond doubt to professional eyes, dodgy details and controversies appear much more spectacular from an out− sider’s point of view. The exclusive rights in trading the state bonds attached to res− idence permits have been placed in the hands of privately owned companies dedi− cated to specific markets on a one country per market base, granting a monopoly to these firms on those markets. Parliament’s Economic and IT Committee, headed by Fidesz’s Antal Rogán, specifically autho− rize such companies. The committee has thus far authorized three firms: the Hun− gary State Special Debt Fund, registered in Grand Cayman, targets the Chinese and Vietnamese markets; Innozone Hold− ings Limited, registered in Cyprus, targets India and Cyprus itself; and Discus Hold− ings Ltd, registered in Malta, targets South Africa, Indonesia, Kenya and Nigeria. It is difficult to ignore that all three of these companies are registered in traditional off−
shore locations, where the Hungarian state has very little if any control over their oper− ations, and is likely to have absolutely zero revenue from their profits. REMAINING POSITIVE Although the PwC tax expert also appears unsure about why the Hungarian state would entrust offshore companies with exclusive rights to handle its assets (a naïve approach would suggest that these coun− tries are where the procedure to launch financial companies is easiest and fast− est), Imecs still thinks that the positive aspects outnumber the potential pitfalls in this area. “I think it would be beneficial to move faster, and launch a number of com− panies that target all major and important potential markets for these state bonds,” he says. “Also, a state−backed marketing sup− port seems inevitable, to ensure that the ini− tial capacity to attract a significant amount of foreign capital to the country is not left unused,” he concludes.
Budapest Business Journal | May 31 – June 13
NEW IDEAS IN TAXING Most governments in Central and Eastern Europe have changed their taxation systems in order to decrease central budget deficits − but different countries have come up with different solutions. In most cases, however, these solutions are not exactly investor−friendly. GABRIELLA LOVAS
Before the economic crisis, there was strong tax competition among the countries of the Central and Eastern European to attract investors. Lately, most governments have been forced to change their tax regimes to decrease mounting central budget defi− cits. However, the countries of the region have responded differently to these chal− lenges, points out Mazars tax partner Sán− dor Szmicsek. A 2013 Mazars regional tax brochure reveals that countries have estab− lished complicated and less transparent tax systems, thus, investors find it hard to make comparisons. “We have observed two main strategies in tax policy in the region”, says Mazars ADVERTISEMENT
tax director Heléna Csizmadia. Some coun− tries, like Hungary, cut taxes on income but at the same time significantly increased consumption taxes, for instance, VAT or the transaction duty. She pointed out that the Hungarian system is a good example of this polarized approach with the high− est standard VAT rate of 27%, yet one of the lowest corporate income tax rates (progres− sive: 10%; above a tax base of HUF 500 mil− lion it is 19%). Romania is following a sim− ilar path with flat corporate and personal income tax (PIT) rates of 16% each. At the same time, the country’s 24% VAT rate is above the average 21% rate of the 15 coun− tries surveyed. The main alternative strategy is to keep income tax rates high, while pushing down consumption tax rates in order to increase competitiveness. Csizmadia cited the example of Slovakia, which was the first to introduce flat tax rates. However, as of January 2013, a progressive PIT rate was reintroduced with a new 25% rate beside the existing 19% rate above a certain level of income. In addition, the flat corporate income tax rate was increased from 19% to 23% from the beginning of this year, but the VAT rate remained unchanged at 20%. Another example is Austria with a 20% VAT rate and a relatively high corporate income tax rate, at 25%. The country’s PIT
rate is progressive, with the highest rate reaching 50% from €60,001. Some countries in the region are “cen− trists”. Poland has a progressive PIT regime with only two rates of 18% and 32%. Although its 23% VAT rate is above average, it is not extremely high, while its corporate income tax rate is 19%. Czech Republic belongs in this category, too, as its real PIT rate is approximately 20% com− pared to the nominal 15% flat rate due to an increased tax base. The country’s 21% VAT rate and 19% corporate income tax rate are near the average, too. Certain ex−Yugoslav countries, Mon− tenegro, Bosnia−Herzegovina, Macedo− nia and Serbia, form a special group as they strive to keep their tax rates, includ− ing income and indirect taxes, below the regional average. “However, these attempts are noth− ing more than experiments in each coun− try,” notes Szmicsek adding that all of them have certain advantages and disadvantages. While there are several successful models based on past experience for growing econo− mies, unfortunately there is no way of know− ing what will or will not work in a shrinking one. The introduction of the flat PIT rate in a crisis situation in Hungary, for instance, has not brought the expected results. With hindsight, argues Szmicsek, it was not a very
good idea, as it created unbalances in the revenue side of the central budget. Unbal− ances are present in every country in the region and the positive impact of the mea− sures is hampered by the crisis. EXTRAORDINARY TAXES “While investors are willing to accept extraor− dinary taxes, they cannot tolerate the current level of unpredictability,” stressed Szmicsek. Several CEE countries have decided to intro− duce crisis taxes after failing to increase tax revenues in other ways. As of February 1, Romania launched special surtaxes on reve− nues obtained from the exploitation of natu− ral resources, on companies operating in the extraction and sale of gas and in the energy and gas transport sector. As if trying to copy the Hungarian model, Slovakia introduced special taxes for two years from September 2012, says Csizma− dia. The temporary special contribution is applicable on business activities in regulated industries, such as energy, insurance, postal services and health care services, among oth− ers. The tax base is the profit generated from the taxable activity and the annual tax rate is 4.356%. The fact that the tax is applicable on businesses with more than €3 million in annual profit indicates that the government aimed at taxing richer, typically foreign− owned companies.
Budapest Business Journal | May 31 – June 13
Can’t live without bank
Fewer births and deaths
The majority of young Hungari− ans have a bank account
the lowest number of births in the Central and North in Q1
OF YOUNGSTERS REJECT BORROWING
FEWER CHILDREN WERE BORN IN Q1 2013 THAN A YEAR EARLIER
The overwhelming majority of 19−29 year olds use bank services, primarily current accounts and debit cards. Some 89% of young Hungarians have some kind of relationship with a bank, 23.6% of 26−29 year olds with more than one. Only 6% use no banks at all. However, among unemployed youths – who make up 26% of the age group – bank avoidance is unexpectedly high at 32%. Even among active job seekers, 6% don’t transact finances through banks. While 85% of young Hungarians have some kind of card, only 74% admitted having a bank account. This might indicate a slight lack of financial knowledge, not realizing the connection between cards and accounts. The proportion of student having bankcards or bank accounts was 91% and 64%, respectively. The number of financial services used by young customers shows a tight correlation with aging. The rejection of loans is very high; some 43% of 19−29 year olds agreed completely or mostly with the idea of not having a loan of any form. “This generation stands ready to have an individual life and the purchase of an apartment on their own, but the majority can’t afford it without a loan,” said Dr. Ágnes Bába, deputy CEO of K&H Bank responsible for the retail division. “However, a loan is seen rather as a difficulty for them, not an opportunity. The high rejection rate of loans might be based on the high level of unemployment in their ranks and repayment difficulties among their parents during the last few years,” Bába added. Indeed, 88% of those who have a loan said they had difficulties with repayment, 61% have serious burdens. They borrowed for real estate, car or other purposes, such as a consumer loan, K&H Bank supposes. While 28% have a student loan, however only a further 3% have plans to finance their education this way.
According to preliminary data published by the Central Statistics Office, in the first quarter of this year 4.8% fewer children were born than a year earlier. The number of live births declined in all three months of the first quarter, but by the largest extent, 8%, in February. The number who died was 33,608, which meant a decrease of 6.1% compared to January–March 2012. After the less than 1.5% drop in January, the number of deaths decreased by 7.6% in February and by almost 9% in March year−on−year. Taking into account the leap−day effect, the number of deaths declined by 5% in the first quarter. Natural decrease was 1,116 persons lower than in the previous year, amounting to 12,576 persons. The number of births and deaths changed to a different extent in the regions. Births were down everywhere; the drop was highest in Central and Northern Hungary (6.9 and 5.6% respectively), and lowest in Central Transdanubia and the Southern Great Plain (2.1%). The number of deaths also decreased in every region, and was highest in the Southern Great Plain (12.7%), while in Southern Transdanubia it was a much more moderate 0.9%. The number of marriages decreased considerably this January– March, year−on−year. The beginning of the year has never been a popular time for weddings, but the 3,769 marriages in the first three months was by 370 (some 9%) lower than the level a year earlier, and was the lowest level registered in the first quarter for a long time. After a considerable drop of more than 12% in the first two months, the pace of the decrease slowed to 4.6% in March. The decrease in the number of marriages in the first quarter without the leap−day effect was 7.9%, year−on−year.
RELATIONS WITH BANKS AMONG YOUNG HUNGARIANS (%)
A MATTER OF LIFE AND DEATH
Off the radar Hungary is largely off the radar for traditional institu− tional buyers
€ 73 mln
WAS TRANSACTED ON THE HUNGARIAN REAL ESTATE INVESTMENT MARKET IN Q1 2013
According to Jones Lang LaSalle’s Q1 2013 Budapest City Report, €73 million was transacted on the Hungarian real estate investment market in the first quarter of the year. Only two transactions were concluded. One of these was not an institutional investment while the other was an off−market deal. The disposal of the Match and Profi retail units continued and, as a result, more than 60 units were transacted at a value of around €15 million for mainly local, private food retailers or investors. ProLogis and Norges Bank Investment Management formed a joint venture at the end of 2012 and, as part of the deal, the 50% of ownership of several Hungarian properties were sold to Norges. Altogether 18 distribution centers were involved in the deal with a value of €57.7 mln. According to the forecasts of Jones Lang LaSalle, the annual transactional volume will be around €300 mln in 2013, reflecting a growth year−on−year. However, it is important to point out that this volume would include two large off− market transactions to the value of nearly €150 mln. Besides the volatile Hungarian macroeconomic environment, which is highly exposed to changes in the international economic climate, the startling real estate market fundamentals discourage most investors who would rather focus on safe−haven locations such as Poland. The country is largely off the radar for more traditional institutional buyers, except for some high net worth individuals, value−add investors or local players. According to Jones Lang LaSalle’s research, Hungarian prime office yields are at 7.50%−7.75%, prime logistics at 9.25%−9.50% and prime retail at 7.25%−7.50%.
CURRENT PRIME YIELDS ON HUNGARY’S REAL ESTATE MARKET PRIME OFFICE YIELDS
Has some kind of relation
Has bank card
Has bank account
7.5%-7.75% PRIME LOGISTICS YIELDS
9.25%-9.5% PRIME RETAIL YIELDS
7.25%-7.5% Source: K&H Bank
Source: Central Statistics Office
Source: Jones Lang LaSalle
3Special Report Cars put economy on a roll 12
World class autos made 16 in Hungary
Vehicles in a perfect future?
ELECTRONICS AND AUTOMOTIVE INDUSTRY
Budapest Business Journal | May 31 – June 13
SKILL SHORTAGES – THE ETERNAL CONUNDRUM FOR ORGANIZATIONS Following the recent launch of its 2013 Salary Guide and Market Overview, Hays Hungary’s Managing Director, Tammy Nagy-Stellini, takes an in-depth look at the specific challenges faced by employers and professionals alike in one of the 10 featured sectors: engineering and production.
T Tammy N NAGY-STELLINI M Managing Director H HAYS HUNGARY
NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y
he main areas of manufacturing and engineering in Hungary are automotive, electronics contractors, consumer electronics and metal fabrication. Starting with the automotive sector, employers continue to hire high numbers of professionals, typically quality engineers, electrical engineers and production specialists to work at the main automotive hubs, which are mostly located in western and central Hungary. Experts with 1-3 years’ experience who can speak English at least to an intermediate level can expect an average 20-30% salary increase. Given the candidate-driven nature of the market, this puts upward pressure on wages, especially when there is a need to commute or even relocate. While the electronics sector is also a strong performer, some of the international manufacturing contractor companies have cut back their operations or even left the country due to the fast changing trends in this sector and in technology. That said, professionals are still in demand and can easily find alternative employment as long as they possess the right skill sets. Hungarian metal fabrication suppliers are highly valued by their customers. We have seen an increase in initiatives both by the government and its partners, their aim to further develop the quality and volume of production activities. These companies are ready to take on professionals with a good manufacturing background, or even fresh graduates with no prior work experience. NEED FOR EMPLOYER FLEXIBILITY Various positions tend to remain unfilled for more than three months, especially at large manufacturing hubs throughout the country or isolated plants. There are several reasons for this, notably the salary cycle mentioned above, a shortage of engineers in the market and the fact that locations are not attractive enough to motivate experts to relocate. It is worth pointing out that the skills shortages apply to the manufacturing industry, which again halts development. Since this has become a candidate-driven market, individuals can find themselves with multiple job offers and so companies wishing to attract the best talent have to speed up their recruitment processes to not lose out on the right talent.
Employers need to be more flexible when considering a suitable candidate in the case of multiple vacancies, particularly if the individual has some related work experience and is open to changing to a slightly different engineering role. The same applies where a qualified applicant has a first-class track record, but which has been gained in a different subsector. A FOCUS ON CAREER DEVELOPMENT Although the production and engineering industry remains a highly candidate-driven market, professionals still need to ensure their skills are up to scratch so that they can stay competitive. Language and communication are traditionally areas where engineers have fallen down on. For example, fluency in English and German is a definite advantage.
CARS PUT ECONOMY ON A ROLL The automotive industry is finally living up to state expectations and giving a tangible boost to the economy. The government can rejoice, although it’s not Hungarians that are buying the cars. In fact, a growing number of them are opting for other modes of transport. GERGŐ RÁCZ
The first quarter of 2013 finally produced pos− itive growth figures, something the govern− ment has been awaiting for a long time now. The Central Statistics Office announced the first three months of the year produced 0.7% growth in gross domestic product from the AUTO INDUSTRY OUTPUT IN Q1 (%)
Postgraduate vocational courses in niche areas are also highly recommended for experts wanting to stay ahead of the game. For example, a post-diploma certificate in quality management is increasingly valued in quality assurance, a Lean or a Six Sigma certificate in process engineering and either a one or two year advanced or postgraduate course for health and safety practitioners. It is also important not to lose sight of longterm career advancement plans. If an opportunity for a career move arises, professionals need to look at the bigger picture and weigh up the future career benefits of such a move. Although it is fairly easy to argue in favor of a career change for some positions, such as project-based roles, changing jobs too frequently could negatively sway employers who could question the applicant’s dedication and enthusiasm. To sum up, employers need to shorten their recruitment cycles and be more flexible when hiring, looking at relevant profiles even if these professionals have worked in a different sector. To advance their careers and boost their employability, individuals need to stay focused on an area within the industry in which they would like to develop their expertise. To get tailor-made advice on recruitment solutions in this and other sectors, and to request your free copy of the 2013 Hays Hungary Salary Guide, call our experts on +36 1 501 2400 or email firstname.lastname@example.org.
preceding quarter, while contracting 0.9% from the same time span in 2012. The prelim− inary figures mean that Hungary has techni− cally recovered from the recession of last year. In achieving the result, the automotive industry played one of the most significant roles. Even though the aggregate volume of industrial output contracted by 2.9% in March from the corresponding period of 2012, car manufacturing produced the biggest growth, up 10.2% from last March and up 12% in the first quarter compared to the first three months of last year. “Hungary produced the highest (‥.) GDP growth in Central Europe thanks in large part to the driving factor of investments in the automotive sector which made Hunga− ry’s industrial output an overachiever in the region,” JP Morgan commented. DRIVING GROWTH The government has maintained that, despite ubiquitous analysts’ forecasts of continued recession in 2013 or stagna− tion at best, the previously determined 0.9% growth target for this year will be achieved and might even be exceeded. The cabinet continues to point towards the automotive industry as the catalyst,
bringing new investments and creating new jobs in the process. “There are currently 160,000 more peo− ple in work than they were in 2010 and car makers’ expansion played a significant role in achieving the goal,” state secretary in charge of foreign trade relations Péter Szijjártó said when inaugurating an add− on to turbocharger maker BorgWarners’s site in Oroszlány. The U.S. company is just one of several in the past months to complete or launch new developments. These ventures are also a boon for the still−struggling construction sector. A survey by the ÓBUDA Group consultancy shows that out of the 10 biggest real estate investments to be concluded between 2013 and the end of 2015, car markers or their ven− dors have commissioned five. The expansion announcements are also starting to sway otherwise dubious analysts that the government’s economic targets might not be as far−fetched as previously thought. The JP Morgan investment bank stated that the car industry might be a factor of such sig− nificance that it could assure positive growth for the entirety of 2013. Other London−based analysts published similar views. NOT AT HOME Unsurprisingly, the overwhelming majority of the vehicles produced in the country are shipped abroad. In fact, domestic demand for vehicles continues to drop, with people are using their cars considerably less, much to the chagrin of fuel distributors. Data from the Hungarian petroleum asso− ciation MASz revealed that there is a drop− ping tendency in fuel consumption. Last year saw sales of 2.75 billion liters, down 4.2% from 2011. As a result, several fuel distributors have decided to streamline their operations to adjust to the circumstances. Shell had already announced it will close 34 stations by the end of the year, but the head of its local unit Balázs Erényi told the daily Népszabadság that the total number of closures would likely reach 50. Shell isn’t the only one affected. Austria’s OMV, Italy’s ENI as well as Hungary’s MOL have either closed or are planning to sell sev− eral stations in response to dropping sales. It is also common to reduce expenses by short− ening business hours, closing stations at night, for example. Although the reduction of registry taxes last January led to a high base figure, the number of new cars purchased this year also showed a sizable drop. According to the Hun− garian Vehicle Importers Association, there were 12,559 new vehicles entered in the record in Hungary during the first quarter, a 10% drop on the year. The association did point out, however, that figures from the DataHouse car mar− ket data provider started showing signs of recovery with a 6.3% month−on−month increase in March, when 5,066 new vehi− cles were purchased.
Budapest Business Journal | May 31 – June 13
“GOOD FOR AUDI, GOOD FOR HUNGARY” Being one of Hungary’s biggest companies based on revenue and headcount, German carmaker Audi remains highly committed to its well− established operations in Hungary and is in the final stages of unveiling a brand new addition to its production site in Győr.
Audi closed an exceptional 2012, with the Győr plant, situated in northwestern Hungary near the Austrian border, rolling out a record 1,915,567 engines, almost 30,000 more than the year before, mark− ing an all−time record. While the num− ber of fully assembled cars produced was lower than in 2011, Győr still produced 33,553 cars altogether from components arriving from Germany as well as from the extensive network of local vendors operating in the area. “This record production is the result of our consistent work to develop products, which also contributes to assuring our position as one of the biggest engine man− ufacturers in the world,” Audi Hungaria managing director Thomas Faustmann said, commenting on the figures. As a prominent player in the automotive industry, which is one of the key areas sup− ported by the government in its ambition to create favorable terms for the manufac− turing industry, Audi also enjoys central support, like its peer German vehicle mak− ers active in the country. According to government spokesman András Giró−Szász, €5 billion arrived in German capital since 2010, which now provides 1.2 million jobs from the likes of Audi and compatriot German investors like Mercedes and Opel. Audi employs around 9,000 people after boosting head− count by 1,450 in 2012. The government and Prime Minister Viktor Orbán have taken every oppor− tunity to express appreciation for Audi’s activity and highlighted that the compa− ny’s expansion at its Győr base only goes to underline the decades−long fruitful rela− tionship between Hungary and German businesses. Audi and the government have signed a strategic partnership agreement in order to ensure the successful coopera− tion between the two parties in the future. For its previous expansion, Audi was recognized by the government as inves− tor of the year in 2011, while it is in the final stages of fully launching production in its latest add−on in early 2013. “What’s good for Audi is good for Hun− gary,” state secretary in charge of foreign trade relations Péter Szíjjártó said when the company announced that it would be involved in yet another infrastructural investment.
THIS RECORD PRODUCTION IS THE RESULT OF OUR CONSISTENT WORK TO DEVELOP PRODUCTS
garia was the expansion of the engine fac− tory which will soon make full scale auto− mobile production possible. Due to an investment of €900 million the new fac− tory will be opened in June this year, with an annual production capacity of 125,000 units. The new A3 derivative will be manufactured in Győr, which will be an entirely “made in Hungary” car. Thanks to the investment, more than 2,100 addi− tional workplaces will be secured. This article was originally published in PwC Hungary’s Investing Guide Hungary 2013 publication ADVERTISEMENT
DEVELOPMENT SITES Faustmann announced that Audi will be shouldering several billion out of the total €6.6 billion project to upgrade the Győr− Pér airport, located near Audi’s base. The company has a decade−long partnership with the airport and chose to get involved in the project since it already accounts for most of its passengers and also needs a modern travel hub to make the best use of its employees’ time when having them travel between Germany and Hungary. The developments will make the Győr− Pér site accessible to Boeing−737 and Air− bus 320 models as a result of widened taxiways and runway, and the installation of a landing system. Audi is also active in the Hungarian education system and runs various initia−
tives aimed at recruiting new talent. The efforts are aimed at multiple age groups through programs such as the Audi Tech− nik Kreaktivity, which was organized for the fifth time in 2012 and is targeted at high schools students. Out of the 40 appli− cations 12 teams reached the finals, where they were challenged to design a vehicle that is not driven by an internal combus− tion engine. The company’s internship program aimed at securing the contin− ued availability of skilled workforce wel− comed its 100th participant in 2012 while Audi also launched a program to promote gender equality and hired 30 female work− ers last year who completed a training pro− gram designed specifically for women. An important milestone for Audi Hun−
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Budapest Business Journal | May 31 – June 13
STRONG POSITION National Instruments, based in Austin, Texas, provides ready−for−use software and modular cost−effective hardware to customers around the world. The company opened its first overseas factory in Debrecen, Hungary in 2001. Today, the company that focused only on hardware production in the very beginning, now has more than 1000 employees working in 12 different kind of departments – beside manufacturing − including legal, finance, HR, IT, customs and engineering. These departments provide support not only for European but also global teams and projects. We talked to László Ábrahám, general manager of the Hungarian unit. KRISZTIÁN KUMMER
While many factories in Hun− gary have suffered during the crisis, NI in Debrecen has been able to continuously increase sales and revenues. What makes you differ− ent from other Hungarian manufactur− ing companies? A: Our status is special as our market position is very strong: our direct sales network covers more than 40 countries around the world. Beside our direct sales offices we can reach all of our customers through our connected sales and distribution partners. Most of the products manufactured in the Hungar− ian factory go to export markets, and I can proudly announce that our prod− ucts are very popular and the demand is continuously increasing. Regarding the geographical distribu− tion of sales, it is roughly 30% among the three main continents North Amer− ica, Europe and Asia. In 2011, our reve− nue reached HUF 127 billion. That makes us the 57th biggest company in Hungary by revenue. For 2012, we expect better results, based on our interim reports.
and from several industrial fields. No indus− try comprises more than 15% of our revenue. Our products are almost everywhere from the Beijing Olympic Stadium’s structural health monitoring solutions through the con− trol system of a medical robot used for treat− ing brain tumors, to the LEGO Mindstorms robot brain, which was developed by NI and LEGO engineers and made for creative minds everywhere on the planet.
A: Indeed, the standards of Hungarian education could be improved, just like the motivation on the side of the educa− tors, the students and the private sec− tor. Our company has a similar mentor− ship program too, where students can spend, for example, four days at univer− sity and one day at work. This program is a win−win situation for our company and the student also. It is easier for us to choose our next colleagues when we already know them, and it is easier for them to know what is required from them and their likely tasks in the future, when they see the ‘all in a day’s work’ mental− ity from point blank range.
Budapest Business Journal | May 31 – June 13
What are the company’s main goals for 2013? A: Last year we opened a new factory in Malaysia, so our main task is to transfer knowledge and technology to this new facility. Our qualified employees’ hard work and strong commitment to the com− pany has helped us in creating a Center of Excellence in Hungary by setting a very good example to all members of the NI fam− ily. This Malaysian opening is also a chal− lenge in that we are focusing on the new installations while in the meantime remod− eling our manufacturing processes based on the needs of our orders. We have more than 35,000 customers around the globe and we provide them various product solu− tions. It is equally important to us that an agreement has recently been signed with the Hungarian government, which gives
National Instruments strategic partner sta− tus. In addition, we won a grant from the Hungarian government for the construc− tion of a new Science Park. This 6,000 sqm building will be home for laboratory, exper− imental and educational activities.
Most readers from outside your field are probably not very familiar with NI’s products. Could you be a little more specific about what you do? A: Our product portfolio is very wide. We manufacture more than 2,500 types of instruments and devices with a workforce of more than 1,000 employees. Amongst many other things, we produce state−of the−art industrial computers, measurement units and many utilities used in education. Our customers come from all over the globe,
The company, and you person− ally, have received many awards over the years. It is widely known that NI contributes a lot to the city of Debrecen in the field of educational activities, among other things. However, you have made some recommendations on the quality of Hungarian education, especially the education of engineers.
This article was originally published in PwC Hungary’s Investing Guide Hungary 2013 publication
OUR PRODUCTS ARE ALMOST EVERYWHERE FROM THE BEIJING OLYMPIC STADIUM’S STRUCTURAL HEALTH MONITORING SOLUTIONS THROUGH THE CONTROL SYSTEM OF A MEDICAL ROBOT USED FOR TREATING BRAIN TUMORS, TO THE LEGO MINDSTORMS ROBOT BRAIN ADVERTISEMENT
Budapest Business Journal | May 31 – June 13
WORLD CLASS CARS MADE IN HUNGARY
Hungary continues to be an attractive destination for automotive investments and in 2012 welcomed the launch of a new Mercedes factory in Kecskemét. With the stated aim of turning the central Hungarian town into one of the biggest hubs of car production in the region, the company is already considering expanding its output capacity at the site, hardly a year after production started. GERGŐ RÁCZ
The German firm picked a greenfield site when it chose Hungary’s eighth biggest city as the venue of its new base of pro− duction in Central Europe, but is seeing the rewards for that initiative, and is now looking to substantially increase’s the
area’s role and make it a recognized spot on the international map. “We are well on
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COMMUNICATION IN THE AUTOMOTIVE SUPPLY CHAIN A ALISTAIR BINKS cceo N Napos Oldal Kft., Albion Translations Group A firstname.lastname@example.org a
uto manufacturing is more international than ever with newcomers like India and China the latest new members of the global auto industry. As automotive OEMs break into new markets and new manufacturers emerge, this leads to developments and relocations for key Tier 1 and Tier 2 sub-suppliers that aim to be within close proximity of their customers. In order for the suppliers and the OEM to collaborate efficiently, they need to be able to share precisely translated and interpreted information. Traditionally, the automotive supply chain involves five major groups of players: ■ original equipment manufacturers (OEMs) that design and assemble the vehicle; ■ first-tier suppliers that manufacture and supply components directly to the carmaker; ■ sub-tier suppliers that produce some of the individual parts that would be included in a component manufactured by a first tier supplier; ■ raw materials and infrastructure suppliers; ■ engineering firms, dealers and advertising agencies. For a successful communication between the automotive supply chain links, an automotive translation services provider needs to: ■ use professional translators that have knowledge across diverse technical fields.
These fields include, but are not limited to: mechanical and electrical engineering, automation technology, electronics and microelectronics, navigation systems, onboard computers, wiring, air conditioning, paneling, service and diagnostics; ■ hire in-house native speakers that have knowledge of logistics, finance, R&D, marketing, insurance, client relationships, etc. By being able to effectively communicate both upstream and downstream, a supplier can better integrate its actions to work seamlessly to meet the needs of a client on any terms, instead of the terms of business being dictated by language barriers; ensure that all translators have shared real-time access to dictionaries, specialized glossaries and translation memory systems. Obviously, translators involved in automotive translation projects need to not only understand the technical aspects of the products they are dealing with, but must also be aware of the market in which they are being sold. The difference between technical language and market/retail language is large and significant. By being embedded into the manufacturing supply chain, the translation services provider can understand it from the inside and accurately interpret the important aspects of the international auto parts industry and its successful marketing.
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our way to making Kecskemét the center of car production in Hungary,” Daimler AG’s chief executive Dr. Dieter Zetsche said at an event introducing a new Mer− cedes model in Kecskemét. January saw the first of Daimler’s Mercedes−Benz CLA compact execu− tive four−door sedans roll off the assem− bly line, a model that is produced exclu− sively in Hungary. The addition to the product line comes after the Kecskemét plant rolled out some 40,000 cars from its inauguration in March 2012, which contributed to boosting the global output of the Mercedes−Benz B−class compact sports tourer by 11% compared to 2006, totaling 145,649 units. Daimler, and automotive production in general, enjoys the full support of Hun− gary’s government, which has made nota− ble efforts to assure a comfortable oper− ating environment for the sector and has vowed to keep the cooperation going. “If we Hungarians are capable of making a Mercedes, then we have nothing to fear,” Prime Minister Viktor Orbán said at the CLA launch, highlighting the work at Kecskemét as an encouraging example to balance other economic pressures weigh− ing on the country. BEST OF TWO CULTURES Similarly, Daimler has also expressed satisfaction with the cooperative attitude of the Hungarian authorities, whether on a national or a local level. “We experi− ence on a daily basis in both personal terms and work in general that Hungar− ian and German mentalities complement one another perfectly, so we can achieve ‘the best both cultures have to offer’ in striving toward mutual success,” Zetsche said. Indeed, the company and the Hun− garian government signed a strategic cooperation agreement in 2012 to under− line their continued commitment to working together.
Daimler made the decision to expand its production capacities in the compact car capacities in 2008, and announced it had chosen Kecskemét as the location of its new plant. The initiative involved expand− ing its standing capacities in Rastatt in Ger− many with a €600 million investment, while spending another €800 million on building the Hungarian facility, which spans an area of nearly 441 hectares. When it launched its Hungarian opera− tions, Daimler cooperated with 17 local com− ponent suppliers, a number that was boosted to 25 once production of the CLA model started in January. Daimler has said it is very happy with the available workforce, both in terms of number and quality. The company currently provides jobs to 3,000 people, mak− ing a much−appreciated contribution to the country’s labor market where qualified work− force is available in plenty, but new employers are needed and always welcome. The automaker prides itself in the fact that it has also introduced a German educa− tion model and provided specialized train− ing to college students who are candidates to become employees once they complete their studies. Daimler’s own records show that there are now nearly 70 future specialists par− ticipating in the program. “The qualifications of our colleagues is a major factor in assuring that the cars com− ing out of our Kecskemét factory fully live up to the high quality demands that anything released under the Mercedes brand must live up to,” Zetsche said. The government has also underlined its commitment to support indus− trial production in Hungary by restructuring the country’s education system to favor dis− ciplines that allow high school graduates to achieve the kind of degree that will help them find employment with the likes of Mercedes and other manufacturers. This article was originally published in PwC Hungary’s Investing Guide Hungary 2013 publication
Budapest Business Journal | May 31 – June 13
VEHICLES IN A PERFECT FUTURE? Preserving nature and health is a major concern today – meaning electric or hybrid electric vehicles are becoming not only a preference, but also a necessity. So does this means that in the near future everyone will have cars that they can just plug into a power outlet, and then race through the country? Not quite, but we are getting there, slowly. GERGELY HERPAI
“In 2020 about 10% of the cars will have electric propulsion, as for a complete change−over, it’s impossible to foresee the future,” Péter Palkovics, PR and marketing manager of Nissan Hungary told the Buda− pest Business Journal. It may sound dis− heartening for those who were hoping for a quicker change, especially knowing that the first electric vehicles were produced in as far back as the 19th century. Ányos Jed− lik, a Hungarian inventor, engineer, phys− icist, and Benedictine priest living in the Austro−Hungarian Empire, made the first model of an electric vehicle, and the first small drifter operated by a miniature elec− tric motor was built by Thomas Daven− port in 1835. Still, the technology couldn’t become really widespread, mainly because of the conflicting interests with the big fos− sil fuel companies. As for the current tech− nologies, Nissan could take a leap forward: in 2010 it produced the first models of the Nissan LEAF, a fully electric car, which has slowly been getting more popular ever since. According to Electric Vehicles News the LEAF’s global sales had reached the 50,000 units milestone by mid−February 2013. In Hungary, the Nissan LEAF will be sold from mid−June, with a price tag of HUF 9 million. GOING FORWARD, BUT TO WHERE, EXACTLY? However, in this era of alarming global pollution, one may wonder why electric vehicle technology isn’t more popular? It may sound surprising, but there are gen− uine problems with the real green creden− tials of the current electric technology. “The energy used in the batteries of the electric cars has to be produced some− where, and the polluting power plant tech− nologies are still predominating. It’s true, that with this solution the pollution isn’t produced in the cities, but it also means that it isn’t a global solution,” stressed András Medvecky marketing director of IVECO, told the BBJ. According to him the real step forward would come if the zero−emission modes of production (nuclear, wind, solar, water, biomass) were
dominant. He also thinks that the deliv− ery of electric power in the batteries of cars, and when used with engines, can only be produced with great losses, and the electricity supply networks should be developed as well, since the current ones aren’t strong enough to support the power needs of the quick chargers for cars. DIVERSE SOLUTIONS So instead of going fully electric, Iveco is proposing more diverse solutions. For example their “TRAKKER” trucks use eth− anol−diesel, and are used in the fleet of COSAN, Brazil’s largest sugarcane pro− ducer. In Italy, TNT Express uses Iveco’s Daily vans, which run on natural gas. In Germany, DHL also uses the Daily, but with electric technology. The Daily model is present in Hungary as well. “There are several hundreds minibuses modifications of the Daily in Hungary, and Magyar Posta uses about 100 of our vehicles,” says Med− vecky. What about public transport? It would be logical if BKV’s buses use green technology‥ “Iveco is one of the largest bus manufacturers in Europe and besides its diesel−electric hybrid offerings, natural gas−powered vehicles are also included in the portfolio. If the capital would commit itself to environmentally friendly technol− ogies, Iveco would be an essential factor,” says Medvecky. WHAT ABOUT THE NEXT CENTURY? One thing is certain: the truly “green” solu− tion for vehicle propulsion would still be fully electric technology. Medvecky is con− vinced that humanity must achieve a “gen− uine energy revolution” for a purely elec− tric−powered transport to happen. “Even if this revolution would happen say within 50 years, when the solutions based on this revolution achieve a global reach, we will already be in the 22nd century.”
Budapest Business Journal | May 31 – June 13
FAR FROM DESIRABLE Hungarian new car sales grew by 18% in 2012, the third fastest in the EU−27, but due to the low starting basis, sales are still far from optimum; dealers predict only moderate growth for this year. KRISZTIÁN KUMMER
In 2012, new car sales reached 53,059 in Hungary, an almost 18% jump from 2011, making Hungary’s new car market the third fastest expanding in the EU−27. But that bright progress report takes on a slightly different shading when other measure− ments are also taken into account. Hun− gary still lags someway behind its neigh− bors with a 0.5% new car sales/population ratio: in Poland the figure is 0.7%; it 1.4% in Slovakia; 2.4% in Slovenia (that despite a 16.7% fall in sales on 2011); and 4% in Aus− tria. But a fair number of imported new cars (estimated as high as 15%) are re−exported to other countries to benefit from tax and fleet discount deals, according to research conducted by PwC made amongst new car importers. In other words, these cars appear in the domestic statistics, but never roll out onto Hungarian roads.
The average age of cars in Hungary rose to 12.5 years in 2012, according to the Central Statistics Office (KSH). A year earlier, the average age was 12 years. The average age fell from 16 years in 1991 to 10.3 years in 2006, but has risen ever since. The current level is two years more than the EU average, and three years above that in Western Europe alone. There are approximately three mil− lion cars on the roads of Hungary. Based on a desirable total fleet replacement period of 20−25 years (right now it takes 56 years), new car sales should be stabi− lized at a range of 120−150,000 per year. To reach that of the most developed Euro− pean countries, 160−190,000 new car sales would be needed annually. So even with the spectacular jump of 18%, new car sales are very far from the optimum. The decrease in registration tax in the beginning of 2012 had no significant effect on new car prices (an average 3% decrease has been registered) and sales didn’t grow unexpectedly. The effects of tax changes are much more perceptible in used car imports, which increased from 32,312 in 2011 to almost 53,533 in 2012, overtaking new car sales. “Based on the experiences of the last 20 years, it seems easily predictable that the significant increase in used car imports will have a serious impact on
NOTE: ALL ARTICLES MARKED E XPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y
PUTTING GLOBAL GROWTH INTO HIGH GEAR MIKLÓS BÁN ceo espell translation and localization
uitable translation services are critical to meeting the challenge of bringing products to new markets. The products of the manufacturing and automotive sectors come with a great deal of documentation, software and marketing content. Moreover, tapping into the opinions of consumer bases in various locales is often paramount. A tailored selection of translation and localization services can help you get your message across to customers via various channels at top gear within the industry. DOCUMENTATION AND MANUALS Developing a dependable customer service is heavily reliant on accuracy, legal compliance and proper use of terminology in operation manuals, maintenance manuals and product specifications. Documents that are simple to follow earn customers’ trust and put them at ease. Putting out documentation with such a level of fidelity and informational value within a tight release time requires a technology-enabled translation ecosystem that can accommodate content authors, translators and experts in an accessible environment around the clock. CUSTOMER COMMUNICATION A strategic approach to introducing content to foreign locales goes a long way towards securing brand integrity and ensuring that your message resonates with the target audience. First impressions can drive or hold back a product regardless of its quality. A professional touch is instrumental to
conveying your message as intended, and a dedicated translation task force can protect your brand through adaptation, transcreation or even authoring content anew, depending on the requirements and nature of the material. SOFTWARE LOCALIZATION Software solutions are everywhere and are prominent in every step of the development and manufacturing chain as well as in final products. When it comes to integrated automation systems, even the slightest mistake can cause irreparable damage. End-user products, such as on-board systems, must conform to the same level of security and operational reliability, but also have to be appealing and intuitive. Such high requirements necessitate superior domain knowledge, expertise, quality control and a robust localization process to ensure that your products evoke the image of quality in every corner of the world. BRINGING YOUR CUSTOMER BASE CLOSER Today big data enables companies to mine the untapped resource of user content and opinions. Localization, which channels this flow and capitalizes on the power of machine translation solutions, comes into play. The maturity level of the technology renders it suitable for such use and facilitates c2b interaction at an unprecedented level. By establishing more personal channels of interaction, deriving better information and gaining a deeper understanding of consumer needs, companies can flex their creativity and produce better, customized products.
IT SEEMS EASILY PREDICTABLE THAT THE SIGNIFICANT INCREASE IN USED CAR IMPORTS WILL HAVE A SERIOUS IMPACT ON THE MARKET the market, decreasing new car sales,” said László Deák, director and tax expert at PwC. “Since the decrease in registra− tion tax, imports of old, out−of−date cars are increasing again. To stop this phe− nomenon, registration tax rules should be returned to the old legislation, where the import of older, less environment−friendly or junk cars was punished with higher tax rates. Banning the import of cars with too high pollutant emissions would be another efficient method to protect the Hungarian market,” Deák added. The respondents in the PwC research felt the black economy was a serious threat to the business, just as in pre− vious years. The effects of the under− ground economy affected 93% of respon− dents negatively. Some 71% think that high costs and taxes are primary causes
leading to the black economy, while 46% of them felt, that clients requires some kind of “black solution” too, to keep prices low. On the other hand, the overwhelm− ing majority, 86%, said the 50% deductibil− ity of service expenditures is a milestone in the war against underground economy. The financial transaction tax also bur− dens new car importers, as the 0.2− 0.3% tax might reach a cumulated HUF 3 million extra expenditure on average throughout the year. Talking about predictions for 2013, only 41% of the dealers forecast expan− sion, although this rises to 86% for 2014− 15. From 2016, every respondent awaits growing markets. New car sales for 2013 are estimated between 40−70,000 with a mean average of 56,000, indicating a moderate growing expectation.
Budapest Business Journal | May 31 â€“ June 13
CAR IMPORTERS Ranked by total net revenue
FORD KĂ–ZĂ‰P- Ă‰S KELETEURĂ“PAI KFT
BMW VERTRIEBS GMBH MAGYARORSZĂ GI FIĂ“KTELEPE
VOLVO AUTĂ“ HUNGĂ RIA KERESKEDELMI Ă‰S SZOLGĂ LTATĂ“ KFT
SECOND HAND CAR TRADE
TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR
ADDRESS PHONE FAX EMAIL
â€“ Porsche Automotive GmbH (99.90), Porsche Austria GmbH (0.10)
Peter Gstattner, JĂĄnos Eppel SĂĄndor Rudi â€“
1139 Budapest, FĂĄy utca 27. (1) 451-5100 (1) 350-1500 email@example.com
Szabolcs Nagy TamĂĄs TĂłtvĂĄri PĂŠter Ă rvay
1139 Budapest, FĂĄy utca 27. (1) 451-5500 (1) 451-5502 firstname.lastname@example.org
â€“ Porsche Holding GmbH (100)
â€“ Ford Motor Company (100)
Viktor MolnĂĄr â€“ â€“
2000 Szentendre, Galamb JĂłzsef utca 3. (26) 802-533 (26) 802-590 email@example.com 1133 Budapest, KĂĄrpĂĄt utca 21. (1) 887-7005 (1) 887-7001 internet-hu@ daimler.com
â€“ Daimler AG (100)
Ingo FrĂśhlich, Stephan KrĂśl Marianna KĂśnczĂśl Edina KozĂĄri SztipichnĂŠ
â€“ BMW Ă–sterreich Holding GmbH (100)
Denis Baudouin â€“ Attila Oros
2220 VecsĂŠs, /ĹƒULQFL~W (29) 555-100 (29) 555-101 firstname.lastname@example.org
â€“ Automobiles CitroĂŤn S.A (100)
GyĂśrgy BalkĂĄnyi â€“ â€“
1194 Budapest, AndrĂŠ CitroĂŤn utca 1. (1) 348-4848 (1) 348-4896 email@example.com
CITROĂ‹N HUNGĂ RIA KFT
OWNERSHIP (%) HUNGARIAN NONHUNGARIAN
MERCEDES-BENZ HUNGĂ RIA KERESKEDELMI KFT.
Audi, Porsche, Seat, Skoda, Volkswagen
PORSCHE INTER AUTO HUNGARIA KFT
PORSCHE HUNGĂ RIA TRADE KFT
TOTAL NO. OF NET NEW REVENUE VEHICLES (HUF MLN) SOLD IN IN 2012 2012
SPARE PARTS SUPPLY
CitroĂŤn (C-Zero, Berlingo)
â€“ Volvo Personvagnar AB (100)
GĂĄbor Bodrogai Ă gnes TĂĄrkĂĄnyi Andrea SztĂĄrcsevity
1044 Budapest, VĂĄci Ăşt 50â€“58. (1) 238-8100 (1) 238-8190 firstname.lastname@example.org
â€“ AutoBinck Holding N.V (100)
ZoltĂĄn MarkĂł JĂĄnos Kerekes PĂĄl KovĂĄcs
1182 Budapest, Sallai Ăşt 15. (1) 887-5700 (1)887-5701 email@example.com
â€“ KIA Austria GmbH (100)
Duk Hwa Jung ZoltĂĄn Bata â€“
1117 Budapest, Budafoki Ăşt 56. (1) 371-2000 (1) 371-2001 firstname.lastname@example.org
â€“ Mazda Motors Logistics Europe N.V (100)
Tibor EgyĂźd Erika KĂĄldi Eszter Burovinc
1117 Budapest, Infopark sĂŠtĂĄny 1. 1. ĂŠp. 2. em. (1) 464-5000 (1) 464-5001 email@example.com
GĂĄbor MĂĄtrai â€“ â€“
1149 Budapest, MogyorĂłdi Ăşt 34â€“40. (1) 422-3910 (1) 422-3900 info@ mitsubishimotors.hu
HYUNDAI HOLDING HUNGARY KERESKEDELMI KFT www.hyundai.hu
KIA MOTORS HUNGARY KFT www.kia.com/hu
MAZDA MOTOR HUNGARY KFT 10 www.mazda.hu
MM IMPORT KFT
EMIL FREY IMPORT KFT
HONDA MOTOR EUROPE LIMITED NR MAGYARORSZĂ GI FIĂ“KTELEPE www.honda.hu
NISSAN SALES CEE KFT www.nissan.hu
PEUGEOT HUNGĂ RIA KFT www.peugeot.hu
Âť Âť Âť Âť Âť Âť Âť
all KIA models
Mazda2, Mazda3, Mazda5, Mazda6, MX-5, CX-5, CX-7
â€“ Emil Frey AG (100)
â€“ Emil Frey AG (100)
GĂĄbor MĂĄtrai â€“ â€“
1149 Budapest, MogyorĂłdi Ăşt 34â€“40. (1) 422-3910 (1) 422-3900 firstname.lastname@example.org
â€“ Honda Motor Europe Ltd (100)
JĂĄnos Reisz GĂĄbor Kucserka KĂĄroly Nagy
2040 BudaĂśrs, TĂśrĂśkbĂĄlinti utca 25/B (23) 506-406 (23) 506-464 email@example.com
Ă dĂĄm RĂŠnyi-VĂĄmos Tony Moen PĂŠter Palkovics
1117 Budapest, Infopark sĂŠtĂĄny 3/B (1) 371-5300 (1) 371-5300 hungary@ nissan-services.eu
â€“ PSA Peugeot Citroen (100)
GyĂśrgy GĂĄbor Kuats â€“ =VyĂ€D%iOLQW.RYiFVQp
1194 Budapest, AndrĂŠ Citroen utca 1. (1) 279-5555 (1) 279-5556 Info.ap.hu@ peugeot.com
Micra, Note, Juke, Qashqai, Qashqai+2, Murano, XTrail, Navara, 3DWKĂ€QGHU 370Z, GT-R, NV200, Cabstar
3008 HYbrid4, 508 RXH
107, 208, 2008, 308, 301, 508, 807, RCZ, Partner, Expert, Boxer
NOTES: (1) Data of business year April 1, 2012 - March 31, 2013.
Âť= would not disclose, NR NA = not applicable
= not ranked,
This list was compiled from responses to questionnaires received by May 24, 2013 and publicly available data. To the best of the Budapest Business Journalâ€™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, MadĂĄch Imre Ăşt 13â€“14., or faxed to (1) 398-0345. The research department can be contacted at firstname.lastname@example.org
Budapest Business Journal | May 31 – June 13
ELECTRONICS MAKERS ARE NOT OUT OF THE WOODS YET The last year was a tough one for the electronics market, since the global crisis was still perhaps at its hardest last year. In 2013 “stagnation” was the keyword for some companies, “solidification” for others, and “we are not out of the woods yet” was the general feeling for many. GERGELY HERPAI
Japan−based Clarion Hungary, which makes multimedia devices for autos, was struck not only by the global crisis but also the tsunami in 2012. Still, it had bet− ter results than expected. Since the car industry is suffering as well, making mul− timedia for automobiles is a shaky busi− ness. In 2013 results are expected to be almost the same for the manufacturer, and Clarion Hungary expects “stable” stagnation next year as well. ADVERTISEMENT
Zsolt Belényesi, director of Electrolux Domestic Division told the Budapest Busi− ness Journal that the trend of declining sales of household appliances continued in 2012 but was “only” a 7% decrease. He compared 2012 to 2008 and stated that the market in large household appliances had halved from 2008. Inflationary VAT increases affected prices and the new system of waste manage− ment wasn’t good for the marker either. “Still Electrolux group augmented its market share in 2012 and thus we are still market lead− ers,” Belényesi told the BBJ. In 2013 a small increase in sales would be felt. The new prices of the waste management system are still causing problems for Electrolux. The com− pany didn’t want to comment on next year. CRISIS REMAINS A CHALLENGE On the other hand, the crisis hadn’t held back the Debrecen factory of Texas− based company National Instruments. “We closed the 2012 fiscal year with a record income, thanks to our ever increasing product range, which means, we are constantly making new types of products,” László Ábrahám, manager of National Instruments told the BBJ. “Our
high frequency products are also suc− cessful, thanks to the excellent work of the research and development, and the production teams,” he added. According to Ábrahám, National Instruments also expanded globally in 2012, the num− bers in the R&D and sales departments increased all over the world. National Instruments also made a technological roadmap plan, with the goal to keep in touch with new technologies and to react accordingly. Still, in 2013, the global cri− sis remained a challenge for the com− pany, and, according to Ábrahám, holds back NI’s developmental dynamics. When it comes to hiring, Ábrahám says that it is difficult to find suitable specialists for certain positions, especially in the field of engineering. “Secondary and higher edu− cation has many problems, and this badly effects the knowledge of the graduates in our field as well,” Ábrahám commented. In 2014 NI will proceed with a big project: the company will reinforce its R&D department and will build new laboratories. The project includes a 300−person office investment and the acquisition of devices that are spe− cialized in experimentation.
Budapest Business Journal | May 31 – June 13
JABIL CIRCUIT HUNGARY KFT
ROBERT BOSCH ELEKTRONICS KFT
VIDEOTON HOLDING ZRT
EPCOS ELECTRONICS PARTS KFT
SANMINA-SCI HUNGARY KFT
CLARION HUNGARY ELEKTRONIKAI KFT
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OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN
YEAR ESTABLISHED NO. OF FULL-TIME EMPLOYEES ON MAY 1, 2013
FLEXTRONICS INTERNATIONAL KFT
NET REVENUE FROM ELECTRONICS MANUFACTURING IN 2012 (HUF MLN)
TOTAL NET REVENUE (HUF MLN) IN 2012
Ranked by total net revenue
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22 4 Going Global
Budapest Business Journal | May 31 – June 13
STARTUPS AIMING FOR THE WORLD If an idea is global and satisfies a basic need, any startup can make it on the international stage as several companies stemming from Budapest have already shown, speakers at the Budapest Business Journal’s Going Global conference pointed out. That said, Hungarian startups still have a lot to learn.
vince an investor to put up the seed money. But there are now services they can turn to for help. As Zoltán Varga, chairman of the board at Central Fund Kockázati Tőkealapkezelő explained, the necessary know−how is now widely available through various fund managers. These firms have gath− ered the experts from industries on the slide like banking or real estate, but who are nonetheless intimately familiar with key aspects of business, like how to manage a project or how to negoti− ate with investors. This type of interna− tional knowledge is all the more impor− tant because of the globalized nature of the industry. “Business plans are the same in Buda− pest, New York and the Baltics. Profit is international,” added Miklós Fekete, part− ner at PwC Hungary, which has a service established to provide consultations to smaller Hungarian businesses.
“Let’s make Budapest the startup capital of Europe,” said Gyula Fehér, co−founder and chief technical officer of the popular video streaming solution Ustream, one of many startups that have overcome the fairly common hurdles that innovative initiatives have to face. Unlike the common and traditional approach that involves setting up a busi− ness that becomes a success locally and then moving forward to make it a simi−
Photos: Zsolt Balla
(L-R) GRAPISOFT CHAIRMAN GÁBOR BOJÁR, 77 ELEKTRONIKA CEO SÁNDOR ZETTWITZ, KÜRT CAHIRMAN SÁNDOR KÜRTI
USTREAM CTO AND CO-FOUNDER GYULA FEHÉR
lar hit on the international stage, the cur− rent age allows and actually requires a different perspective, especially in the case of tech firms. As such, any startup should start devel− oping its product from the very begin− ning with the aim of reaching a global audience. Accordingly, as Imre Hild, chief executive of iCatapult stressed, it is essential to develop products in English, since this allows direct access to hun− dreds of millions of potential users that would otherwise be excluded because of language barriers. STILL HURDLES AHEAD Innovation is undeniably present in Hun− gary and new ideas are abundant, but the local environment is still far from opti− mal. Speakers particularly pointed to Sil−
icon Valley in the United States, an area those thinking of founding a startup are encouraged to visit for a study trip to soak in the environment. “The ideas aren’t better than here at home, but the opportunities are far bet− ter,” said Péter Nagy, co−founder and chief executive of Colabs. This is a journey that successful Hun− garian startups have made and are all the happier for it. They say that the Val− ley’s openness enables anyone with an idea to meet the right people in the right places, and doing business is easy, espe− cially compared to what is common prac− tice in Hungary. As Priszcilla Várnagy, chief execu− tive of Be−novative recalls, one of the milestones of her career in a startup was simply joining in a conversation at
BE-NOVATIVE INC. CEO PRISZCILLA VÁRNAGY
a San Francisco cafe, which led her to meet senior executives at major firms along the way. HELP AVAILABLE A startup may have the best idea in the world, but that doesn’t necessarily mean the founders possess the necessary pre− sentation and management skills to con−
WHAT IS THE KEY? The established companies all seem to lack a magic recipe that could provide success for all startups if replicated. As Sándor Kürti, president of IT company Kürt, made famous for its data recovery services, recalled, the most important thing is to focus the company’s efforts instead of offering a broad range of ser− vices, while also making sure to promote itself at every given opportunity abroad. Sándor Zettwitz, CEO of Elektronika 77, which established itself on the med− ical supplies market, similarly explained that it took association with a major inter− national company to allow its products to enter the mainstream. As a further imper− ative, he highlighted innovation, which is still more than achievable in Hungary, since the expertise is available, even if it comes at a fair price. But once a company has established itself as an international factor, it should also be easily recognized. This is why organic sewage treatment solution pro− vider Organica is striving to make itself and the design of its facilities as recog− nizable as any household logo, accord− ing to the company’s chief financial offi− cer Ákos Berzi. The most important element is the entrepreneurial spirit and knowing who your competitors are. When advising a company this is one of the key factors to weigh, to see whether there is a risk of an opening being filled with newcomers that could potential bring better solutions to the market, said Iván Németh Gyurácz, partner at M27 ABSOLVO. But although it carries risks, having competition is the essential driver of any business effort. “An entrepreneur is an athlete who lives to compete,” said Gábor Bojár, chairman of Graphisoft. “If you think you are enter− ing a niche where there is no competition, I say, don’t do it.”
Budapest Business Journal | May 31 – June 13
4 Going Global
THE FUNDING FATHERS Having the idea that becomes the next big thing is great, and also and essential component of launching a startup, but most ideas will not reach maturity unless someone chips in with an appropriate (and often substantial) amount of money. Matching up enthusiastic startups with the money “out there” waiting to be invested is challenging work, and also an intriguing venture in itself, Péter Nagy and Zsolt Bakó, founders of Colabs tell us.
COLABS OFFICE OFFERS AN INSPIRING ENVIRONMENT
Finding the appropriate and necessary funding for a startup in the initial stage of its life−cycle is a critical step in order to establish market presence, or a whole new market for that matter. While a good basic idea and being passionately commit− ted are two important factors when building a new company, they are rarely enough to break through the first few obstacles and to become successful. Funding, on the other hand, is not easy to find: although there are investors continuously searching the mar− ket for new opportunities, they are getting ever more selective in their decisions. “Potential for growth is the first and most important thing investors are looking for in a new project,” says Péter Nagy, co−founder and CEO of Colabs, a startup launched with the mission of improving the Hungar− ian early−stage funding scene by helping startups and investors to find one another. “Startups at the early stages of their careers are usually very fluid and flexible, and in most cases the most they can show us when we first meet them is a working prototype at best, so imagination and past experience are the things we are left with when deter− mining whether the companies have it in them or not,” he explains. Reaching out for new companies is rela− tively easy, partly because there are quite a few forums where they can be met, and partly because most are proactive in search− ing out financing opportunities, so they are likely to get in touch first via the online form at Colabs’ website. While the form will make sure no one is wasting anyone else’s time by asking basic questions, a personal meeting is inevitable as a first step to touch base with a newly founded startup. Compa− nies vary from the perspective of when they are reaching out for help, but in most cases it would be somewhere between the “fam− ily and friends” and seed financing phases. EARLY STAGES “Seed financing is still a very early, and therefore, hugely risky stage in a com− pany’s life−cycle, and investors who are involved in the startup scene know that very well,” states Bakó. Talking about the potential to scale rapidly means ask− ing the question whether a certain proj−
Photo: Zsolt Balla
MONEY ON THE TABLE It appears that while the Hungarian startup culture still has vast room for development, there is money on the market, some of it only waiting to be seized by projects, teams and investment opportunities. “The total amount of angel funds on the market is vir− tually impossible to estimate, but the fact is that Colabs by itself, and through its part− ners, invested some HUF 145 million in various projects last year,” Nagy discloses. “While we are typically looking for compa− nies that require funds in the area of HUF 5 – 150 million apiece, we know of a few investors who have the capacity to invest tens of millions a year alone,” he says. Taking a step backwards, the sum pro− jected based on the above can be multi− plied by the existence of JEREMIE funds backed by the European Commission, with the caveat that EU and state grants usu− ally work with a whole different set of cri− teria than private investments. And after a project successfully tackles the initial diffi− culties and reaches a more mature phase, it gradually becomes a target of venture capi− tal funds, which also opens up a whole new dimension of funding potential. Money, therefore, is not the key obsta− cle – it is more the relatively undevel− oped startup and investment culture that
GOING IT ALONE?
A TYPICAL ANGEL INVESTOR NEEDS TO TRULY BELIEVE IN A PROJECT HE PUTS HIS MONEY INTO ect has the capability to increase the investment’s value around 15−fold within roughly a three−year period. “If six out of ten investments fail, three are around breaking even and one achieves this kind of performance, that can be regarded as an outstanding investment portfolio in the startup world,” he explains. It obvi− ously also means that successful projects need to make all the money lost on failed projects, so the pressure is rather high. To reduce risk, and to offset the usual lack of experience among startup owners, most business angels (investors who provide capital in this early development phase) do not only contribute money, but also like to take part as consultants to help businesses as much as possible. From this perspec− tive, there is another important point on
top of the actual business facts and the esti− mated potential for growth: a certain kind of chemistry needs to be there between the investors and the startup teams. “While the investors we represent vary in a broad range from this aspect, from cold−headed businessman at one end to the enthusi− ast on the other, a typical angel investor needs to truly believe in a project he puts his money into,” says Nagy. “Some of our investor partners are almost hobbyists, who are really enthusiastic, if not fanatical about the startup they choose to cooperate with,” he adds. Since a close working−relation− ship between an inexperienced staff and a seasoned investor can add great business value, and significantly diminish the risk of failure, the presence of this chemistry is more than desirable.
While an idea, even a really good one needs only one mind, experts say that it is highly desirable, if not a necessity, to have a team working on a specific project. An ideal team consists of members with different areas of expertise: so while three engineers can have great fun, and can even inspire each other, from a business point of view it is much better to have someone focused on technology, another focused on business, and someone else focusing on design. Successful one-man shows are few and far between, partly because it is hard to imagine that somebody is an expert in all these fields (and many others), but also because it is difficult to maintain enthusiasm when the first obstacles and real problems kick in. Team spirit is, therefore one of the critical parameters to be observed when trying to assess a project’s potential for success.
4 Going Global
Budapest Business Journal | May 31 – June 13
PIONEERS, GO EAST! To dodge the potential risks of sluggish domestic and European markets, ever more Hungarian SMEs are turning further east to find new partners and markets. The idea is widely supported by the government, but the streets aren’t all paved with gold in the oriental markets. KRISZTIÁN KUMMER
To dodge the potential risks of sluggish domestic and European markets, ever more Hungarian SMEs are turning further east to find new partners and markets. The idea is widely supported by the government, but the streets aren’t all paved with gold in the oriental markets. According to Hungarian statistics, 76% of the country’s exports go to the European Union, 12.1% to non−EU European markets and only 11.9% make it directly to other continents, most of those ending up in the United States. “Our strategic goal is to improve this rate in new markets and to make Hungar− ian direct exports appear in third coun− tries, not just through European interme−
diates, as part of the supply chain. We’d like to see the share of EU and non−EU exports 2/3 to 1/3 in five years through the dynamic expansion of the non−EU exports,” said Róbert Bödőcs, head of division at the Hungarian Investment and Trade Agency (HITA). Nothing bet− ter proves the government’s intentions to find new markets outside the EU than that Péter Szijjártó, state secretary responsi− ble for foreign trade, had bilateral negotia− tions with seven nations in May alone.
WIDE RANGE OF TOOLS Last year HITA spent HUF 1.18 billion financing its activities, with a total of 567 programs realized at home and abroad. “According to our expectations, HITA helped Hungarian companies to exports worth € 63.7 million,” Erzsébet Dobos, chairwoman of HITA said earlier in May at a press conference. The clientele of HITA consisted about 1,500 domestic SMEs last year. “Our goal is to increase this base to 2,000 partners, i.e. reaching more than 500 new clients. The agency helps its export−oriented clients through personal company visits and consulting,” Bödőcs added. HITA has a wide range of tools to promote and help Hungarian companies, offering training, targeted trade development support, appearances
at industrial or sectoral trade shows and encouraging corporate collaborations. In addition, the state can contribute directly or indirectly to export incentives for Hungarian companies – primarily SMEs – through European Union funding. One of the direct resources is the support for mar− ket access in the Economic Development Operative Program (GOP to use its Hun− garian initials), while sources for innovation indirectly help to enter foreign markets. The Export Cooperation organization helps on one hand by providing customized information or involving experienced local experts through its international network; on the other hand, it puts education in the forefront. “I think, the combined efforts of these actors in the last two to three years made it possible for aiming at foreign mar−
OF HUNGARIAN EXPORTS WENT TO NON-EU COUNTRIES IN MARCH
kets to became a primary business prior− ity for those companies that are mature enough,” said Iván Gyurácz Németh, part− ner at consulting company M27 Absolvo and founder of Export Cooperation. TRAPS AND PITFALLS Hungarian exports to China, Japan, Russia and Vietnam are expanding smoothly and constantly. On the top of that, Dubai and its region has always provides opportunities, as high interest in the latest HITA exhibi− tions on the fields of IT, healthcare and food industry showed. However, one must not forget that in leav− ing the EU’s inner market, many new diffi− culties can arise, such as taxes, customs, foreign currencies, different quality stan− dards and expectations, etc. Unprepared companies could fall into many pitfalls due to inadequate market research, lack of export strategy or cultural differences. “Unlike friendly European markets, far− eastern markets are only advised for experi− enced, big companies, with large capacities, stable profit and a revenue of several billion forints. According to the experiences of the Export Cooperation, establishing a reliable distribution network might require two or three years, with small backlogs and round− abouts, all expending money and time,” Gyurácz Németh added.
HOW RISK LEVELS HAVE CHANGED IN THE REGION According to the latest insolvency report released by Coface: after a slight recovery in 2011, countries report a difficult economic environment again. Export Cooperation draws attention to the most important risk level: Insolvency figures increased again in CEE in 2012 – except for Latvia, Estonia and Ukraine ECONOMIC CRISIS HITS CENTRAL EUROPE HARD The impacts of the economic crisis are severely felt in the Central European countries. Insolvency figures and rates are on the rise. In total the insolvencies in Central Europe increased by 3.5% in 2012. The only real positive developments show in Estonia and Latvia. The region showed an upward insolvency trend during the last few years. Compared to 2009, in 2012 the numbers were 38.7% higher. The most affected sector in 2012 was construction. Companies suffer from austerity programs and lack of investments in private housing. Similarly hit was manufacturing industry, as well as the wholesale and retail trade. The latter experience the negative effects of the unemployment rates and a decrease of household spending. “On the other hand IT, telecommunication, education and health were the sectors least affected. They showed the lowest insolvency rates in 2012,” said Gábor Kárpáti, country manager of Coface in Hungary.
It has to be mentioned that the insolvency data is not completely comparable as the associated laws are quite different in the respective countries. “While there is no uniform set of rules even within the EU for the specifics of insolvency proceedings, EU law does require such procedures to be started in the country where the insolvent company is incorporated or has its “center of main interest”. Only following the commencement of this initial procedure may further secondary procedures be started in other member states. The aim of such secondary procedures is to allow creditors located in other states to claim assets in these countries without the necessity to join the primary procedure. All official decisions brought during insolvency procedures in a member state are directly enforceable within the EU,” said Dénes Szabó, attorney at law, and partner at the international law firm TaylorWessing enwc. COUNTRIES IN TROUBLES In Bulgaria the total number of companies that went insolvent in 2012 was 1,339 compared to
Export Cooperation - Brought to life in 2011 by six companies, the initiative aims to help firms with competitive products and services realize their potential and dare to seize the opportunities offered by foreign markets. The Export Cooperation provides comprehensive assistance to meet the challenges of foreign markets and offers support to export companies for further business development. Members of the Cooperation at present are: Coface, M27 ABSOLVO Consulting, law firm TaylorWessing enwc and Próbakő Communications.
390 insolvent companies in 2011. This implies an increase of 243%. Compared to 2011, the insolvency rate almost tripled. For 2013 and 2014, a further increase is expected. In Croatia, the number of insolvencies increased dramatically by nearly 175% 2012 implying that the insolvency rate almost tripled to 2.43% in 2012 (from 0.88% in 2011. In Slovenia insolvency procedures for 980 companies were opened in 2012. Compared to 2011, this figure increased by 39.2% which results in an insolvency rate of 0.65%. The main issues are still long-lasting procedures (it may take up to 10 years or more for the bankruptcy procedures to end) with very low dividend among the ordinary creditors since valuable assets are normally always encumbered with mortgages Poland and its economy still stands out through its constant growth in important macro-economic indicators, but a slowdown is becoming increasingly visible. The insolvency ratio is still the best in the CEE-region (0.04% ), but the number of bankruptcies increased by 21.3% in the preceding year. The construction sector is mainly responsible for those figures as it constituted 25% of all bankruptcies, followed by retail trade. In Romania in 2012 the insolvency proceeding was opened for a total number of 23,665 companies, which equals a rise by 10% compared to 2011. FURTHER INCREASE IN 2013 AND 2014 EXPECTED For 2013 Export Cooperation predicts a worsening situation. Insolvencies will rise in most countries of the CEE region – in Poland, where in 2013, the global crisis is expected to be felt to a much greater extent and also concludes in a higher level of insolvencies. Also in Bulgaria, where insolvencies almost tripled
from 2011 to 2012, a rise in the number of insolvency procedures in 2013 cannot be ruled out. Positive outlooks are hard to find in the region, but Latvia is one of the examples where the future development of the economy is assumed to be mainly positive. The analysis clearly shows some industries moderately affected by the recession, thus having a stronger growth potential (such as ICT) and therefore having less problems concerning insolvency. For the sake of a successful market entry, when prioritizing target countries, one has to consider other factors as well, besides insolvency. For instance, depending on the product’s USPs (unique selling propositions) a declining trend could also be of interest for certain companies– suggests Iván Németh Gyurácz, partner at M27 ABSOLVO Consulting. “In the uncertain market conditions, it is important to have the professional help in every step of entering new markets. It is trivial that a major part of marketing communications is preparing and planning. But several clients simply do not think of media as one of the best means of information gathering, which is essential in planning good communications activities. If we think of traditional media, collecting and analysing articles about a certain market to better understand our target market. Last but not least we can gain information about what relevant journalists feel and think of our market. As for social media, one can directly analyse the activities of consumers,” says András R. Nagy, managing director at Próbakő Communications, drawing attention to the importance of marketing communication.
Budapest Business Journal | May 31 – June 13
4 Going Global
SCIENCE FICTION OR REALITY? According to some, humanity has to fight so many problems (including the economic crisis, serious environmental conditions, and lack of food) that we may have to leave planet Earth in search of less troubled home sooner than expected. Is life on Earth seriously threatened? Not necessarily. According to Rob Nail, CEO and Associate founder of Singularity University, a ground breaking technical philosophy called singularity may save the day, by providing an answer to humanity’s numerous issues. GERGELY HERPAI
If you are unsure what singularity is, that’s no great surprise. According to Wiki− pedia, it is the theoretical emergence of super intelligence through technologi− cal means. But for Rob Nail it’s a lot more than that. Biotech and robotics are the main interests of the young CEO who co− founded Velocity11 in 1999, involved in building automation equipment and robot− ics for cancer research and drug discov− ery. When Agilent Technologies acquired his company in 2007, he was made general manager, attempting to become a catalyst for change at a big company before eventu− ally leaving to “go surfing” instead in 2009. The main goal of Singularity Univer− sity itself is to positively impact humanity “by assembling, supporting, educating and inspiring future leaders across the globe who can harness the power of exponential technologies to improve the lives of a bil− lion people within a decade”. A BRIGHT FUTURE? At a special breakfast briefing this spring in Budapest, organized by AmCham Hun− gary, he demonstrated many examples of such technological advances, the sort of stuff you might usually see only in sci− ence−fiction movies or computer games. One of Nail’s key believes is that, contrary to today’s pessimist evaluations, the world has evolved considerably in the last cen− tury, and we can expect an even more excit− ing and promising next century. “The last hundred years have been extraordinary in terms of progress in the human condition. Still, the progress of humanity is tied tightly to technological advances,” Nail explained. And you don’t even have to think about science fiction gadgets when looking at
THE LAST HUNDRED YEARS HAVE BEEN EXTRAORDINARY IN TERMS OF PROGRESS IN THE HUMAN CONDITION the evolution of technology: the signifi− cant decrease of the price of today’s top technology which will relatively soon be available to everybody, almost free, may be a more important factor. Observ− ing the tablet industry, Nail says you can clearly see the explosive pace of tech− nology. “Five years ago this technology didn’t even exist, and in five years every conference will have tablets virtually for free, every conference will have tablets, instead of paper,” Nail thinks.
SMARTER THAN ALL OF US “About ten years ago, the processing power of a $1,000 laptop could be com− pared to an insect’s brain. Today it can be compared to a mouse’s brain; in ten years it will equal a human brain, and ten years after that it will be comparable to the power of all the human brains on the planet,” explained Nail. He also believes that everything that is technology based will be “digitalized, dema− terialized and democratized”. Some technol−
ogies will physically disappear: cameras and flashlights are just an example, which have became applications on mobile phones. “We turned them into a virtual thing, and soon there will be an app for virtually everything.” MAKE YOUR OWN! But that’s not all. Besides technology itself, even real objects can be “digi− talized” and reproduced in this way, the CEO says. Not convinced? Well, 3D print− ing is actual technology today. Besides belts, shoes, and other objects, the first handgun made with a 3D printer has been successfully test fired in America. (On a scarier note, it will be even simpler for an army to provide weapons by simply 3D printing them.) In the near future we will likely be able to make 3D print motorcy− cles, or even parts of houses. But besides objects, digitalizing and recreating animal – and soon human – DNA has never been simpler. The tech− nology is becoming ever cheaper, so pre− serving and recreating human genomes, effectively creating life, will be virtually free in the future. Of course, there are still legal problems concerning this kind of technology. Besides creating life, recre− ating meat will be also a very important biotechnological advancement accord− ing to Nail, since it could help solve the world’s food problems, something human− ity will have to tackle very quickly.
4 Going Global
Budapest Business Journal | May 31 – June 13
WINE LOOKING FOR A PLACE TO SHINE The main strength of the highest quality Hungarian wines may be their major weakness: that there are very few bottles produced. That restricts the wider adoption of the quality brands and reduces them to the cellars of premium restaurants and curious connoisseurs abroad. Thus far.
STORY HIGHLIGHTS ■
China is Hungary’s third largest overseas wine market after Russia and Canada ■ Excellent quality is not the only factor when going global; packaging and design also count
Brazil. The mature market is in search of new tastes, so there is no point in sell− ing international varieties. To stand out, wines need to reflect something uniquely Hungarian. Developing markets, such as China or India, still in the learning pro− cess, may be more willing to try new and lesser−known brands. Either way, there
With €1.9 million worth of Hungar− ian wines imported in 2011, China has become the country’s third largest over− seas wine market after Russia and Can− ada, but ahead of the United States, MTI has reported. Hungarian wines are so much appreciated in China that exports are growing by 15−20% every year, diplo− mat Ágnes Kártészi told the Hungarian state newswire. The Chinese market’s appreciation for anything high quality and European is proving a big draw. Though 70% of wine consumed in China is produced locally, several Hungarian cellars have decided to try their luck so far away. One such is Laposa Winery (with vineyards in Badac− sony, Somló, on Szentgyörgy−hill and Csobánc), which entered the Chinese market earlier this year after three years of preparations. Apart from a pilot ship− ment to Belgium in 2012, Laposa’s wines have never crossed international borders. The cellar has sent a total of 10,000 bot− tles in two shipments to China this year. That might not sound like much, but it still accounts for roughly 10% of the com− pany’s total planned production (some 110,000 bottles) for 2013. The three vari− eties picked for Chinese wine lovers are Laposa Juhfark 2011, Laposa Szürkebarát 2011 and Laposa Rizling 2010. The main idea was to ship premium wines, András Gagyi Pálffy, managing director of Laposa explains. The Juhfark will sell purely on its slogan: the honey− mooners’ wine. Legend has it a couple who drink the wine on their honeymoon night will have a son for their first child. The other two items are “simply” of pre− mium quality, and will be sold through a wine shop chain in Shanghai and Beijing; no restaurant has listed them yet. How much does Hungarian wine cost in China? “Duties are high, but in general three to four times as much as they cost here,” Gagyi said. Potential markets are opening some− what closer to home as well. A few weeks ago, Laposa’s Pinot Gris Fresh won a “Best Buy” title at the Pannon Bormustra contest. Among the jury was Tim Atkin, master of wine, who contacted the firm to
“Negotiations are ongoing, no new partner has been announced yet,” Péter Tánczos, head of Euroventures, told the Budapest Business Journal. Beyond Royal−Tokaji, a secured partner already, it is rumored that two more businesses will be acquired this year. Constant premium quality is key and AWE Kft acts as a kind of ‘quality filter’. The owner of a Chinese restaurant chain is unlikely to come Hungary to taste wines in 22 regions. They will probably turn to someone whom they trust, Mount said. “We will help Hungarian producers get through the door.” They will also rely on their previous experience with Hilltop wines and Royal− Tokaji to make it happen. Said Tánczos, “These businesses have helped us under− stand that whatever it is, be it a garment, a food item or wine, as long as it is mar− keted right, it can become successful.”
IN VINO VERITAS
WHATEVER IT IS... A GARMENT, FOOD OR WINE, AS LONG AS IT IS MARKETED RIGHT, IT CAN BECOME SUCCESSFUL discuss export/trade opportunities to the United Kingdom. WHO GOES GLOBAL? So which wines stand a good chance of going global? At first, Tokaj, as it is the only region whose name sounds familiar outside the country’s borders. Euroven− tures, a private equity and venture capi− tal firm, has attained quite a success hav− ing invested in Tokaj early. Last year the firm, together with private investor Char− lie Mount, invested HUF 150 million in Amand Wine Export (AWE) Kft, a wine merchant, to export high quality Hungar− ian wines abroad. Besides Western markets (particu− larly the United Kingdom and the United States) they are looking at China and
is some educational job to do every− where, Mount explained. Matching international distributors and Hungarian producers is a lengthy process in which excellent quality wine is not the only factor. “Certain styles of wine, very popu− lar in the Hungarian market, may not do so well internationally,” Mount noted. Pack− aging and design also need to appeal to the selected markets’ taste. AWE Kft will take care of that as well, spending its newly acquired funds mostly on marketing, brand− ing and buying stocks. The wine merchant will buy stocks – Mount calculates, where possible, on at least one third of a cellar’s pro− duction – secure sales and place orders. This means zero risk for the producer, but it also means it has to concede many rights, such as price setting, to AWE Kft.
Of the 2.5 Mhl of wine produced in 2011, exports accounted for 590,000 hl. Domestic consumption stood at 2.3 Mhl while the volume of imported wine was 515,000 hl (456,000 hl from Italy). Source: Hegyközségek Nemzeti Tanácsa and the Central Statistics Office
In 2012, 1.8 Mhl of wine was produced: the significant drop due to the poor weather conditions. Hungary’s 2012 calendar year wine exports are expected to decrease in volume by 19% to 458,109 hl in value by 14% to $69million. Czech Republic, Germany, and Slovakia are the main destinations for Hungarian wines. Source: International Organization of Vine and Wine
The Hungarian Government has budgeted €3 million for wine export promotion in Canada, China, Japan, Russia, and the United States from 2013 to 2016. Source: International Organization of Vine and Wine
5 Socialite BOOK REVIEW
Clive Rich: Learn how to say ‘yes’ Summertime in Japan
PEOPLE ON THE MOVE
ANDRÁS BARTHA A
Volksbank Zrt/ ing head of corporate banking
THE BURGER BOOM
➜ PAGE 31
28 5 Socialite
Budapest Business Journal | May 31 – June 13
LEARN HOW TO SAY ‘YES’ In a world where we negotiate constantly – and often unsuccessfully – getting people to say ‘YES’ is crucial. Negotiation is something we engage in every day – whether it’s getting our children to eat their vegetables, making a case for a pay rise, or trying to secure an important deal at work. However, negotiation has changed. It’s no longer about competition and con− frontation, where there are clear winners and losers. Instead, it’s about collaboration. In The Yes Book, Clive Rich explains that ‘yes’ is, of course, the word we want to hear at the end of any negotiation. But it’s a less common word than we might think. According to World−eng− lish.org, ‘yes’ holds position num− ber 486 in the list of the 500 words most commonly used in written English. This is in contrast to ‘no’, which is in the top 100. Rich’s aim is to help us get other people to say ‘yes’ more often when ADVERTISEMENT
negotiating. But he also wants to make sure we can answer ‘yes’ to questions such as: Can I manage the stages of a negotiation? Do I know how to prepare properly? Do I know how to close deals? Do I know how to stand up to tough guys? Do I know how to negotiate when I am in a different country? Being able to answer ‘yes’ to these questions is crucial, Rich argues, because good deals don’t happen by chance. “Effective negotiators have a conscious blue− print for success,” he writes. By breaking negotiation down into its three key elements of Attitude, Behavior and Process, Rich shows us how to shape, create and close deals. He also helps us uncover our individual negotiating style, and demonstrates how we can apply it to influence others. In addition to providing this prac− tical framework, Rich includes plenty of stories about negotiating, suggest− ing that they are key to cementing our learning. Some of these stories come from fellow−negotiators, and some are his own, based on his years of experience working with major organizations and super brands such
as Sony, Yahoo, Apple, the BBC BC and Tesco, as well as hundreds of smaller companies. By being aware of the correct havior attitude, process and behavior for negotiation “you should auto− fective matically make more effective CHOICES than those who don’t ”, Rich have these skills or insights”, concludes. “You will have under− stood the purpose, processs and iating. pay−off from good negotiating. or deal And you will be equipped for making the modern way, in a con− rld. In nected, interdependent world. short, you will be better at getting people to say ‘YES’.
THE YES BOOK by Clive Rich Virgin Books ISBN 9780753541098 Available to order through www.hungaropress.hu
Budapest Business Journal | May 31 – June 13
SUMMERTIME IN JAPAN Fireworks, festivals and nature are just some of the spectacles summertime holds for visitors heading off to Japan. The Asian country has plenty to offer, and getting there has never been more comfortable. BBJ
Nights are always bright in Japan dur− ing the summer, as there are fireworks all around the country organized by var− ious communities. Japanese use the col− orful spectacle to celebrate the arrival of the summer to the port of Yokohama in the middle of July, to cleanse the impuri− ties of the past six months in Kanagawa at the end of June or to show off the best fireworks out of the 20,000 launched into the Tokyo sky at the end of July. The festival organizers are quick to point out that the events on the calen− dar rain or shine. And rain is a definite possibility, since the summer months typically see plenty of rain during the summer in most parts of the coun− try, leading to humidity. The season starting in June called “tsuyu” usually entails overcast skies along with the rain and leaves a pleasant average tem− perature of around 20°C. The situation gradually clears as sum− mer progresses and the average tempera− ture rises to around 30°C by August. There are numerous airlines flying to Japan on a regular basis. Japan has over 50 airports. The busiest is the Haneda Airport in the capital which, according to ADVERTISEMENT
ministry information saw passenger num− bers exceeding 64 million in 2010. Air ticket search sites currently list 13 air− lines that travel to Japan from Budapest. OUTDOOR ACTIVITIES Japan also holds a vast array of out− door recreational options. Camping is increasingly becoming a popular pas− time among the Japanese leading to a growing number of campsites opening around the country. These sites called “camp−jo” or “auto camp−jo” for peo− ple who prefer to set up their tents near their cars normally also offer a range of camping gear as well for those who aren’t properly equipped.
Those looking for more active recre− ational activities will also have an easy time. Japan hosts a big number of water parks in Tokyo as well as other towns. They typically open in July and are open until September correlating with the warmer part of the summer. They are highly popular and can consequently be crowded. Besides the water parks, Japan also has the encompassing ocean as a lure for trav− elers. Swimming beaches that are called “kaisui−yokujo” are likewise open to the public in the warm months of the summer and are ready to accept visitors from July to August depending on location. Sea− side rest houses called “umi−no−ie” are
commonly constructed on major kaisui− yokujo during the summer. Travelers frequently come to the country to tackle the best−known challenge Japan offers, climbing Mount Fuji. Fuji−san, as it is usually referred to is Japan’s highest moun− tain with 3,776 meters. Guides for climb− ing note that the official season is from July 1 to the end of August, which is the best period to make the attempt even if the trail gets crowded at times. Although climbing Japan’s emblematic mountain is widely con− sidered an adventure that can’t be missed, caution is advised against sudden changes in attitude and possibly the weather. Sources: Japan−guide.com, Japantravelinfo.com, About.com Japan Travel
30 5 Socialite
Budapest Business Journal | May 31 – June 13
Name RICHÁRD ROZMAN Current company/position WORK FORCE / OPERATIVE DIRECTOR
Name GÁBOR KÓKA
Richárd Rozman has been appointed operative director at Work Force from April 2013. He graduated from the University of Miskolc as an engineer, and also finished Brunel University in London with an MBA degree. He was head of HR division at Philips Magyarország between 2002 and 2005 and HR director of Audi Hungária Motor from 2007.
Before his appointment as partner, Kóka was director of Deloitte’s tax consulting department and Hungarian leader of the international tax team. He joined Deloitte in 2003, while sill at university. Within the tax department, he is a member of the specialized real estate and venture capital firm teams.
Current company/ position DELOITTE / PARTNER
Do you know someone on the move?
Send information to email@example.com
Name BAUDOUIN DENIS Current company/ position BMW MAGYARORSZÁG / MANAGING DIRECTOR
Name GÁBOR MOLNÁR Current company/ position DELOITTE / PARTNER
Baudouin Denis (45) has been appointed managing director of BMW Magyarország from June 2013. The present managing director, Paul de Courtois will head the Polish subsidiary of the BMW Group after two successful years at BMW Magyarország. Denis graduated from the European Business College with a degree in marketing and communications. He joined BMW in 1991 in the marketing and sales department of the French subsidiary, and became head of marketing in France in 2009.
Molnár has many years of experience in accounting, business consulting, and in coordinating audits, particularly in the banking sector. Molnár is a chartered accountant and also certified as a professional risk manager from PRMIA. After being promoted to partner, he continues to lead the accounting consulting business of Deloitte Magyarország.
Bartha has moved to Volksbank Zrt from Crédit Agricole, where he spent six years as head of corporate and structured financing activities. Before that, he had been at the corporate division of MKB Bank for three years. In the preceding six years, Bartha worked with ABN AMRO Bank.
Name ANDRÁS BARTHA Current company/position VOLKSBANK ZRT/ HEAD OF CORPORATE BANKING
Name PÉTER PÁDÁR Current company/ position DELOITTE / PARTNER
Péter Pádár is a chartered accountant, and graduated from the Budapest College of Economics in 2002, specialized in accounting. Before his graduation, he had joined Deloitte as an audit assistant. Pádár has 11 years of experience in auditing Hungarian companies and compiling consolidated and nonconsolidated reports in accordance with domestic and international accounting rules. As a partner he will continues to lead the Emerging Medium Enterprises branch.
VARICOSE TREATMENT MADE EASY aser treatment makes complicated varicose vein operations a thing of the past. No scars, no bandage, no down time – just get up and walk. Varicose veins are considered a symptom of ageing, although some develop the condition as early as eighteen, while others retire without it. “We can do little to prevent it but these days a lot can be done to treat it,” explains Dr. Gábor Darabos, vascular surgeon at Dr. Rose Private Hospital. “Doing sports may improve circulation in general, but the strength or weakness of your arteries and venal valves is purely genetic. Physical activities are good for your health but do not prevent varicose veins.”
GOOD TO KNOW 20-60 percent of the population are prone to venal problems to various extent globally. 20 percent of men and 25 percent of women cannot wear clothes that they’d like, to cover up the bulging veins on their calves and knees. Spider veins affect 60 percent of the adult population.
So much so that certain sports are ruled out with advanced varicose veins. The condition is potentially inflammatory, and it can be the cause of thrombo-sis and embolism. “Everyone should know that varicose veins are not an aesthetic problem but a serious health condition that needs medical attention,” warns Dr. Darabos, adding that only a quarter of affected patients seek medical advice. Had they known that the operation is painless and heals fast and easy, having to wear a bandage only for a short time, they might think otherwise. A series of Doppler, duplex ultrasound and x-ray examinations help the ex-perts map out the weakest points of the patient’s veins,
and come up with a personalised treatment. The operation is conducted with a thin probe inserted from behind the knee, all the way to the affected vein. A laser beam seals the
vein, its function promptly taken over by surrounding healthy veins, restoring deep venal circulation – and improving the aesthetics of the legs at the same time.
For an appointment, call (+36)1-377-67-37 or go online at www.rendelo.drrose.hu Széchenyi square 7/8, 1051 Budapest
NOTE: ALL ARTICLES MARKED PARTNER CONTENTS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
Budapest Business Journal | May 31 – June 13
EAT AMERICAN THE BURGER FEVER Hamburgers have never been more popular than they are now. The top hotels and first−class restaurants all fell prey to the Great Burger Boom of 2012, like many weathered old buffets, where hamburgers have replaced the good old goulash soup. Burger fever has gripped the city indeed – what’s more, you can check your hamburger skills at the Millenáris Park on June 21−23 at a hamburger eating and preparing competition.
taurants which are responsible for bringing burger culture to this higher level.
The above−mentioned changes are benefi− cial for two reasons. One: now it’s finally pos− sible to have truly tasty burgers in Budapest. Two: these developments have had such a positive impact on those making burgers at home that people now look for quality ingre− dients and collect information on patties, rolls, sauces and frying technologies. And this new attitude could be the main long− term benefit of this passing whim of the popularity of hamburgers. Hopefully this attitude will become permanent and peo− ple will demand quality in other things they eat, too, not just burgers. It is an extremely entertaining paradox that the quality of the hamburger, the ultimate junk food, is what people focus on recently. Let’s see some res−
BOCK BISZTRÓ The chef of Bock Bisztró, Lajos Bíró has become an iconic figure of Hungarian gas− tronomy over the past few years, and for a rea− son. The restaurant he dreamed about and built is a key part of the gourmet world of Budapest and not only because of the special dishes it serves, but also because it reinvents simple and traditional dishes to make them special. So the Beef Burger available in Bock Bisztró is not your average sandwich. They put 100% sirloin patties in “two−handed” clas− sic bread rolls. They put the home−made style mayonnaise based sauce in the hamburger with some red onion and gherkins to make it unique, and then place another layer of meat, a slice of fried and pressed calf head on top.
standard offered by flashy gourmet restau− rants, and the standard price of HUF 700 shows that this is a different league, but the hamburger is still competitive. The bread rolls, the grilled vegetables, the jalapeños (avail− able as an extra) and the Cheddar cheese they use are of outstanding quality and so are the French fries, cut by hand, fried in peanut oil and served as a side dish. 1095 Budapest, Mester u. 46. www.blackcab− burger.hu
The dish is made complete with some ajvar sauce, white cabbage salad and Lyon onion, which is so filling that they do not serve French fries with it, just a mixed salad. 1073 Budapest, Erzsébet krt. 43−49. www.bockbisztro.hu BLACK CAB BURGER The black, white and red dominated scenery looks like that of a fast−food restaurant, but both the speed of service and the quality of hamburger are different. The image of Black Cab includes items of both English (the name refers to the hackneys of London and the num− ber of special English beers the place offers) and American culture. The hamburgers sold here in packaging featuring the place’s own logo are notable primarily because of their great value for money. The hamburger patty made of minced beef neck may not be of the
MANGA COWBOY Manga Cowboy was made a popular and trendy place primarily by its unique image, the combination of the Japanese manga cul− ture and the American cowboy lifestyle. How− ever, its hamburger also had a role, and we believe it is one of the best in Budapest. They use various kinds of beef to make the 150− gram patty; this way, the flavors are fuller and more exciting than the taste of a patty made exclusively of sirloin. Standard sauces are available at no extra charge, but they also offer homemade ones: kamikaze, which is hot, and the one they call “secret recipe”. The ham− burger is served in a sesame seed covered roll (toasted on both sides) with some French fries and coleslaw. Their French fries are some− times imperfect and portions could be big− ger (cabbage, too), but the overall impact has made Manga Cowboy a must−try place in Budapest when it comes to hamburgers. 1092 Budapest, Ráday u. 31. www.mangacowboy.hu This article is taken from Fine Restaurants, the BBJ’s 2013 res− taurant guide. To get your copy of the book, visit www.amedia.hu
OTP KLUB GOURMET FESTIVAL – HAVE A BITE OF HUNGARY!
ungary’s most prestigious and diverse gastro event, the OTP Klub Gourmet Festival, will again await visitors in the Millenáris Park between May 30 and June 2. It is a must-see event for all those who love Hungarian gastronomy. The festival represents the essence of Hungarian culinary events with more than 100 exhibitors bringing the best flavors from each corner of the country. This is where the most outstanding restaurants – from inside the capital and out –converge, along with the most notable wine makers. As a noteworthy novelty, this year’s Gourmet puts goulash, the bestknown Hungarian dish, firmly in focus. Gourmet Festival is an exciting gastronomical reflection of Hungary. Exhibitors from all around the country will participate to make culinary pleasures available in one place, so no need for a travel plan to travel through Hungary. Gourmet Festival is not just about gastronomy, visitors can also enjoy cultural delights at the event. To match its slogan of “Taste Hungary”, this year even more restaurants from right across the country will participate. The event endeavors to provide a comprehen-
May 30 – June 2
sive view of high-end Hungarian gastronomy by introducing the best restaurants, wineries, gourmet shops and confectioneries. “It delivers a translucent snapshot of the current state of gourmet catering. It’s also unique for being the single event in which the big guns of the Hungarian gastro scene are gathered together almost in their entirety, from both Budapest and out-
side,” explained Károly Gerendai, director of the Gourmet Festival. “In 2013, nearly all of the top 50 Hungarian restaurants will be represented. Furthermore, for many of them this is the only event they will move out of their kitchens for. We are spurred by the aim of presenting a gastronomic scale model of the country within the grounds of Millenáris. We offer visitors the opportunity
to taste countless exciting and delectable delicacies at an affordable price (between HUF 500 and HUF 1,000 per portion). Alongside the foods, visitors will receive wine offerings compiled by experts so that they can taste the wines on the spot as well. Visitors can get almost everything in one place that they would otherwise only be able to discover by going on long journeys and at considerable expense,” the festival director added. On top of the unprecedented food and drink offerings, gastro and music programs will also provide entertainment for visitors. On the Gourmet gastro stage, the audience can watch Hungary’s Michelinstar chef Tamás Széll (Onyx) who will hold separate shows. After their success last year, Lajos Bíró and Viktor Segal will enter into a gourmet duel over the subject of this year: the eggplant. So see you again on the last weekend of May at the Gourmet Festival at Millenáris with goulash variations and endless delicacies. More information on the program and tickets can be found on www.gourmetfesztival.hu