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In focus: Russia Domestic tourism FEB 14, 2014 – FEB 27, 2014

VOL. 22. NUMBER 03

BUDAPEST

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HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

‘I’VE SEEN THE FUTURE AND IT’S BLEAK’ If you’re looking for high hopes regarding Hungary’s economic outlook, Saxo Bank’s Steen Jakobsen probably isn’t your man. The chief investment officer thinks that there is an abundance of negative trends and a conspicuous lack of reforms worldwide, but he says Hungary stands out as having become the exemplum of how not to manage a country.  08-09

NEWS

BUSINESS

SOCIALITE

Rollercoaster

Air−bound insecurity

All online ears

The forint has quickly reached a two− year low against the euro, with investors anxious about emerging markets. Regardless of the reason, the currency is widely predicted to weaken further and eyes are now on the central bank.

You most probably own a mobile device with internet access, and the odds are pretty much the same that you have been victim of a security breach. And this is only the beginning.

Spotify, the pioneer of the global streamed music business, has eventually made it to Hungary. Competitors are already gearing up, which should mean that the users will win.

03

10-11

20-21


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Budapest Business Journal | Feb 14 – Feb 27

In focus: Russia Domestic tourism FEB 14, 2014 – FEB 27, 2014

VOL. 22. NUMBER 03

BUDAPEST

BUSINESS JOURNAL HUF 1,250 | €5 | $6 | £3.5

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

‘I’VE SEEN THE FUTURE AND IT’S BLEAK’ If you’re looking for high hopes regarding Hungary’s economic outlook, Saxo Bank’s Steen Jakobsen probably isn’t your man. The chief investment officer thinks that there is an abundance of negative trends and a conspicuous lack of reforms worldwide, but he says Hungary stands out as having become the exemplum of how not to manage a country.  08-09

NEWS

BUSINESS

SOCIALITE

Rollercoaster

Air−bound insecurity

All online ears

The forint has quickly reached a two− year low against the euro, with investors anxious about emerging markets. Regardless of the reason, the currency is widely predicted to weaken further and eyes are now on the central bank.

You most probably own a mobile device with Internet access, and the odds are pretty much the same that you have been victim of a security breach. And this is only the beginning.

Spotify, the pioneer of the global streamed music business, has eventually made it to Hungary. Competitors are already gearing up, which should mean that the users will win.

03

10-11

20-21

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THE EDITOR SAYS

A FIRM REMINDER THAT’S NOT SO GENTLE Hungary got a stark reminder in the opening weeks of 2014 that, even though it may have lulled itself into a false sense of security over the last year of favorable international sentiment, it still has a very vulnerable economy that is at the mercy of international happenings. News of the United States making a long−anticipated move to scale back its stimulus campaign has suddenly put the spotlight on the issues that weigh on emerging market economies, things that were largely ignored because of all the dollars floating around. Hungarian assets started to slide along with others and there is no clear indication of which way the wind will blow now. The political reaction was, to no one’s surprise, the continued rhetoric of infallibility: it’s all because of the global sour mood, there is nothing wrong with the Hungarian economy, those who think so should do their research. In fact, the prime minister has told China that Hungary is the engine of growth for the entire European Union, in case anybody had any doubts. The lesson that this government still hasn’t learned, despite several opportunities, is that even if it’s messages of an economic “fairy tale” were 100% true, which they are not, it is hardly relevant given the country’s unchanged status as an underdeveloped and exposed economy that is consequently vulnerable. Things were also A−OK at the end of 2011, when Hungary was looking for a “safety net” in the shape of an International Monetary Fund support program, but PM Orbán also said then that if the talks failed, it would

be no big deal, Hungary would be fine on its own. Seeing that the economy essentially collapsed over the course of the first workweek in 2012 and panicky backtracking only prevented a bigger disaster should have been an indication that international investors aren’t fully convinced of the credibility behind Hungarian rhetoric. Then of course, Hungary found a friend in the U.S. Federal Reserve and its stimulus program that served as opium for anxious international markets. The country were able to conduct successful foreign currency bond auctions, and also made a spectacle of ousting the IMF. What the government didn’t do was to take advantage of the grace period and at least start implementing reforms that it had avoided up to that point – and to this day – like the plague. While it is true that it is putting people to work, it is also true that it is still stifling the businesses that could employ them. It is happy deconstructing legal safeguards in the name of the nation while also putting small companies out of business. Newly appointed Fed boss Janet Yellen clearly stated that the bucket−loads of dollars being poured into the American and indirectly the global economy would stop shortly. Without money to burn, market participants will likely be seeking out safer investments than the questionable state of affairs in Budapest and its peers in the other emerging markets. That ringing sound on the emerging markets is a wakeup call, yet another one on a long roster. There are only so many times we can hit the snooze button and hope things will sort themselves out.

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ANYWHERE BUT HOME The success stories of the recent past show that technology is the way to go, because even if a firm hails from Hungary, it doesn’t actually have to conduct business here, but anywhere in the world it chooses. The latest big news in Hungarian business, the IND buyout, shows two important things: being a Hungarian firm is not only by no means a disability, but it also helps if what you’re selling is non−material and can easily be distributed. When IND founder and boss Balázs Vinnai spoke to the Budapest Business Journal recently, he highlighted that the main benefit a tech company has over other business segments is that it doesn’t need a huge headcount, doesn’t need to set up offices around the world to represent itself and can even provide a full service to customers that it possibly never meets in person. For anybody who has ever sent an email beyond the Hungarian border, this notion is hardly a revelation, but it does point to a chronic Hungarian issue that has held the country back during its modern history: it is a place where ideas are born, maybe reach a stage of childhood, but it is not a place where they can mature to fuel prosperity. Of course, this is no reason to dismiss the good fortune of the innovators and the ambitions of making Budapest a recognized startup hub. It is a reason though to realize that all this is of little consolation for companies that remain within the borders. They still have to deal with high taxes, hostile authorities and a political leadership that often decides

for no obvious reasons that it wants to destroy entire brands and businesses in an overnight decision or just take away relatively lucrative opportunities and give them to a group of the chosen. The latest electronic cash register affair, the ban on slot machines, and the state franchise for tobacco shops are all prime examples. Even major employers, multinational firms, whether they are based in Hungary or anywhere else in the world, can only strive to become strategic partners to the government, a deal that translates into little more than a non−aggression treaty. That sounds nice if you’re under a genuine threat of attack, but that state in itself is probably not the best place to be. Already, the younger generation is flocking away, in what the government says is a walkabout that will ultimately lead them back home, bringing their skills and experience with them, but what the opposition says is in fact an exodus. Either way, the current lack of opportunities and the sour ambient is driving people away, but if current trends continue, they might run out of destinations. Great Britain and most recently Switzerland have decided on limitations to immigration, and this trend is expected to escalate with the euro skeptics getting a bigger share of the vote at this year’s European Parliamentary elections. Not everybody can work for a successful tech startup, yet it is exactly those who can’t who need opportunities because they are the ones who most need the chance of having a shot at success, even if they stay at home.

HUNGARY IS A PLACE WHERE IDEAS ARE BORN [...] BUT IT IS NOT A PLACE WHERE THEY CAN MATURE TO FUEL PROSPERITY


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1 News

NEWS

Misys buys IND

05

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Speaking of figures07

macroscope

EMERGING MARKET ROLLERCOASTER The forint has seen a hectic period along with its peer currencies in emerging market economies. Investors are getting jittery over risky emerging markets as the United States scales back its stimulus campaign, which has been the main source of favorable sentiment thus far. GERGŐ RÁCZ

The Hungarian currency hit a two−year low against the euro at 311 at the end of January, levels that it has since been sticking to amid overall uncertainties on the outlook for emerging markets. In all fairness, while Hungary remains lumped with the EMs, other nations have been far worse affected thus far. Just as the Turkish central bank announced a drastic interest rate hike to halt the lira’s weakening against the euro, the Ukrainian hryvnia was devalued; other EMs have fared no better. As the Budapest Business Journal goes to print, Russia has intervened for the 17th time this year to stop the weakening of the ruble, which has shed 5% against the dollar since the start of the year. The immediate focus in terms of the Hungarian outlook is how the central bank will respond and whether it believes the events warrant a modification of its resolute rate cutting cycle, which has constantly reduced the key indicator to historic lows currently standing at 2.85%. “The economy’s financing is highly reliant on the sentiment on international capital markets, while the low interest rate makes the forint an easy target for attacks. So, if the current nervousness on the market persists and the forint starts a strong weakening, the pressure will also increase on the central bank to opt for a rate hike,” István Horváth, investment director at fund manager K&H Alapkezelő said. MIXED OUTLOOKS The only sure thing is the uncertainty that hovers around emerging economies and the markedly different viewpoints of the market participants and the decision markers is doing nothing to help bring any clarity. National Bank of Hungary governor György Matolcsy was discussing further cuts to the base rate even as the forint hit the new low against the euro, while senior government officials dismissed the events as

STORY HIGHLIGHTS ■

Forint hits two-year low amid emerging market turbulence ■ Government dismisses concerns, but market participants are wary

hardly important fluctuations that have nothing to do with Hungary’s economy. Caucus leader for the governing Fidesz party Antal Rogán said that the events only show the “usual” forint weakening that happens every year. “The currency fluctuations show that the uncertainty of the global economy and the European economic crisis haven’t ended yet, which makes European currencies fragile,” Prime Minister Viktor Orbán added, also stressing that there are no endemic reasons. In contrast, analysts like Saxo Bank’s chief investment officer Steen Jakobsen say that international affairs are only 30% to blame; the remaining 70% is down to Hungary’s own legal and economic issues. Regardless of the reasons, market participants think that the central bank rhetoric points to the continuation of the rate cutting cycle and even if there is a change along the road, it will take further, considerable currency depreciation before that point is reached. “We think a warning level based on the last financial stability report could be in the 340−350 region,” Nomura analysts Peter Attard Montalto said in a research note. Horváth agreed that the MNB will need additional pressure to consider

The five best and worst performing currencies against the euro (%), December 31, 2013 – January 31, 2014

Japanese yen U.S. Dollar Hong Kong dollar Chinese renminbi Indonesian rupees Canadian dollar Turkish lira Russian ruble Hungarian forint South African rand Source: K&H Alapkezelő

rate hikes, which he thinks would likely come through a sequence of failed government bond auctions. STORIES TO FOLLOW On the international stage, the most decisive player will be the U.S. Federal Reserve, where new boss Janet Yellen has promised to continue the ongoing downscale of the stimulus program, or ‘tapering’, as it is known. Domestically, there are elections to consider that some forecasts show will entail the need for corrections,

since the country’s deficit will likely grow beyond the 3% of gross domestic product threshold demanded by the European Union. Also the Luxembourg−based European Court of Justice as well as Hungary’s Constitutional Court will reach a verdict about foreign currency loans soon. A ruling that could serve the basis for declaring forex policies null and void will certainly bring more pain for the banking industry and consequently further shake investor confidence about the viability of the Hungarian economy.

THE ECONOMY’S FINANCING IS HIGHLY RELIANT ON THE SENTIMENT ON INTERNATIONAL CAPITAL MARKETS, WHILE THE LOW INTEREST RATE MAKES THE FORINT AN EASY TARGET FOR ATTACKS


04 News

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

NEWS

IN BRIEF

Budapest Business Journal | Feb 14 – Feb 27

Those who do business with Hungarians are doing business with the European Union’s engine of growth Prime Minister Viktor Orbán said during his official visit to China

Prime Minister Viktor Orbán arrived in Beijing for an official visit upon an invitation from his opposite number Li Kequiang. The Hungarian delegation’s main goal is to reinforce and enhance relations between the two countries, Orbán told the press. During a lecture, he highlighted the numerous cultural similarities between the two countries as well as his expectations of a 4% economic growth in 2016. Railway developments and re−launching of a direct flight between Hungary and China were among the topics discussed, while the sides agreed that Bank of China would establish a regional hub in Hungary to support Chinese business in Europe.

ECONOMY CITY SEES HUNGARY Q4 GDP WELL ABOVE 2% Hungary’s annual economic growth is likely to have accelerated to well above 2% in the last quarter of 2013, although it may have slowed in quarter−on− quarter terms on the back of an apparently softening industrial output towards the end of last year, London− based emerging markets analysts said ahead of the preliminary GDP data. Economists at Capital Economics, a major London−based global financial consultancy, said that their GDP tracker model points towards growth of around 2.5% year−on−year in the final quarter of last year, up from 1.8% in the third quarter. It looks like the economy has benefitted both from a recovery in the export−led industrial sector as well as strengthening domestic demand, they added. “The seasonally adjusted quarter−on−quarter growth figures are volatile [...] But for what it’s worth, GDP growth of 2.5% year−on−year would be consistent with output rising by 0.4% over the quarter – a slowdown from the 0.9% recorded in the third quarter.” AGRICULTURE PERFORMS BETTER, STIMULATES GDP GROWTH Hungary’s agriculture performed 21.7% better in the first nine months of last year than in 2012, which means that half of last year’s economic growth may have come from agriculture, György Czerván, state secretary for agriculture at the Rural Development Ministry said at a press briefing. Hungary’s GDP may have grown more than 1% on average last year, over expectations, Czerván said. Hungary’s GDP can grow only if agricultural performance increases, the state secretary added. The gross

value added of agriculture fell 29% in 2012 at previous year’s prices, while total GDP decreased 1.7%. Last year, gross value added in agriculture increased 30% at comparable prices, the statistical office said earlier. Agriculture exports totaled HUF 8.1 bln in 2012, with an international trade surplus of HUF 3.6 bln, making more than half of Hungary’s foreign trade surplus, and these levels could have been approached last year as well, the state secretary said. EXIMBANK EXPANDS EXPORT STIMULUS CREDIT PROGRAM The Hungarian Export−Import Bank signed an agreement with lenders on the expansion of its ‘export stimulus credit program’. In the framework of the program, companies may apply for loans with runs of less than two years as well as for export pre−financing that matures in more than two years, said CEO Roland Nátrán. National Economy Ministry Mihály Varga said the program had contributed 0.8% to economic growth last year and would contribute a further 1.1% in 2014. The funding will support the creation or preservation of 80,000 jobs, he added. The agreement was signed by Varga and Nátrán, and with Eximbank partners Budapest Bank, CIB, Commerzbank, Erste, Granit Bank, K&H Bank, MKB, OTP, Raiffeisen, Sberbank Magyarország, Takarékbank and UniCredit

DOMESTIC V4 COUNTRIES SIGN JOINT TOURISM MARKETING PLAN Representatives of the Visegrád 4 countries have signed a joint marketing plan for the year 2014 with regard to

Numbers in the news

€17.8 bln was the output of Hungary’s automotive sector last year, accounting for about 20% of manufacturing sector output.

6,471

patents were filed by Hungarians in 2013, doubling from 2008, the Hungarian Intellectual Property Office said, adding that the number was up 46% from 2012.

their respective tourism marketing organizations. Since Hungary is holding the rotating presidency of the V4 Partnership until June 30, 2014, Magyar Turizmus Zrt has invited its partner organizations to Budapest to finalize the joint plans for 2014. The 2014 marketing plan envisages fewer, but higher−budget campaigns including online training for tour operators in the United States, presentations and workshops in Azerbaijan, Kazakhstan, Belarus and Georgia, a roadshow in Russia’s Asian territories, and the continuation of a popular community media campaign in Japan. The V4 countries will jointly participate in events in Brazil, Singapore, Australia and South Africa. M4 STRETCH FROM CAPITAL COULD BE BUILT BY 2022 A section of the M4 motorway connecting Budapest with Cegléd – about 50 kilometers from the capital – could be built by 2020−2022, state secretary of the National Development Ministry Pál Völner said at a press conference. The section will be financed from the budget because the area is no longer eligible for as much European Union funding as underdeveloped regions, Völner said. A 30−kilometer section of the M4 between Abony and Fegyvernek is underway at a cost of HUF 111 bln. The M4 will run past Szolnok to Hungary’s border with Romania in the east. RUSSIA COULD LIFT BAN ON EU PORK BY MARCH Russia will hopefully lift a ban on pork imports from European Union countries by March, Hungarian Rural Development Ministry state secretary Endre Kardeván said at

the Prodexpo trade fair in Moscow. Russia’s food safety agency will carry out reviews of 21 Hungarian pork exporters next week, Kardeván said. Russia banned the pork imports after an outbreak of African swine fever in Lithuania at the end of January. Twenty−one Hungarian companies are showing at Prodexpo this year. They are joining some 2,300 Russian and foreign food and farm industry companies.

POLITICS NUMBER OF ELECTION PARTIES REACHES 60 As of the weekend of February 8−9, there are 60 political parties that have been approved to contest in the 2014 general elections, the National Election Office said. According to the central registry, there are currently 147 registered political parties in Hungary plus 13 parties for nationalities, altogether 160 organizations. The number of entrants will likely increase as the elections approach since the law stipulates that only groups that enter national elections can be permitted to continue functioning as a party. PARLIAMENT APPROVES THIRD ROUND OF UTILITIES PRICE CUTS Parliament has approved legislation mandating a third round of utilities price cuts. The law will cut household gas prices by 6.5% from April 1, electricity prices by 5.7% from September 1 and district heating prices by 3.3% from October 1. Last year, two rounds of government−mandated utilities price cuts saved Hungarians a combined 20% on their bills.

Photo: Barna Burger

ORBÁN VISITS FRIENDS IN THE EAST


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News 05

Budapest Business Journal | Feb 14 – Feb 27

COMPANY NEWS

New outlays by Hungarian leasing companies rose 4% to HUF 365 bln last year, the head of the Hungarian Leasing Association said. While new outlays grew, the combined value of the companies’ portfolios fell 6% to HUF 1,479 bln.

MISYS ACQUIRES HUNGARY’S IND GROUP

RICHTER PROJECTS FALLING REVENUE IN 2014 Hungarian drugmaker Richter expects a decline in revenue, calculated in euros, this year, CEO Erik Bogsch said, after the company published fourth-quarter earnings. Bogsch did not estimate the scale of the fall, but said exchange rate changes could affect the projection. Richter projects stagnating revenue in Hungary and a similar outlook for new European Union member states. Richter’s fourthquarter net income fell 60.7% to HUF 4.8 bln from the same period a year earlier as costs rose at a faster pace than revenue, the company’s consolidated IFRS report shows. Profit was well under the HUF 11.8 bln estimate by analysts polled by Portfolio.hu. The company sees sales in Russia, its biggest export market, climbing 0-5%, calculated in rubles. Sales in Ukraine are set to fall, while sales in other countries in the CIS rise 5-10%, calculated in dollars. Bogsch said Richter’s recently launched drug for uterine fibroids, Esmya, had generated turnover of €16.3 mln last year, and sales were set to reach €30 mln in 2014, even excluding the effect of a recent decision by the European Commission extending the treatment period for the drug.

IND FOUNDER BALÁZS VINNAI

Financial software company Misys has signed an agreement to acquire 100% of Hungary’s IND Group, which makes online banking software. Misys did not disclose the price of the acquisition, but industry insiders said the deal could be worth more than HUF 10 bln. IND Group is owned by four private Hungarian individuals. It employs 250 people and had EBITDA of HUF 900 mln on revenue of more than HUF 5 bln last year. “The market for digital banking is exploding. More than half a billion people already use mobile devices for personal banking and this is set to double in the next four years. This deal reinforces our digital banking proposition in this rapidly expanding area by adding world−class consumer− oriented solutions to our offering,” said Misys CEO Nadeem Syed. Misys and IND Group have been business partners since the spring of 2013.

Mercedes−Benz Hungária sold 1,587 new passenger−vehicles last year, up 28.6% from 2012, the company told state newswire MTI. The automaker noted that passenger vehicles accounted for just under 60% of all the vehicles the company sold in 2013.

391.7 mln in EU support for the investment through the government’s New Széchenyi Plan. The unit will hire 50 new workers as a result of the investment.

Hungary’s Rába Automotive Holding said its axle unit had won new orders from two European “premium category” vehicle makers that could generate an annual €18 mln from 2016. Rába Axle will supply the companies with new I−beam models for medium and heavy−duty truck models.

Media company Est Media will issue bonds of HUF 3.296 bln to satisfy creditors of its subsidiary, EMG Médiacsoport, which is under bankruptcy procedure. According to an agreement with the creditors, approved by court, the ten−year bonds will carry a coupon of 9.5% annually, payable in a lump sum at maturity.

German automotive industry supplier Continental has completed a HUF 2.8 bln investment at its base in Veszprém. The unit installed 12 new production lines in the project, which was supported with a HUF 512 mln grant. It made 152 new hires as a result. Continental Automotive Hungary employs more than 6,000 people in Hungary.

A HUF 220 mln business incubator established through Hungarian−Slovak cooperation opened in Nagykovácsi, northwest of Budapest, National Development Ministry State Secretary Pál Völner announced. Völner said that the European Union had provided HUF 190 mln in funding for the incubator.

German engineering giant Bosch plans to raise headcount at its bases in the Hungarian cities of Miskolc, Hatvan and Budapest this year. A decision announced last November to move production of woodworking tools from Switzerland to Miskolc will create 320 jobs by the end of 2016.

Business Telecom had after−tax profit of HUF 859 mln in 2013, up from HUF 60 mln in the previous year as margins improved, the company’s report for the period shows. BTel’s revenue climbed 22% to HUF 4.32 bln.

India’s Apollo Tires could build a new European plant in Hungary, the Financial Times said. Apollo Tires wants to invest up to $500 mln in two new factories to be built within the next four years: one in Eastern Europe and another in Southeast Asia, managing director Neeraj Kanwar told the paper. A final decision on the plants’ construction will be taken in the next few months, Kanwar said. The Hungarian ball bearing unit of Germany’s Schaeffler has completed a HUF 1.8 bln investment at its factory in Debrecen. FAG Magyarország said the investment, which will raise the added value of the factory’s output, was supported with a HUF 500 mln European Union grant. Duna Aszfalt has won a tender to reinforce a 27 kilometer stretch of road in the south of Hungary with a bid of net HUF 9.8 bln, it was announced in the fresh issue of the Public Procurement Gazette. The contract includes the construction of a bicycle path parallel to the road. Duna Aszfalt’s bid was the lowest in the tender. The runner−up was EuroAszfalt. Prague−based used car seller AAA Auto is returning to Hungary after a five−year absence, the company told MTI. AAA Auto will start buying cars and open its telephone customer service at the beginning of February. Sales will start at AAA Auto’s base in Fót, near Budapest, in March. Coloplast Hungary, the Hungarian unit of Danish medical−supplies maker Coloplast, will make a HUF 1.51 bln technological investment at the company’s plant in Nyírbátor. The company said it had received HUF

German-owned OBO Bettermann is spending more than HUF 300 mln to expand its warehouse and renovate its production hall in Bugyi, close to Budapest. The company won a HUF 122 mln grant for the project which will wind up this June. The unit had revenue of HUF 13.5 bln in 2012. Skansksa’s Green Office claimed two prizes at the annual ‘Office of the Year’ awards organized by the iroda.hu website. The facility sporting 17,800 square meters of leasable space won two prizes for its environmentally friendly solutions while its tenant, Avis Budget Group ended being the overall winner of the office of the year category. SWARCO Traffic Hungária has won a Magyar Közút Nonprofit-issued tender to equip public road crossings with traffic-signal operating mechanisms, the Public Procurement Gazette revealed. SWARCO won the tender with a bid of HUF 1.32 mln, compared to an estimated cost of HUF 2.26 bln. Metalworking company Heiche Hungary has announced the launch of a HUF 300 million capacity expansion at its base in Sátoraljaújhely. Heiche Hungary won a HUF 120 mln grant for the investment. The company had net income of HUF 216 mln on revenue of HUF 773 mln in its 2012 business year. It employs 55 people. Hungary’s government has signed a strategic cooperation agreement with German brake maker Knorr−Bremse. The German-owned company has been present in Hungary for about a century. Knorr-Bremse makes train brakes in Budapest and vehicle brakes at its base in Kecskemét. It has invested more than €100 million in its operations in Hungary over the past five years.


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Budapest Business Journal | Feb 14 – Feb 27

ENERGY

NEWS FOR THIS SECTION IS TAKEN FROM THE BUDAPEST BUSINESS JOURNAL’S DAILY BRIEFING, ENERGY TODAY NEWSLETTER AT WWW.BBJ.HU/STORE/NEWSLETTER-PACKAGE

EU PARLIAMENT CALLS FOR THREE BINDING CLIMATE TARGETS FOR 2030 Members of the European Parliament voted on February 5 in favor of three climate and energy targets for 2030, rebuffing a Commission plan for just one fully binding goal. The vote at the EP has no legal force, but stokes debate before summit talks between European Union leaders in March on energy and environment policy and its impact on competitiveness. It endorses fully binding goals for cutting climate emissions, improving energy efficiency and forcing member states to increase the amount of renewable energy they use. The European Commission in January presented its views on 2030 policy, calling for one fully binding goal to cut emissions by 40% by 2030 as well as a weaker EU−wide target on

green energy, which would not oblige individual nations to act. That would give member states more freedom to decide how they meet the emission goal, for instance by opting to build carbon−free nuclear plants or bury emissions underground rather than subsidizing the installation of new wind or solar power projects. EU WIND POWER INSTALLATIONS FELL LAST YEAR European Union new wind power installations declined 8% to 10,917 megawatts in 2013, as the market was affected by “volatility” across the continent, the European Wind Energy Association said on February 3. Germany and the UK accounted for 45% of all new installations across the bloc’s 28 members, while the markets in Spain, Italy and France declined by 84%, 65% and 24% respectively from 2012 levels, EWEA said in a statement. “Wind power installations for 2013 show the negative impact of the market, regulatory and political uncertainty that has been sweeping across Europe,” according to the statement. “Destabilized legislative frameworks for wind energy have undermined investments and put green growth, jobs and energy security at risk,” it said. EUROPE LINKS 15 POWER MARKETS Power markets across 15 European nations from the UK to Finland were linked on February 4 in their biggest transformation since liberalization in the 1990s. The move is intended to smooth price differences between nations through better control of cross−border flows, the Agency for the Cooperation of Energy Regulators (ACER), said. The process, known as market coupling, is the biggest step in a push to integrate electricity markets by the end of this year across the 28−nation European Union, which forced utilities to open up their business to competitors in the 1990s.

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Photo: Noémi Bruzák / MTI

EUROPEAN POWER EXCHANGES PLAN CROSS-BORDER INTRADAY TRADING Four European power exchanges have agreed to develop an intra−day market for electricity, which will be better able to balance price swings caused by intermittent solar and wind energy than the current day−ahead markets. Wind and solar energy output can swing strongly on an hourly basis, which makes cross−border flows hard to coordinate. The Paris−based European Power Exchange (EPEX), which operates the power spot markets for Germany, France, Austria and Switzerland, said on February 10 it had signed a cooperation agreement for cross−border intraday trading with exchanges in Benelux, Iberia, Scandinavia and the UK. This would create an intraday market stretching from Stockholm to Madrid. European Transmission System Operators – which operate Europe’s high−voltage power grids – will also cooperate, while Deutsche Boerse AG will deliver a technical system, EPEX said.

HUNGARY’S PARLIAMENT APPROVES AGREEMENT ON PAKS UPGRADE Hungarian lawmakers on February 6 approved the controversial Russian−financed plan to construct two new reactors at the country’s only nuclear plant. Under the deal, Russia will lend Hungary up to €10 bln to build the reactors in the city of Paks. The deal was approved by MPs from the governing Fidesz party and the far−right Jobbik party. The government says the bill will reduce reliance on foreign sources. Public opinion surveys show the country remains divided over nuclear energy. Many details of the deal have not been made public – and placed under a 10−year secrecy rule. What is known is that the nuclear fuel rods would be transported to Russia for 20 years of storage, then back to Hungary for final disposal. Prime Minister Viktor Orbán struck the agreement with Russian President Vladimir Putin in January. The pact allows Russia’s Rosatom to build the reactors in Paks, which lies around 100 km south of the capital, Budapest. It generates some 40% of Hungary’s electricity supply. The upgrade would increase production from 2,000 to 4,400 megawatts, with the reactors scheduled to begin operation in 2023. LMP caucus members protested against the expansion during the voting in Parliament (pictured).

HUNGARY IN ‘SERIOUS NEGOTIATIONS’ ON ACQUIRING MORE ENERGY SECTOR STAKES, PM SAYS The Hungarian state is in “serious negotiations” on acquiring more stakes in energy service providers, Prime Minister Viktor Orbán said on public radio on January 31. Orbán noted the state’s buyout of German RWE’s stake in Főgáz, the gas distributor for Budapest, and said the state wanted to take similar measures. He said energy prices in Europe could not be brought down to the level of global competitors’ under the textbook rules of market competition, which is why Hungary wants to turn energy service providers into non−profits. The move would lower energy prices for both households and businesses, he said, adding that if industry did not get cheap energy, factories would close and jobs would be lost. GAZPROM PUSHES BACK SOME GAS DELIVERIES TO HUNGARY Russia’s Gazprom will push back some

gas deliveries to Hungary slated for 2013 and 2014 to a later date, business daily Napi Gazdaság said. “We have agreed to put off delivering part of the amount of gas contracted for 2013 and 2014 to a later period,” Gazprom deputy chairman Alexander Medvedev told the paper. Hungary’s long−term gas contract with Russia expires in 2015. The state−owned Hungarian energy group MVM recently bought the local gas business of Germany’s E.ON in part to create a more advantageous negotiating position with suppliers. Medvedev said talks were underway with MVM. He added that Gazprom’s prices were determined “in harmony with market conditions” in a manner that ensured they remain “competitive”. He said Gazprom had no plans to buy a power plant in Hungary in the near future, but added that the company was working with MVM on the South Stream gas line project and named gas used as vehicle fuel as a potential area of cooperation.


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News 07

Budapest Business Journal | Feb 14 – Feb 27

MAGNIT ATTRACTS HUNGARIAN FOODSTUFF

MACRO Speaking X of figures The Budapest Business Journal presents the most important macro data of the past fortnight.

Russia’s biggest FMCG retailer Magnit has tripled its purchases in Hungary over the past two years – by the end of this year the amount may reach 500 truckloads. In the meantime, a giant Magnit development is under way in northeast Hungary: a truck hub is being constructed near Nyíregyháza. Celta, the logistics subsidiary of Magnit, will operate the new cargo center, which will create 2,500 new workplaces.

HUF 75.4 bln Hungary’s cash flow−based general government deficit, excluding local councils in January. In January last year, the shortfall was HUF 2.5 bln or 0.3% of the HUF 841.8 bln original full−year target.

Magnit’s headquarters is located in Krasnodarsk in Southern Russia. The company’s chain of retail units, however, covers the whole country except for the far east; there are no Magnit stores east of Omsk. Magnit runs 200 supermarkets, 7,200 convenience stores, and 700 drug stores. Last year’s turnover was $18 bln. Magnit is listed on the London stock exchange; its market capitalization exceeds $28 bln. Magnit’s controlling stakeholder, Sergey Nikolaevich Galitskiy, was 25th on Forbes’ rich list in 2013.

this quantity grew further; out of the 200 truckloads of fresh vegetables which Magnet purchases in Europe per week, 10% already comes from Hungary,” Szilárd Kiss, Hungary’s commercial attaché to Moscow and government delegate supervising the Magnit development project told the Budapest Business Journal. “My initial idea was conceived at the time when Magnit was still buying produce exclusively from Western Europe,” he continued. “I thought Magnit should import part of the foodstuffs directly from Hungary; by doing so it would get fresher and better−quality goods, and the produce would also be cheaper as in−between wholesalers would be removed from the chain. High−quality Hungarian produce would then be present on Magnit’s shelves in a competitively priced way,” Kiss pointed out. “This is why I came up with the idea that Celta, Magnit’s fleet management company, should establish a cargo truck hub in Hungary. One advantage of that is going to be the 2,500 workplaces created by the new enterprise. The other advantage is going to be the great export opportunities offered by the logistics center to Hungarian providers,” Kiss added. The Hungarian Investment and Trade Agency stressed that all possible support will be given to Magnit’s new development, in order to retain the Russian retail chain in Hungary and avoid competing logistics centers in Poland or the Baltics. It is also crucial for Hungary to improve its balance of trade with regard to Russia. In 2012, Hungary imported twice as much from Russia as it exported there. Hungary imported goods, primarily gas and oil, worth $8.3 bln, while it only exported $3.3

bln of mostly processed goods, leaving a $5 bln balance of trade deficit. “The increase in agricultural export is supposed to play a crucial role in [reducing] that, all the more so as the deficit is largely due to the gradual erosion of the once massive Hungarian agricultural export,” Sándor Fazekas, Minister of Agriculture said. In the 1980s, Hungary used to export large amounts of agricultural produce and foodstuffs to the Soviet Union on a barter basis, so foreign trade relations were necessarily balanced out. After the political transition, this changed. Firstly, dollar−based foreign trade replaced Hungarian−Russian barter in 1993. Secondly, the disintegration of the USSR and the emergence of successor states often disrupted long− established trade relations. Thirdly, the privatization and subsequent downsizing of Hungarian companies affected the scale of trade in a negative sense. Since 2011, however, Hungarian agricultural exports into Russia have started to increase again, by about 25% annually. The increase can be attributed largely to the export of breeding animals, seeds, and fodder farming technologies. As far as breeding animals are concerned, the export of Hungarian cattle is already expanding successfully; furthermore, Russia is showing keen interest in the establishment of goose and duck breeding plants operating on the basis of Hungarian technologies. The Hungarian Minister of Agriculture has pointed out that Russia is making efforts to build up a modernized agricultural sector that, in the long run, would make the country self−sufficient. At the moment, however, the country depends to a great extent on imports to meet its food supply needs.

€34.110 bln Hungary’s international reserves at the end of January, climbing €328 mln from a month earlier. The reserves were down €287 mln from their level a year earlier. Hungary repaid a €1 bln bond on January 29. Hungary’s industrial output climbed

6.8% in December from the same period a year earlier. According to preliminary data, industrial gross output in 2013 was 1.4% higher than in 2012.

1.8% rise in retail sales in December, following a 4.8% increase in the previous month.

€289.8 mln Hungary’s trade surplus in December, up €149.8 mln from one year earlier.

Sources: National Bank of Hungary, Central Statistical Office, National Economy Ministry Note: All data are preliminary/first readings

“Magnit’s logistic hub is a great opportunity for Hungary to increase her export of foodstuffs,” Péter Szijjártó, Hungarian government commissioner of foreign trade affairs said at a press conference last December. “The future truck base may become the guarantee of long–term export activity into Russia,” he added. The press conference was organized after the Hungarian government signed a declaration of intent giving full support to the establishment of the new truck base. At the same time Hachatur Pombukhchan, Magnit’s president declared: “We consider Hungary a strategic partner in logistics, and we are determined to commit ourselves to long−term cooperation.” The company has been increasing its purchases in Hungary. In 2012 it bought foodstuff worth altogether € 12 mln, one−tenth of the entire Hungarian agricultural export to Russia. “In 2013,

Photo: wikipedia

ANDRÁS ZSÁMBOKI


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2Business Q&A

“I’VE SEEN THE FUTURE AND IT’S BLEAK” European economies are on the wrong trajectory in how they address the crisis while trying to indefinitely put off any extensive reforms, and Hungary is the worst offender, according to Saxo Bank’s chief investment officer Steen Jakobsen. The Danish economist spoke to the Budapest Business Journal about current economic issues after telling reporters what he means by ‘Hungarization’ and why he would rather invest anywhere else in the world than Budapest. GERGŐ RÁCZ

Seeing consistent improvements in the output figures this year, do you think that the fourth quarter and consequently aggregated 2013 GDP figures could cause an upward surprise? A: A slight adjustment is a possibility. However, anything gained in the fourth quarter of last year basically disappeared in the past two weeks, during the course of the current emerging market crisis. Also, Hungary is still very far from any recovery, since the minor growth only compares to zero or recession. I like to

say, don’t call me until GDP returns to STORY HIGHLIGHTS ■

Hungary’s interventionist policies are damaging, hinder competiveness ■ Crisis management is defined everywhere by avoiding the implementation of necessary reforms

2008 levels, and Hungary is still far from that.

Do you see any chance that government measures – early repayment of foreign currency loans, utility fee reductions – could have led to a trend−turn by stoking domestic consumption through increasing disposable income? A: Anything gained is taken away with the 27% VAT level, not to mention the other burdens that government measures directly or indirectly place on households. Just the recent increases in bank costs mean that household expenses are increasing. This comes alongside the highly restricted lending potential of the banks thanks to the repeated and increasing taxes they have to bear, which is also an obstacle to household purchases.

Hungary’s sovereign debt rating is in the junk domain with all three major rating firms. Is this a concern? Are rating agencies even that important? A: If I were the Hungarian prime minister or finance minister, what the rating agencies say wouldn’t be a particular concern. What I would be concerned about is implementing the needed structural reforms. However, this is a long−term process that doesn’t rhyme


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2 Business

Budapest Business Journal | Feb 14 – Feb 27

well with politics. The in−depth changes that are needed could take something like 10 years and have to be implemented gradually. You can’t simply fire 50% of the public sector overnight.

The government is actively promoting a bigger role for the state in the banking sector. Is that a viable scenario and are there examples where such an arrangement works? A: State ownership growing is a very likely scenario based on what’s happened thus far. Simply put, it would be a waste of money. Banking is for the bankers, it’s not the state’s job. I have no knowledge of any country where such a setup would operate effectively. If there is, I would very much like to hear about it.

The new management of the National Bank of Hungary introduced a new communication regime this year, scrapping press conferences after rate calls and releasing statements that contain forward looking statements. How do you rate this approach and the MNB’s credibility? A: Central banks’ forward guidance basically aren’t worth the paper they are written on. We’ve seen that central banks always make the worst predictions. We all tend to make poor choices, but the central banks are always the worst offenders. Besides, why would I want the central bank ’s opinion about what it’s planning to do, when I could just ask Orbán, right?

09

THE ‘HUNGARIZATION’ SPECTER “We could not have had a worse start to the year than the January just past. The European Central Bank, International Monetary Fund and World Bank all increased their growth projections in January and before the ink on the press releases was even dry, emerging markets started tanking. Talk about an inverse indicator, so get this IMF, World Bank and ECB goes directly from an upped growth forecast that stated the recovery is coming to crisis alertness. Will this persuade them to revisit their models? Hardly…” Saxo Bank’s Jakobsen is a vocal critic of how the leaders of the European Union are acting to address the continent’s economic crisis. His main concerns involve a return to planned economies, where an over imposing and interventionist approach is becoming the main tool that decision markers chose. In this aspect, Hungary is the perfect case study. “The thing to fear is not ‘Japanization’, but rather ‘Hungarization’. Hungary has a government and policy hell bent on reducing its fiscal deficit, its methods being increased direct and indirect taxes, meddling with the independence of the central bank, under-investing and forcing its banks to pay a levy in the name of securing its customers from the pain of risk-taking entirely on their own device.” The idea that everyone can have a surplus while reducing debt is “idiotic” and the fact that the actors in the matter are the central bankers is plain wrong. Jakobsen, however, stresses that although he is not a fan of central banks, they are innocent in terms of the direction things are heading. They are, after all, only carrying out policies that are decided by the countries’ politicians. In Hungary, matters are even worse. Any and all fiscal adjustments are financed from taxes, the central bank has no independence, and there is hostility towards non-residents even though foreigners hold some 45% of stock, while disposable income is in the dumps. As an unsurprising consequence, Hungary is falling behind in overall competiveness, even when compared to the other European counties that are following similar paths, Jakobsen said. While expecting a small uptick this year in Hungary, Jakobsen still sees a forint weakening of 5% to 10% in addition to the January slide by the end of the year, with the overall turmoil in Europe and the eurozone opening a new chapter with this year’s European Parliamentary elections.

Recently a former tax authority employee claimed there was an extensive VAT fraud scheme involving food products on a regional basis and which allegedly amounts to HUF 1 trillion in damages a year. Do you think this a realistic possibility and do you have knowledge of such cases in other countries? A: I don’t know the specific case, but if you have a 27% VAT rate, there is always a propensity. I’d say such an arrangement was very much feasible. The Hungarian tax rate is the highest in the European Union and as such, products being transported could go from 0% to 27% just by crossing a border. In this sense, any fraud and the related damages that the economy suffers are self−inflicted.

CENTRAL BANKS’ FORWARD GUIDANCE BASICALLY AREN’T WORTH THE PAPER THEY ARE WRITTEN ON. [...] BESIDES, WHY WOULD I WANT THE CENTRAL BANK’S OPINION Q  ABOUT WHAT IT’S PLANNING TO DO, WHEN I COULD JUST ASK ORBÁN, RIGHT?

You seem to have a very grim view of Hungary’s economic outlook. Isn’t there any positive element that you could name? A: This countr y has tremendous potential. The people are traditionally excellent traders, it has a great location within Europe and there is immense potential within the high−level education system. Still, this will only remain a potential as long as there isn’t a better system of taxation, extensive reforms and an end to deconstructing the constitutional framework.


10 2Business // IT, Telco

Cloudgazing

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Budapest Business Journal | Feb 14 – Feb 27

The Budapest Business Journal’s new column about IT and telecom focuses on the new developments in the tech sector, on the rapid change in services, and the transition to the cloud. It explores how businesses are using the channels already available to them. It appears in every second issue.

AIR-BOUND INSECURITY FROM A HOTSPOT NEAR YOU It is not only the phones that are getting smarter; so are the cyber criminals. Wireless security is an issue for private individuals and the corporate world alike, with a hard fight ahead to protect valuable data. LEVENTE HÖRÖMPÖLI-TÓTH

As the world has gone wireless, online crime has gone wild. Among the global total of some 5.9 billion mobile phone subscribers, the frequency of mobile

STORY HIGHLIGHTS ■

Mobile security threat is on a sharp rise due to ever more devices targeted ■ Software firms have a hard time to keep the pace with cybercrime

Business Journal, most of the reported cases are of hoax nature (i.e. false alarms), and in general it is not communications through the provider’s network that poses a risk. Most incidents are due to a lack of knowledge about security functions on the part of the user. Security is typically breached when

MAJOR CAUSES OF DATA BREACHES GLOBALLY

Source: Ponemon/Symantec Cost of Data Breach Study

threats doubled between 2010 and 2011, according to Symantec’s Cybercrime Report. Protection of individuals’ privacy and corporate intellectual property is higher up the agenda than ever. No wonder that, as established by ABI Research, the mobile security services market was expected to total around $1.88 bln by the end of 2013. Device loss and theft top the chart of concerns. Most targeted are high− end gadgets and sensitive data, features preferably bundled in one single object. Software firms offer GPS tracking and remote locking activation for such emergencies. Organized criminal activity, however, is more concerned with malware attacks and device data leakage. BRACE FOR IMPACT As the communications directorate of Magyar Telekom told the Budapest

using a wireless Internet connection. “According to a survey from last year, the number of mobile viruses has soared by around 150%. They often come disguised as games and then secretly upload the phone’s contacts, SMS and e−mail accounts to a remote server, or send out text messages resulting in excess charges, also known as toll fraud,” Symantec expert László Gombás said. Such activities are typically caused by Trojan applications that, whilst looking normal, perform illegal actions. Some criminals are now taking this concept a step further, building entire fake storefronts of mobile apps. “Phones may be used as a gateway too, where the target is not attacked directly, but through a mobile device, thus making it more difficult to identify the original source of the assault,”

ACCORDING TO A SURVEY FROM LAST YEAR, THE NUMBER OF MOBILE VIRUSES HAS SOARED BY AROUND 150%


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Budapest Business Journal | Feb 14 – Feb 27

Péter Béres, senior IT consultant of Sicontact Kft, an ESET software distributor noted. BREACHES TAKEN FOR GRANTED The bulk of the threats concern Android users, which is no surprise given its 75% market share among smartphone platforms. This popularity with the bad guys finds further incentive in the open approach Google takes to apps on Google Play. Automated methods do test the programs uploaded there, but they are far from airtight. Therefore, users should definitely install some antivirus software on their mobile

device. They refrain from doing so many times not only because they are reckless, but also because they assume that such screening would slow down operation or kill the charger. Neither of these is a legitimate concern. “It can be taken for granted that most of the viruses are meant to thrive on Android,” Béres said. “However, there will be more and more cross− platform and iOS infections around too. Manufacturers, governments and users must work together in order to show visible results in the area of mobile security.” If not, mobile insecurity will prevail.

// IT, Telco 11

COST OF MOBILE SECURITY INCIDENTS IN 2012

Source: Study by Dimensional Research

TYPES OF MOBILE SECURITY INFECTIONS AS OF Q3 2013

Source: ESET − Sicontact Kft.

WRITTEN IN THE CLOUD A novelty a couple of years ago, cloud anti-virus protection has been gaining ground steadily in recent times. Malware detection happens in the cloud or the centralized data center of the software vendor. So if you download something, the content is inspected in the cloud before it lands in the browser of your mobile device.

THE SMARTPHONE USER’S NOT-TO-DO LIST Even if you know the drill, the following security tips will do you no harm, as opposed to the malware you might get by ignoring the rules: • • • • •

Don’t respond to unsolicited emails or spam Avoid storing private or personal information on your phone, especially online banking PINs and passwords Don’t use a rooter with an Android phone Don’t click on any links embedded in an unsolicited SMS If battery consumption suddenly goes up, be suspicious

Having a remote server in the equation could raise security concerns though. “You should definitely count on a risk for breach. The security level of the provider determines that of the user too. Nobody knows who else might have access to the data,” MiTech Systems Hungary Ltd. noted. Péter Béres of Sicontact Kft. suggested that only encrypted content should be uploaded and the connection with the cloud service provider should also be secure. Such a service contract is a matter of trust. Your decision should be based on security qualifications and measures (certification, access regulations) or references. “Capacity needs to be ready for enlargement at any time and the existence of SLA and a 24/7 support are a must,” Béres added.


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3In focus: Russia CLOSER TO MOSCOW Russia has had a historic interest in Hungary but taking that relationship into the business domain is a relative novelty. The two countries’ economic and consequently political relations will, nonetheless, be defined by tradition and the importance of energy supply.

STORY HIGHLIGHTS when compared to the likes of Germany, ■

Russian activity in Hungary mainly linked to energy ■ Russian involvement in nuclear power source of vocal government criticism

Russian stock of foreign direct investment in Hungary (HUF mln)

Hungary’s biggest trading partner, recent developments and an apparent drive to tighten the relationship is set to invigorate FDI flow in both directions between the two countries.

Russia has only relatively recently made foreign investments a priority. A research piece by Csaba Weiner, a senior fellow at the Hungarian Academy of Sciences’ Institute of World Economics, says capital export only became a key issue at the start of the 2000s, with the decisive shift coming when Vladimir Putin announced that Russian companies are interested in foreign expansion in 2007. Since then, there have been certain industries, like manufacturing and logistics, that have attracted Russian interests to Hungary, but Russians have always been interested in maintaining their presence in the energy sector, whether through supplying fuel or striving for a controlling stake in oil and gas group MOL. Russia has made moderate foreign direct investments in Hungary, as shown by figures published by the National Bank of Hungary. Although these volumes pale

ENERGIZED CONNECTION Of course, the most important sector in term of bilateral trade is energy. Hungary is highly reliant on natural gas, with more than half of the total coming from imports, the majority of that from Russia. The state acquired the wholesale gas trade in Hungary with the clear goal of overseeing the terms of the new long− term contract due in 2015, but there is no real likelihood of a significant drop in reliance on Gazprom in the near future. Even though the European Commission is raising legal obstacles, the construction of the South Stream pipeline to deliver Russian supplies to central Europe is making progress, while its EU−backed rival, the Nabucco failed to the extent that the implementation of the consortium’s website has been deactivated. While Hungary and its neighbors say they will be striving to reduce dependence on Russia by the construction of various interconnectors and a greater role for spot

Source: MNB

GERGŐ RÁCZ

market purchases, Moscow’s dominance of the sector isn’t going away anytime soon. NUCLEAR PRESENCE The other energy−related matter that is far more in the spotlight as of late is, of course, the expansion of the Paks nuclear power plant. The Russian energy sector has had a vested interest in Hungary every since the Paks facility started operating in 1982 (the plant provides north of 40% of the country’s overall electricity consumption). Earlier this year, Prime Minister Viktor Orbán made a surprise trip to Moscow and within a matter of a few days, concluded an agreement that has state−owned Rosatom

implementing the already approved expansion of the Paks plant. Even more importantly, Moscow will also be providing the financing of up to €10 billion, meaning it now has a vested interest in Hungary for at least the next 30 years, when the costs of the investment are fully repaid. The Paks issue still raises a number of unanswered questions, like why was the deal was orchestrated amid such secrecy so close to the general elections. That, not to mention the resentment felt by some to Russia for obvious historical reasons, means the expansion of the power plant is set to be one of the focal matters in the remaining weeks before the vote in April.

THE BENEFITS OF EASTERN OPENING Hungary wants more Russian tourists: it’s a demographic that stays longer and spends more than other nations. ZSÓFIA VÉGH

Roughly 20 years ago, Russians were banned from travelling. Of the approximate 1995 population of 148 million, just 2.5 million Russians went on holiday outside the former Soviet Union. By 2006, their number had reached 7.7 million. Triggered by the wealth brought about by the growing oil and gas business, ever more Russians traveled abroad. They have become a tourist group in demand; like

well−off Chinese tourists, Russians tend to spend a lot when they go. The peak year for Russian outbound tourism was 2008 according to consultancy Stark Tourism Associates, when 11.5 million people spent some time outside their country. A year later, the industry saw a 15.5% decline as crisis crept in. Recovery has since started; in fact, trips to all parts of the world by Russians had well surpassed the pre−crisis levels by 2011. While Northern and Western Europe are of limited appeal, Central and Eastern Europe is still a favored destination. Whether it has to do with old ties, relative proximity or Slavic language links with many parts of the region, the highest numbers of Russians tourists are found here. Possibly because they are conservative: just

try and picture a typical Russian woman. For all the evolution that has taken place in fashion, their image has hardly changed. Luscious golden jewelry, fur coats and flashy make−up – Russians seem to stick with the traditions. Good for us, as they can find plenty of tradition in Hungary. Tarnished buildings, spas of character and a tourism industry adjusting ever more to their needs. Indeed, it would be a mistake to pass over such a big market. Though Turkey (which offers visa−free access) and Cypress are the top destinations for Russians, Hungary has been catering to more Russian travelers, too. In December, Russian guest nights in Hungary saw a 20.2% increase. Russians spent 756,000 tourism nights in Hungarian accommodation in 2013 out of the

overall 11.9 million, a 23.4% growth year on year, the latest statistics of the Hungarian Statistics Agency (KSH) shows. This compares with 90,000 Russians generating 316,000 guest nights in 2008 and 104,000 travelers staying 374,000 nights two years later, according to figures from Hungarian Tourism Zrt (MT Zrt). EASTERN OPENING The potential in Russian tourism is underlined by a recent announcement from Russian carrier UTair that it plans to launch a new service to Hungary from March 24, with a Sunday−only Moscow Vnukovo – Balaton service using Boeing 737− 800 aircraft. Also from March, flights will start operating from Vnukovo to Héviz, operated by the 1000 Út travel


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Budapest Business Journal | Feb 14 – Feb 27

agency, and are scheduled to run until November. Hévíz has certainly gained from Hungary’s ‘Eastern opening’ policy, the number of Russian tourists in the first ten months of 2013 grew by more than a third, with guest nights more than 200,000, according to data from Hévízi Turisztikai Nonprofit Kft. Russians spend more and stay longer than others, including Germans, and come in winter as well, when other nationalities are more scarce. Russia seems to be opening to the West too: a proposal on providing three−day visa−free travel for tourists was discussed by the parliament on February 11. A similar easing for airline passengers has also been on the table. (Travelers using ferries and boats have been able to enter and stay in the country for three days without a visa since 2009.) Easing the tight regulations is the result of increased inbound tourism to St. Petersburg. MT Zrt is keeping a close eye on this precious group: the agency’s representation in Moscow is now trying to win over the under−35s. On their way to Croatia or Western Europe, younger Russians often cross Hungary with their caravans (backpackers too). Hungarian festivals and cultural events may be a good enough reason for them to go no further, MT Zrt hopes.

In focus: Russia 13

PANORAMIC NIGHT VIEW OF MOSCOW KREMLIN IN THE WINTER

UNIQUE PRODUCT WITH INCREASING INTEREST FOR CORPORATE CLIENTS From the beginning of February the product portfolio of Sberbank Hungary was broadened with the addition of a deposit opportunity offering a progressive interest rate, available to corporate clients. The new favorable offer combines the higher yield opportunity of longer-term three- or sixmonth deposits with the flexibility of short-term one and two week deposits regarding both forint and euro investments. “Sberbank offers a deposit product with outstanding yield possibility for corporate clients that fits their needs in a flexible way, therefore this really seems to be a unique financial solution for enterprises in the Hungarian market,” said Richard Szabó, Corporate Board Member of Sberbank Hungary Ltd.

6−month EUR Progress Deposit vs EURIBOR

Whether choosing a shorter or longer term, clients will be better off than taking an ordinary deposit, if they cannot or do not want to decide on the time of the money withdrawal. The interest rate grows in a progressive way during the time of the deposit; clients can achieve an outstanding out-turn by the end of the lockup. Corporates can choose a three-month duration investment in EUR or HUF, which is actually a series of weekly tie-ups. Clients can access their money on a weekly basis, while the interest rate is increasing week by week until the end of the duration. The other option is the six-month duration investment, again in EUR or HUF, which is actually a series of fortnightly tie-ups. The money is available every two weeks, while the interest rate is growing from period to period until the end of the term.

6−month HUF Progress Deposit vs BUBOR

The main shareholder of Sberbank Hungary Ltd. is Sberbank Europe AG, which manages nine universal banks in eight Central and Eastern European countries: Slovakia, Czech Republic, Hungary, Slovenia, Croatia, BosniaHerzegovina, Serbia and Ukraine. The banking group is headquartered in Vienna and operates in total 280 branches. Sberbank, with a history of more than 170 years and a presence in 20 countries, is one of the most dynamically developing banks in the world. Sberbank of Russia is the largest bank in Russia and holds almost one third of all Russian banking sector assets. The Central Bank of the Russian Federation is the founder and major shareholder of Sberbank, owning 50% of the total share capital plus one voting share. More than 245,000 individual and institutional investors hold other shares. The terms of the deposit fixing are in the Standard Services Agreement and Sberbank Progress Deposit Posted Notice.

NOTE: ALL ARTICLES MARKED PROMOTIONAL FE ATURES ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILIT Y

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4In focus: Tourism BOOK IT DIGITALLY For most people travelling, it has become a matter of course to simply go to your travel website of choice and manage through it every aspect of the trip down to the very last detail. Unsurprisingly, the market is booming, and has become a medium that could take hospitality providers to prosperity or ruin. GERGŐ RÁCZ

The rise of discount airlines has made affordable travel an everyday occurrence to a far greater range of people who want to see the world on a budget. Thanks to the Internet, they have the means to explore and book their accommodation online through a multitude of service providers who realize it is in their best interest to deliver on their promises, otherwise word will surely get out. The information and feedback that has become available to travelers through online channels is prompting service providers to up their game, since their prospective clientele is increasingly aware of what they can expect for their money, often down to the finer details, which in turn can be converted to revenues. A survey by aircraft manufacturer Airbus found in late 2013 that some 54% in its sample would appreciate bigger seats leading to 41% being prepared to pay more within economy and 5% considering investing in an upgrade in search of more comfort. More importantly 34% are turning to specialist websites, in order to determine true seat value prior to booking flights. The same conscious approach is perhaps even more applicable in terms of accommodation. MAKE OR BREAK Operators in the hospitality industry, be it worldwide or in Hungary, are painfully aware that the significance of travel sites has grown to such extent that reviews alone can be decisive; in fact, some businesses owe their fabled demise to an onslaught of negative feedback. For this very reason, high−profile providers, like TripAdvisor are sometimes the target of criticism regarding whether they take all steps necessary to verify the credibility

STORY of the HIGHLIGHTS reviews that are posted, after ■

Online booking becomes dominant factor in global tourism ■ Providers base business strategies on managing ties to customers online

hoteliers have suffered from biased and even outright faked reviews. For instance, the Grand Resort Hotel & Convention Center in Tennessee was named the dirtiest hotel in America in 2011, something that can be directly linked to the facility having to close down shortly afterwards. The owner sued TripAdvisor for $10 million claiming defamation. A federal appeals court dismissed the case last year, ruling that the listing was an expression of opinion.

Understandably, operators are well− aware that the sites that reach many millions of people (and are in many cases the core source of business) have become a key element in running the hospitality industry. If a hotel gets bad reviews it is prone to go out of its way to remedy the situation, whereas an overall high score is used as a badge of honor, something that is easily converted into marketing gains. OMNIPRESENCE Whether their size in terms of market significance, each site has the potential to generate revenues and hotel operators consequently want to extend their presence to the widest possible audience. This of course means extensive administrative burdens in having to manage the various

different accounts operating for each site. Labor has to go into checking whether vacancy figures are up−to− date, reservations have to be managed, and so on. This has led to the introduction of so−called channel managers, services that operate as umbrella solutions that help manage multiple accounts through a single platform. They are also popular because they provide diverse statistics and feature many automated functions. These sites, which operate on a flat fee or on a commission−basis depending on business models, provide partners with a convenient means of ensuring wide access to potential customers. A presence on a number of different sites also entails an obligation that sites demand demand, which is the elimination of any preferentialism, better known as rate parity. What this translates to is that the sites make sure that their partners don’t make the same services available at lower prices on competitor sites, which are therefore more likely to get the booking and the related commission. The sites have automatic processes in place to make sure they filter out any such events. Partner firms are notified and asked to rectify the situation or risk a penalty by being down−ranked in the listings. IN MOTION Given the nature of the industry, the various sites and operations are in constant motion. Apart from the industry heavyweights, others are always looking to rearrange their business models, becoming channel operators, forming associations with other sites or buying them out and consequently snapping up their user base. This of course also puts operators in the challenging position of constantly being on top of how the market is evolving, knowing their place in it and setting their priorities accordingly. “You have to be constantly aware of the changes,” says Zsolt Szekeres, hotel manager of Senator Apartments Budapest. As he explains, he, like his competitors, is constantly keeping an eye on changes in ownership and structural changes in the sites as well as the arrival of new entrants to maintain their business. This is a crucial aspect, and Szekeres says is one of the main reasons why Senator Apartment can boast an average occupancy upward of 80%, even in the traditionally quieter winter season.


WWW.BBJ.HU

4

Budapest Business Journal | Feb 14 – Feb 27

In focus: Tourism 15

WINTER FESTIVALS NEVER END… Whether one likes them or not, festivals are flourishing in Hungary today. The Hungarian Festivals Association is, however, trying to keep their numbers at bay, introducing the idea that festivals should meet certain minimum criteria. The association also rewards the highest−quality festivals by attracting sponsors who would invest into these events. ANDRÁS ZSÁMBOKI

These days, every Hungarian settlement with more than 5,000 inhabitants hosts at least one annual festival of its own. This may as well be interpreted as a proof of Hungarian towns’ vitality. “A local culinary specialty, coupled with a beer tent and a hard−to−define−style pop band, however, do not yet add up to a good festival,” Péter Sülyi, vice president of the Hungarian Festivals Association (MFSz) points out. Municipal governments are just as enthusiastic about launching local festivals as the residents themselves. “But mayors should be aware of the fact that the quality of an event must be combined by its uniqueness, otherwise it will drown into the pool of mere popular entertainment.” The Hungarian Festivals Association has about 100 members, who are responsible for 300 festivals annually. The majority of members are local governments, and they often run the festivals through municipally encouraged civil associations. For−profit festivals are clearly in the minority. “Within the association, festivals are organized into thematic groups, and their organizers belong to separate divisions,” Sülyi told the Budapest

Business Journal. MFSz has a gastro division, a folklore division and an art division. “In addition, we have a special division for those high−quality festivals which have multiple profiles; these are described by a witty portmanteau as “köztivál”, a crossing of two Hungarian words közművelődés (public culture) and fesztivál (festival). I am the chairman of that special division,” Sülyi added. Festivals registered by the MFSz, however, make up only a fraction of the entire range of all those organized in Hungary. There is no rival festivals association; the MFSz as a rule represents quality events, while those that are unassociated with the national organization tend to be of lower standards. In any case, statistics prepared on the basis of festival hosts’ reports suggest that revenues are derived from four main sources, namely ticket sales, state or municipal subsidies, sponsors’ funding, and the rent paid by stallholders. “The proportions of these four, however, may differ significantly in the case of each festival,” Sülyi said. Art festivals, for example, draw much less in sponsor support than gastro festivals. With the festivals of small towns and villages, municipal funding plays a much more prominent role than in the case of Budapest events. For now, the Hungarian Festivals Association considers the reinforcement of the existing grading system of primary importance. “Our stamp of quality should serve as a guiding feature for potential sponsors, helping them to invest their support into events that bring the highest non−material returns,” Sülyi said. A grading system, set up by the association, has been in use since 2009. It has four levels: no grading; satisfactory; good; and excellent. The system, however, has been inflated over time, so there is an urgent need for its redefinition. This, however, will predictably lead to inner conflicts within the association.

STUCK IN THE JELLY Pork Jelly Festivals have been part of the carnival season in Miskolc for 14 years. This time, however, the festival is being organized outside the city of Miskolc, namely at nearby Miskolctapolca, after the carnivals season early in March. The unusual location can be explained by the fact that there has been a war raging between the festival organizers and the Miskolc municipal government. Mayor of Miskolc Ákos Kriza claims that the organizers have been denied the official permission to arrange the event in the city because they owe several million forints to a municipally owned company. For the organizers, Edit Rózsa has admitted to the debts, but she attributed them to the fact that even though the festival organization had successfully applied for state funding, the money was blocked by Agrármarketing Centrum, a government organization responsible for regional development projects. The Miskolc mayor then decided to stage the event under a slightly different name (Pork Jelly Carnival) between February 22 and 26. Zsolt Pászkán, owner of the license for using the name Pork Jelly Festival told the BBJ that the step made by the mayor amounts to the confiscating of the event, the aim of which is to put what was a not-for-profit festival into the hands of for-profit companies, as happened in the case of the Miskolc beer festival. The situation is made more complicated by the fact that the Pork Jelly Festival is an important touristic event with significant potential. Last year, more than 200 vendors sold their wares, generating more than HUF 1 billion in turnover.


16

WWW.BBJ.HU

In focus: Tourism

4

Budapest Business Journal | Feb 14 – Feb 27

BBJ Research Markets in numbers

REGIONAL TOURISM BOOSTED BY DOMESTIC GUESTS All the statistics show that the troubled tourism industry is past the worst of the crisis and sees more room for expansion. Regional hoteliers are seeing a boost to their business from the revised cafeteria system and they are also feeling encouraged to launch new projects from EU funding. GERGŐ RÁCZ

“Hungary’s tourism industry is past the crisis, all major indicators are improving and the industry’s performance has surpassed the pre− crisis period,” Economy Minister Mihály Varga said at the start of February.

The average occupancy rate was

40% in 2013; a 1.1 percentage point increase from a year before Five−star hotels had an occupancy rate of

57% four−stars and spa hotels had

45%

STORY HIGHLIGHTS ■

Tourism industry has produced growth since 2010 ■ Availability of EU funds boosts new project developments

His optimism is supported by the latest statistics released by the Central Statistics Office (KSH), which show the number of domestic tourism nights in Hungary rose 8.9% year−on−year, while the number of international tourism nights remained largely stagnant (0.6%) last December. Even with only a minor rise in the number of foreign visitors, the gross revenues of accommodation establishments grew by 8.8%. The government is particularly satisfied with the figures since it attributes the continuing growth of domestic tourism, which has expanded since 2010, to the introduction of in−kind benefits like the SzÉP card and the effective distribution of European Union funding. PERKS AND MONEY KSH reported that 1,547 units were accepting SzÉP payment in December, which customers used to pay for services valued at HUF 1.1 billion. This marks a year−on−year increase in SzÉP turnover of 11%. Altogether, SzÉP cards are accepted by 51,000 various hospitality establishments countrywide, the Economy Ministry said at the end of 2013. Up until that point, 22,000 employers had joined the program, giving the perk to 900,000 employees, it added. Varga said that between 2007 and 2013, 1,132 tourism projects received HUF 292 bln in EU grants and there is more expected to follow this year. At the start of February, the Debreceni Gyógyfürdő bath complex commenced a HUF 1.4 bln makeover, while the nearby Hotel Thermal is also undergoing a HUF 1 bln facelift from EU sources. Work has also started on a brand new facility – dubbed the Ambient Hotel & AromaSpa – in Baranya county that will also rely on EU funding for the nearly HUF 660 million investment. Yet another example, Egom MEdihotel, is currently under development in Esztergom for HUF 1.2 bln, HUF 871 mln of which is coming from the EU. ACCESS HANDICAP While regional providers can rejoice over the increase in domestic guests, the stagnation of foreign visitors shows an overall access deficiency, which stems from Budapest. This is also reflected in the pricing. A survey by the BDO Forte consultancy shows that an average Budapest night in a five−star hotel cost €99 last year,

Change in number of tourist arrivals and tourist nights (100=same period of previous year)

Source: Central Statistical Office

Total gross revenues of all hotels in Hungary (HUF mln)

270000 202500 135000 67500 0

2011

2012

2013

Source: Central Statistical Office

compared to €123 in Prague, €148 in Vienna and €185 in Munich. The pressure on the capital, which serves as the obvious point of entry for most foreigners interested in the countryside, originates from the lack of a ‘proper’ national airline in the wake of the Malév collapse, BDO Forte found. Although Hungary is accessible through low−cost airlines, these often

attract a less−affluent clientele that don’t want to book themselves high− cost accommodation. Furthermore, traveling via low cost carriers also often entails reaching connecting flights at smaller rural airports, a hassle that the wealthier clients would rather avoid and will instead opt for countries that can be reached directly.

The BBJ Research column reviews a given industry, gives a market round−up and analyzes the numbers behind the market tendencies. Our analysis is based on the latest edition of the Book of Lists. For the latest, updated figures, check out DigiBOL, the digital version of the Book of Lists. www.digibol.hu


WWW.BBJ.HU

4

Budapest Business Journal | Feb 14 – Feb 27

In focus: Tourism 17

Four/five-star hotels outside Budapest

4

KEHIDA TERMĂ L HOTEL****

85 130

****

–







–



–

872

79 3 6

96 124

**** superior

–



–



–



–

www.kehidatermal.hu

5

RESIDENCE Ă“ZON****SUPERIOR CONFERENCE & WELLNESS HOTEL

****

–



–







–





–

–



–

1996 2013

.ROSLQJ Hotel Kft

+XQJDULDQ.ROSLQJ Family Holiday Foundation (50) .ROSLQJ9HUZDOWXQJV GmbH (50)



Child-friendly services

2004 2013

Karosinvest Zrt

Karosinvest Zrt (100) –

Botond ĂœsztĂśke – –

8749 Zalakaros, $OPDXWFD (93) 542-550 (93) 542-501 sales@karos-spa.hu

–

1996 2013

Hella '91 Kft

/iV]Oy.ROOiU   Edit Laufer JordĂĄnnĂŠ (3) –

LĂĄszlĂł KollĂĄr MĂĄrk KollĂĄr Judit PĂŠk

7346 Bikal, 5iNyF]LXWFD (72) 459-546 (72) 459-549 info@puchner.hu



–

2003 2003

Kehida TermĂĄl Kft

SebestyÊn Horvåth (50), TihamÊr Horvåth (50) –

TihamĂŠr HorvĂĄth *iERU9DVWDJ )OyUD%HQFVLN

8784 KehidakustĂĄny, Kossuth Lajos utca 62. (83) 534-501 (83) 534-592 sales@kehidatermal.hu



–

1995 2010

Hotel Ă“zon Kft

Hoffmann Hotel Ês RendezvÊny Kft  +HQULN-y]VHI Hoffmann (0.05) –

Henrik József Hoffmann eYD.yF]LiQ –

3233 MĂĄtrahĂĄza (37) 506-000 (37) 506-009 info@hotel-ozon.hu

Âť

$QQD Grand Hotel Kft

9LYDPXV%W   Balaton Imperial Kft (4) –

(UQĹƒ/HQJ\HO – –

8230 BalatonfĂźred, *\yJ\WpU (87) 581-200 (87) 581-201 reservation@ DQQDJUDQGKRWHOKX

2007

Pannon Famulus Kft

Âť Âť

'H]VĹƒ2UEiQ 5yEHUW%HNH –

*\ĹƒU Budai Ăşt 4–6. (96) 547-770 (96) 547-779 hotel@hotelfamulus.hu

Hoffmann Hotel ĂŠs RendezvĂŠny Kft

-y]VHI+RIIPDQQ   $QGUHD+RIIPDQQ  +HQULN-y]VHI Hoffmann (10), Judit Hoffmann (4) –

Henrik József Hoffmann eYD.yF]LiQ –

6LyIRN Erkel Ferenc utca 49. (84) 506-840 (84) 506-839 info@hotel-residence.hu



OTHER

884

42 1 1

www.puchner.hu



–

OWNERSHIP (%) HUNGARIAN NON-HUNGARIAN

EVENT MANAGEMENT

93 66



CAR RENTAL

924

125 33 4





OPERATOR

3

PUCHNER CASTLE HOTEL****

www.karos-spa.hu

–

INTERNET IN ROOMS

**** superior



GARAGE

86 140



FAMILY FRIENDLY

1,318

300 8 5



YEAR ESTABLISHED YEAR LAST RENOVATED

2

HOTEL KAROS SPA

–

BEAUTY SALON

****

ZZZNROSLQJKRWHOKX

WELLNESS

82 136

BUSINESS CORNER

1,354

136 75 5

CATEGORY

SINGLE RATE (EURO/NIGHT) DOUBLE RATE (EURO/NIGHT)

1

KOLPING HOTEL SPA & FAMILY RESORT

NO. OF ROOMS NO. OF SUITES NO. OF MEETING ROOMS

HOTEL WEBSITE

SERVICES

TOTAL NET REVENUE (HUF MLN) IN 2013

RANK

Ranked by total net revenue

www.hotelozon.hu

6

ANNA GRAND HOTEL**** WINE & VITAL

100 614

ZZZDQQDJUDQGKRWHOKX

7

8

HOTEL FAMULUS**** www.hotelfamulus.hu

RESIDENCE BALATON**** CONFERENCE & WELLNESS HOTEL

Âť Âť

190 170

****







–





–



–

90 100

****



–

–



–







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2009

HERTELENDY CASTLE www.hotel-hertelendy.com

APHRODITE HOTEL**** NR ZALAKAROS www.wellnesshotelaphrodite.hu

FOUR POINTS BY SHERATON KECSKEMÉT NR HOTEL AND CONFERENCE CENTER

HOTEL DIVINUS***** www.hoteldivinus.hu

HUNGUEST HOTEL NR FORRĂ S SZEGED

415

91 114

****

–



–



–



–



–

1996 2013

149

20 8 1

175 240

***** superior













–



$LUSRUWULGLQJ FHQWHUWHQQLVJROI

2007 2012

Hertelendy KastĂŠlyV]iOOy.IW

– REMI Finanz- und 9HUZDOWXQJV$* (99.99)

,VWYiQ*\HQHVHL – –

7541 Kutas-Kozmapuszta, 0120/4. (82) 568-400 (82) 568-030 hotel@hotel-hertelendy.hu

Âť

34 – 3

75 99

–

0DVVDJHVTXDVK 'FLQHPDULGLQJ

2001 2011

Zala-Kraft Kft

Âť Âť

0iULD%iOLQW9LUiJQp %DUEDUD1DJ\ Eszter NĂŠmeth 9LUiJQp

8749 Zalakaros, Sport utca 10. (93) 540-140 (93) 540-141 info@hotelaphrodite.hu

Âť

136 6 8

106 116

****

–



–

–

–



–

–

–

2012 2013

KÉSZ Hotel Ês Konferencia Menedzsment Kft

KÉSZ Group (100) –

7LERU3ROJiU Krisztina SzĂĄvity $QLWD-XV]Ny

6000 KecskemĂŠt, IzsĂĄki Ăşt 6. (76) 888-500 (76) 888-501 sales@fourpointskecskemet.com

Âť

169 10 5

120 140

*****

















6ZLPPLQJSRRO steam shower, wellness bar, ÀWQHVVIDFLOLWLHV

Divinus Hotel h]HPHOWHWĹƒ Kft

Divinus Hotel Operation Kft (100) –

-iQRV6]Ĺ?FV – –

4032 Debrecen, 1DJ\HUGHLN|U~W (52) 510-900 (52) 510-901 info@hoteldivinus.hu

Âť

87 4 15

85 100

****





–

–









–

Debreceni *\yJ\I UGĹƒ Kft

Âť Âť

Lajos Fazekas Zsuzsanna HĂĄmos PĂŠter Palotai

4026 Debrecen, Hunyadi utca 1–3. (52) 506-600 (52) 506-601 hotel@hotellycium.hu 6]HJHG 6]HQW²*\|UJ\L$OEHUW utca 16–24. (62) 566-466 (62) 566-468 hotelforras@ KXQJXHVWKRWHOVKX

196

www.hotelforras. KXQJXHVWKRWHOVKX

Âť

Âť  = would not disclose, NR = not ranked, 1$ QRWDSSOLFDEOH

–











–

2008

Âť

2006 2013

101 134

**** superior

–











–



–

1987 2010

+XQJXHVW Hotels Zrt

Âť Âť

253 8 3

95 160

**** superior

–







–







Health, wellness and beauty treatments

1997 2011

Hotel Carbona Zrt

Budainvest Kft (84.41), Bakonyi (UĹƒPĹ?5W   Âť (10.59) –

$WWLOD7DSRGL $QGUiV.yVL Zsuzsa PĂĄpai

8380 HĂŠvĂ­z, $WWLODXWFD (83) 501-500 (83) 340-468 hotel@carbona.hu

271 17 5

100 182

***** superior







–

–



–



–

Âť Âť

Spirit Hotel *\yJ\V]iOloda Kft

Âť Âť

Judit Lamperth $QGUiV.yVL %DOi]V9LJ

9600 SĂĄrvĂĄr, 9DGNHUWN|U~W (95) 889-500 (95) 889-510 info@spirithotel.hu

Âť Âť

Âť

Âť

SPIRIT HOTEL NR THERMAL SPA www.spirithotel.hu

****

LåszlónÊ Maklåri 7DPiV6]DEy –

Âť

NATURMED HOTEL NR CARBONA****SUPERIOR www.carbona.hu

$OVySiKRN )ĹƒXWFD (83) 344-141 (83) 344-142 VDOHV#NROSLQJKRWHOKX

57 1 4

HOTEL LYCIUM**** NR DEBRECEN www.hotellycium.hu

Csaba Istvån Baldauf – –

59 1 6

www.fourpoints.com/ kecskemet

NR

ADDRESS PHONE FAX EMAIL

552

www.hotel-residence.hu

9

TOP LOCAL EXECUTIVE CFO MARKETING DIRECTOR

7KLVOLVWZDVFRPSLOHGIURPUHVSRQVHVWRTXHVWLRQQDLUHVUHFHLYHGE\)HEUXDU\DQGSXEOLFO\DYDLODEOHGDWD7RWKHEHVWRIWKH%XGDSHVW%XVLQHVV-RXUQDO¡VNQRZOHGJHWKHLQIRUPDWLRQLVDFFXUDWHDVRISUHVVWLPH :KLOHHYHU\HIIRUWLVPDGHWRHQVXUHDFFXUDF\DQGWKRURXJKQHVVRPLVVLRQVDQGW\SRJUDSKLFDOHUURUVPD\RFFXU$GGLWLRQVRUFRUUHFWLRQVWRWKHOLVWVKRXOGEHVHQWRQOHWWHUKHDGWRWKHUHVHDUFKGHSDUWPHQW%XGDSHVW%XVLQHVV-RXUQDO 1075 Budapest, Madåch Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu


BBJ

5Socialite PEOPLE ON THE MOVE

BOOK REVIEW

Global tilt by Ram Charan

23

RESTAURANT REVIEW

Spoon boat restaurant

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PÁL SIMÁK CIB BANK CHAIRMAN-CEO

WINE REVIEW

DRY FURMINT FINALLY REALIZING ITS POTENTIAL The Grand Furmint February tasting sure rocked the Hungarian Agricultural Museum to the rafters, but where does dry Furmint stand now that the empty bottles have been cleared away and the crowd dispersed? ROBERT SMYTH

While Furmint’s pedigree in making Tokaji Aszú and other sweet late−harvest wines is unquestionable, I must say I didn’t really swallow the hype regarding dry Furmint’s future as a world class white. For a long time, even wines from some of the biggest Tokaj names were often smothered in too much oak to allow the characteristics of the grape or the place of growth to come through. Instead, all we often got was a buttery creaminess that didn’t suitably distinguish Furmint from the likes of a big fat Chardonnay. Then, the high alcohol and searing acidity could finish your palate off. However, slowly but surely many Hungarian winemakers have worked out that less is more when it comes to the use

of oak and held back on harvesting too late and squeezing every last bit of extract out the grapes. Many zesty, fruity dry Furmints are now made entirely in steel tanks. The upshot is that there are now too many fine dry Furmints to attempt to mention here and lots worthy of international attention. The main organizer of Furmint February, Dániel Kézdy, spoke of the need for Furmint to first consolidate its reputation on the domestic market, before pushing ahead with making a name internationally. Nevertheless, international interest is already there. Indeed, the UK’s Tim Atkin MW (Master of Wine) describes Furmint as “one of the world’s great unsung grape varieties”. Among others, the newer, more elegant style of Tokaj’s Zoltán Demeter typifies this victory of precision and finesse over power and intensity. Oremus has increasingly enabled the delicious juice of the grapes to do the talking in its Mandolás Furmint. For this to happen, the barrels have been getting larger, moving from 225 liters to 500 liters in size; as well as older, i.e. used barrels instead of new. Thus, the oak exerts less of an obvious influence over the wine but instead subtly adds texture and rounds the wine out giving the wine beneficial exposure to air. The 2011 Mandolás Furmint has varietally pure

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Wine & Violin – Violin Makers’ Salon Organized for the third time by Fonó Wine & Violin – Violin Makers’ Salon on February 22 and 23 is a forum of Hungarian string instrument makers. Evening concerts of Saturday feature sting masterpieces performed by renowned musicians, such as Kristóf Baráti (violin) and Gábor Farkas (piano) Liszt Award winner musicians, beside the masters of Early music: Hungarian Renessaince Ensemble.

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aromas and flavors of lime, quince, green apple, pear and apricot, plus some mint with real freshness via the vibrant acidity, and firm body on the palate. Bott Pince’s Judit Bodó, who makes the wines while her husband József attends the vines, cherishes working with Furmint as she feels due to it being relatively discreet on the nose and palate, it allows the winemaker to reveal the difference between individual vineyard plots. Bott and many other winemakers agree that Furmint is also an excellent conveyer of the differences between vintages. A different vintage of Bott’s single−vineyard Csontos, whose volcanic rhyiolite soil is planted with 40−year−old vines, ably proves the point. For example, 2009 was hot and dry with the resulting wine revealing lots of tropical richness and low acidity, while the cool weather of 2008 comes across in a much leaner, crispier and tighter wine exploding with tingling acidity. The 2007 had elements of both the 2008 and 2009, is still in good shape and is picking up a hint of petrol, like a fine aged Riesling does. All the wines have the vineyard’s savoriness in common. So varied are the volcanic soils FRENCH WINEMAKER STEPHANIE BERECZ IN TOKAJ of the Betsek vineyard in Mád that István Balassa is planning to release three different dry Furmints (and in the wake of the departure of Károly Áts. Hárslevelűs) from different plots of the same We can expect a slight shift in style away vineyard in the near future. Meanwhile, his from the robust and fiery to a more elegant 2012 Betsek Furmint, which comes from and polished style from this important the volcanic white rhyolite tuff section is international player who has done much full−bodied, creamy, rich and packed with to give dry Furmint, and indeed Tokaji, a apricot and mango. foothold in key markets like the UK and the In Tokaj, it is fascinating to taste the USA. Over in Somló, Furmint is the pick of the difference between Furmint originating from bunch for Kreinbacher winemaker György volcanic and loess−based vineyards. From Varszegi. “The grapes already reveal layers the loess of Tarcal comes Gizella’s Szil−völgy of flavors when tasted straight from the vine,” Furmint 2012, made by László Szilágyi, he says. Varszegi also believes that Juhfark is which has a floral feel alongside plentiful a key player on the black basalt soils of Somló, citrus fruit and mild acidity. Kikelet Furmint but feels that Furmint offers more in terms of 2012 from the same area is another prime complexity. Kreinbacher’s Öreg Tőkék 2011, example. Incidentally, Kikelet’s Stephanie made mainly from Furmint, struck just the Berecz is now consulting at Royal Tokaj, right balance between fruit (apricots, peach, assisting new winemaker Fruzsina Osváth, citrus), freshness, richness and depth.


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5 Socialite

Budapest Business Journal | Feb 14 – Feb 27

OUT OF THE OFFICE The BBJ goes personal What is your greatest regret? Maybe that I ended my professional sports career at such a young age. It would have been good to spend more time and energy on judo; I might have had good results. What is your greatest fear? That one of my kids has an accident.

CV A lawyer and an economist by profession, Attila Vámos currently heads outdoor media company Publimont Kft. He started his career at ad agency Ammirati Puris Lintas, worked at Young & Rubicam, and was marketing and sales manager at American Express. He founded Smart Media Technologies Kft in the early 2000s; and is now the sole owner of it. Apart from Hungarian, he speaks English and German and is currently learning Chinese. He is a member of the Hungarian Olympic Committee (MOB), and president of the Ethics and Legal Chamber of the MOB. He is married with four children, and loves skiing, jiu−jitsu, tennis and CrossFit. What do you consider your greatest achievement? My big happy family, with my four kids and my caring wife, who is also a chief organizer. What is your most marked characteristic? I consciously plan my future – and that includes my kids’ future now. I do a lot to reach my goals, I keep learning and training myself. Who is your favorite hero in fiction? These days, it must be Rumini, the little mouse [a Hungarian children’s character], but I also have a high opinion of Spiderman. What kind of job did you dream of when you were a child? Fighter pilot, truck driver, forester, and biologist. ADVERTISEMENT

What was the most extravagant thing you’ve done in your life? When, without any local geographical knowledge, I went to explore the Caliman Mountains (Kelemen− havasok) in Transylvania, in the hope of bumping into the Witch of Funtinel [a fictional hero of Transylvanian Hungarian novelist Albert Wass]. Instead, at the end of the tour, I found the woman who became my wife (or, I’d rather say, she found me). What is your motto? I think this constantly changes in one’s life. However, my favorite is now this: ‘Why are we on this world? We are on this world so we can feel at home in some part of it.’ These lines are from the Ábel−trilogy of Áron Tamási, a Hungarian author from Transylvania. What would you do with €1 million? I’d build a house where we could feel ‘at home’. The rest of the money – as I’m pretty sure that there would be some left – would go to the children’s savings. What is your favorite gadget? I’m not a gadget−addict, but if I do get to own the above− mentioned house one day, I’ll surely have all kinds of remotely controlled renewable energy systems. What three things would you take with you to a deserted island? If I had to live there on my own, and I have things to eat and drink, then I’d take an e−book uploaded with the nearly full world literature, and with lots and lots of photos and videos of my family. I’d need, of course, a solar charger, and at least a satellite walkie−talkie to stay in touch with my folks. If possible, a relay tower that ensures the Internet connection would be good – in that case, I’d change the e−book for a laptop and a charger. But what if technology goes wron? Which living or fictional persons do you most despise? Those who attack unprotected children, women and elderly people.

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At the steering wheel MY FIRST CAR... The first car that I had sole use of was a Trabant ‘inherited’ from my mother. It felt great to move around free at least in our neighborhood. What I didn’t like that much was the gear stick – it crunched so much that the whole street could hear it. TOP 3 THINGS TO CONSIDER ABOUT A CAR... The first – because of my big family – is size. Four kids and their luggage must fit. Secondly, it all should come together with safety so that I don’t have to worry too much about those in the back seats as well. These two factors narrow my choices so much that – unless we’re talking about a microbus – there is not a wide selection left. The third aspect is exterior design. MOST ADMIRED FEATURES OF THE TEST CAR... I tested a Volvo XC60 over the weekend. My favorite feature was the cruise control, or, in general, the practical manageability of the device. Why? Because when I first started using this function, I already had two speeding tickets. The cruise control prevented me from getting a third! MY GENERAL IMPRESSIONS OF THE TEST CAR... Unfortunately, it is too small for our family (we now have a Volvo XC90), but it was a great experience driving the XC60. The numerous radars and cameras were a great help when parking. What I particularly liked was that when in reverse, it signals to others with a scary beeping noise. As far as I know, the latest XC90 model will roll out at the end of this year; I will hopefully be bidding for one of the first cars to arrive in the country.

Which living or fictional persons do you most admire? Those who help others selflessly at an everyday level – such as Franciscan brother Csaba Böjte (and many other people I don’t know). I also admire people who spend their business skills and financial sources on the needy. Such a person is Muhammad Yunus, who founded Grameen Bank in Bangladesh [a bank that offers microcredit to people too poor to qualify for traditional bank loans]. I fully admire His Holiness the Dalai Lama, Pope John Paul II, and I also have high hopes for Pope Francis.

Sponsored by: volvogaleria.hu


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ALL ONLINE EARS With Spotify having entered the game, real time online music listening has been given another boost on the domestic market. But in a country that has been a ‘nest’ for illegal downloading, will users be tempted to become paying customers?

STORY HIGHLIGHTS ■

Streamed music still accounts for only a tiny share of royalties in Hungary ■ Partnerships with telco providers can make a breakthrough happen, but that’s a rough ride ahead

unheard of in the freemium category. “I don’t agree with the fact that the bigger we get the worse off we are. It’s the opposite. Music streaming is a business where scale actually gives you an advantage,” he told the Budapest Business Journal . “Seventy percent of our income goes back to the

music industry, but 30% stays with us, which ratio will remain no matter how fast we grow.” SURVIVAL KITS IN THE POCKET And growing it is. On the same date as the launch in Hungary, 20 other new markets were opened up on top

LEVENTE HÖRÖMPÖLI-TÓTH

It might seem odd to use the label ‘veteran’ in an industry that came to existence only a couple of years ago, but with the tech world moving at light speed, such a time span feels eternity. So Sweden’s Spotify, the first company to bet on the streamed music business does deserve the title. Hungarian fans were destined to wait till last December, though, to enjoy its services. Particular expectations were attached to the newly enhanced freemium package. Users are now allowed to listen to any of the 25 million songs available on any platform at any time in live streaming. The favor asked in return dwarfs the advantages: listen to three minutes of advertising per hour, and, ta−dah, you are done with your obligations! WALKING ON LANDMINES? Many frown at such a business model. Critics point out that only 25% of subscribers have become paying customers to free themselves of the ad invasion, yet Spotify must also pay royalties after the songs listened to by the remaining three−quarters of its clientele. At a total active user base of some 24 million, it all adds up. The lack of balance may look even unhealthier when compared to the figures of rival Deezer. The French

outfit has persuaded 40% of its fans to open their wallets. But Spotify’s executives are far from worried about the ratio issue. Przemek Pluta, business manager Spotify CEE stresses that a 25% conversion rate is

Number of songs in the catalogue of some streamed music providers present in Hungary (2013) − (million)

Source: providers’ own data. Note: catalogues are expanding continuously.

LEGALLY SPEAKING, LEGALLY LISTENING While revenues from sales in physical stores are falling in Hungary, those stemming from digital content are not growing fast enough to offer compensation. Legally speaking, copyright is still more often abused than it is observed. It is anything but a surprise in a country with such an undeveloped paying culture. “As has been noted by Artisjus, the Hungarian Bureau for the Protection of Authors’ Rights, the reason why the supply of legal online contents is significantly smaller in the Hungarian market is not only due to piracy, but it may have language, economic and content related reasons as well,” Péter Lábody, deputy head of the Copy Rights Department of the Hungarian Intelligence Property Office said. The problem is that large investments would be needed on what is a small market in order to provide users with high quality digital copies. In the meantime, online-bound royalties are on the rise. They grew by 44% from 2010 to 2011; yet, in 2010 they still accounted for only 1% of total royalties, which means that actual revenues remain low. “The viability of the currently operating half a dozen online music businesses is unfortunately unpredictable,” Lábody said. “In order to get the market going, the proactive engagement of all legal actors is an absolute must. As a result, viable models can be launched by legal content providers, the audience gets high quality services and the holders can obtain their royalties.”


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Best monthly rates of premium streamed music packages (HUF)

Deezer

1,390*

Spotify

1,500**

Rdio

2,100

Google Play Music

1,950

*Only with a Telenor mobile subscription **Assuming a HUF/EUR conversion rate of 300 (Spotify’s rate is €5) Source: BBJ collection Note: ad−free listening on all platforms (pc, tablet, mobile) and in offline mode, subject to the providers’ conditions

of the then existing pool of 30. An expanding geographical coverage is a crucial tool in all major players’ survival kit. But whilst Spotify is gradually opening from rich countries to less developed ones, Deezer pursues a take−no−prisoners global strategy and now is present on 180 markets worldwide. “Our success is based on several factors. Music is not only recommended by algorithm stats, but is selected by 50 editors worldwide. A larger geographic coverage and our strategic partnerships with telco

partners all contribute to make the paying customer rate soar,” Szabolcs Horváth, Deezer’s managing director for CEE and the Balkans, said. Indeed, Deezer’s popularity in Hungary has a lot to do with its alliance with Telenor. The mobile provider told the BBJ that, “online music provided by Deezer has become an integral part of the lives of tens of thousands of our customers”. The buzz is further strengthened by the fact that the user interface is available in Hungarian and domestic performers

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JUST STREAM IT In case you are a newcomer to the realm of online music listening, here’s what to expect. Forget the pain of having to select tracks or albums. What you get instead is access to a massive catalogue of music delivered to your device via the Internet in a live stream. As long as your subscription is active, all items on the provider’s servers are available at any time. An additional feature is the option to synchronize some of the tunes, thus ensuring offline access, though that is offered to paying customers only. The latter are also able to enjoy their music without ad interruptions or time limitations and at a better quality. Normally a trial period helps users get a taste of the unlimited experience.

are represented in high numbers in the catalogue. SHAZAM, BREAKTHROUGH? Spotify has plenty of such partnerships abroad, but are not planning any here. “The founders’ concept is that the best marketing you can do is the product itself,” Pluta said. The Swedish company is therefore building on the power of social media and other creative solutions; to name but one example, an app called Shazam that identifies any unknown song played and offers users the chance to

listen to it on Spotify right away. Another hot trend is moving the service to cars’ audio systems. Is such a business model viable in an environment with such deep−rooted tradition of illegal downloading, though? “The online music streaming technology is so new that the entry of any new competitor helps the user base grow as a result of its own communication. Competition also enhances product innovation, and so will result in a more comfortable service,” Horváth said.

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has seen and thinking what nobody has thought. Szent-Györgyi Albert, (1893 - 1986), Biochemist & Nobel Prize Winner for Medicine in 1937

4th Annual Pharmaceutical Manufacturing Congress for Enlarged Europe

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WHO'S NEWS

Name GÁBOR ERDÉLYI Current company/position CUSHMAN & WAKEFIELD / ASSOCIATE

Name PÁL SIMÁK Current company/position CIB BANK / CHAIRMAN-CEO

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Erdélyi joins Cushman & Wakefield from Raiffeisen Real Estate Fund where he spent eight years leading the Asset Management department. He graduated from the University of Pécs with an MSc degree in 2003 and gained a further diploma in asset, fund and portfolio management from the Institute for Training and Consulting in Banking in 2005. In his new role he will be responsible for sourcing and facilitating transactions with locally and internationally active investors.

Intesa Sanpaolo has announced that Pál Simák will be appointed chairman of the management board and CEO of CIB Bank in April 2014. Fabrizio Centrone, currently holding that position, is to take on a new assignment within Intesa Sanpaolo Group. Simák, following a career at McKinsey & Company international consultancy firm, gained vast experience in the Hungarian banking sector over the past six years as the deputy chief executive for finance, then as the chairman and chief executive of MKB Bank.

Budapest Business Journal | Feb 14 – Feb 27

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

Name OLIVER TREIBER Current company/position CUSHMAN & WAKEFIELD / NEGOTIATOR

Name RITA SZUDOCZKY Current company/position JALSOVSZKY LAW FIRM / ASSOCIATE

Treiber started at Cushman & Wakefield as a trainee in 2012 and graduated from the International Business School (IBS) of Budapest. After being introduced to the daily work of all service lines at C&W he worked as a negotiator for the industrial department for more than a year. His enthusiasm and motivation make him an ideal fit for identifying new opportunities within the capital markets context.

Szudoczky has joined the law firm’s tax department, advising both Hungarian and international clients on tax efficient structuring, compliance with transfer pricing legislation and tax litigation. She also assists clients in claims and proceedings based on breaches of EU law. In addition, she currently lectures at the University of Leiden, and lectured and conducted research on tax law for several years at the University of Amsterdam. She recently obtained her Ph.D. degree on EU tax law.

Name MÁTÉ BENDE Current company/position SCHÖNHERR HETÉNYI LAW OFFICE / COMMUNICATIONS AND BUSINESS DEVELOPMENT MANAGER

Máté Bende has joined the Austrian based law firm, Schönherr’s office in Budapest as communications and business development manager. He has nearly 10 years of experience working in a legal environment. Previously he worked as a product manager at legal publisher Wolters Kluwer and as a communications and business development manager at a French rooted international law firm. He has a degree as a lawyer as well as a public relations specialist.

Marketing communication specialist Bálint Nagy will preside over Dreher Breweries’ Responsible Consumer Communication Supervisory Board from this month. He was the communication director of Matáv Group for 11 years from 1995 and supervised the Name change of branding from Matáv BÁLINT NAGY to Telekom. Between 2006 Current company/position and 2009, he was president of DREHER BREWERIES/ the Hungarian Advertising PRESIDENT OF THE Association, and subsequently he RESPONSIBLE CONSUMER was communication director at COMMUNICATIONS SUPERVISORY BOARD Vodafone for one and a half years.


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BOOK REVIEW

HOW TO GET ON IN A TILTED WORLD The world’s economic center of gravity has shifted. Permanently. ‘Global Tilt’ shows you how to adapt to what may prove to be the greatest change in business history. The ‘global tilt’ is nothing less than an irreversible shift of economic power – jobs, wealth, and market opportunities – from a small part of the world to its entirety. It is improving the lives of millions of people around the world, and while it is creating immense opportunities, it is disrupting the world as we know it with dizzying speed. If you’re European or American, any assumptions you may have about national and managerial superiority are obsolete. Businesses in China, Singapore, India, Brazil, Malaysia and other countries on the move have ready access to the capital and the expertise they need to grow. Their leaders have just as much knowledge, talent, and drive as you do. And they are unleashing their entrepreneurial verve to scale up fast and grab once−in−a−lifetime opportunities. These businesses will soon be competing with yours everywhere on the planet, even if you’re not aware of them yet. Finding opportunities of your own requires you to consider vastly different perspectives and to see the new global landscape in its totality. Only then can you change the way you work in order to discover and pursue these new opportunities. In ‘Global Tilt’, bestselling author Ram Charan gives business leaders the guidance they need to

succeed in a ‘tilted’ world. He recommends a twofold approach. Firstly, leaders need to be able to look from the ‘outside−in’. This involves understanding how a culture really works, rather than simply importing ideas that work elsewhere. Secondly, leaders need to be able to think from the ‘future−back’. This means conceptualizing a goal and then working back to the present, defining each step required to reach that goal. Charan also outlines how to cut through the complexity of demographics in order to identify ‘unstoppable trends’ better and sooner than others can, and how to make necessary shifts in people assignments, decision− making authority and resource allocation, even before making structural changes. “A tilt in the balance of the world’s economic power is not the end of the world, nor is a tilt in your leadership and organization,” Charan writes. “The pace and timing of the global tilt may be uncertain, but the direction is clear. Adjusting to it will allow you to be part of it, and help you adapt to its inevitable fits and starts.”‘Scaling Up Excellence’ is the first management book devoted to what is – or should be – a core priority for every organization. It’s an essential read for every leader. GLOBAL TILT by Ram Charan Published by Random House Business Books ISBN 9781847941114 Available to order through www.hungaropress.hu

RESTAURANT REVIEW

RIVERSIDE DINING Spoon might just be the most popular location for proposals. The restaurant−boat, located right by the Chain Bridge on the Pest embankment, has such a romantic setting with its dazzling scenery, elegance and charm, that a ‘Yes’ is almost guaranteed. We chose Spoon for a double birthday dinner on a late winter weekday night. Our table was right at the window, so we could enjoy the sparkling lights of the Buda Castle, the bridges and the Citadel. Sipping a glass of Moet & Chandone champagne as an aperitif and watching seagulls flying above the river, we knew we were at the right place to celebrate. Spoon offers international cuisine with a Hungarian touch. It bravely uses common seasonal vegetables (i.e. root vegetables, beetroot, Jerusalem artichoke and sweet potato) and goose, venison, mangalitsa and duck – all typical of Hungarian cuisine. As a starter we chose beetroot tartare with spiced goat cheese and tomato flavored pumpkin salsa, and grilled goose liver with fig and sweet potato strudel and hibiscus cider sauce. The beetroot was a fresh start. The al dente

– slightly steamed vegetables were covered with creamy and rich goat cheese. The goose liver was perfectly done; great quality, tasty, juicy and the light seasoning did not overwhelm the natural taste of the liver. For the main course we ordered grilled lamb and lamb sausages with vegetable amarant soufflé and mint flavored cashew nut sauce, and a portion of roasted pheasant breast with spring rolls and porcini and chestnut sauce. Both dishes were elegant and creative at the same time. The sous vide pheasant meat was medium−rare, so it remained succulent and tender, and the wild mushroom sauce was a great accompaniment. The New Zeeland lamb ribs may not be the best choice without the sausage. The spicy, homemade sausage were seasoned in the traditional Hungarian way with paprika, peppers and garlic, and created a fresh and interesting combo with the creamy cashew sauce. Our waiter seeing that we were uncertain as to which dessert to choose, we were offered a mixed sampling plate. This meant we could try mango and almond panna cotta with strudel crunch, raspberry chocolate truffle with salty caramel, vanilla scented carrot mousse with beetroot, and the fantastic tonka bean chocolate cream with hazelnut ice cream. The beautifully styled superb desserts were impressive both for our eyes and their tastes. The various chocolate

versions were indulging, the fruity ones exotic and light – good choices either before or after the memorable moment of the proposal. The great dinner proved to us that Spoon has more ambitions than making do with its exquisite location and feeding tourists who may never return. It does its best to impress customers with great service, kind and professional staff and a

hardworking kitchen. Spoon is one of the ambassadors of Hungarian hospitality. Let’s hope that its example will be followed. RATATOUILLE

SPOON 1052 Budapest, Vigadó tér 3. 06 (1) 411 0933



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