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BUSINESS JOURNAL BUDAPEST
VOL. 26. NUMBER 20
NOVEMBER 5 – NOVEMBER 15, 2018
SPECIAL REPORT TELECOMS SPECIAL REPORT
Telco Market Adapting to Match Customer Needs, Habits
Mohamed ElSayad, Chief Commercial Officer at Telenor Hungary, talks to the Budapest Business Journal about how the Hungarian market is changing, and what the future might hold. 13
SPECIAL REPORT
5G Coalition Looking to Establish Pioneering Path for Hungary Launched last June, the 5G Coalition now counts 65 members from industry, academia and the government. 16
SOCIALITE
Does This bus go to Chinatown? David Holzer takes a 30 minute bus ride from Deák Ferenc tér in search of the right Chinatown – it turns out Budapest has two – in Kőbánya (District X) and, more importantly, authentic Chinese food. 21
Time to Change Your Business Model
NEWS
Analysts: MNB’s Dovish Policy may Stick Around London-based financial analysts say there are no macroeconomic or market factors that might force the MNB to start tightening monetary conditions any time soon. 3
BUSINESS
NE BUSI
SS
Exec-turnedlecturer Doreswamy Nandkishore tells Budapest business leaders new, sustainable approaches are essential if companies want to thrive in the future. 7
Hungary’s Largest Winery Looking to Balance Quality and Cost With 15 million bottles sold annually, Varga Winery is currently the largest wine producer in Hungary and says it owes much of its success to the use of high-level technology and marketing. 11
2 | 1 News THE EDITOR SAYS
EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence Gaál,
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TIME TICKING TOWARD CEU EXIT The slow-burning fuse that is the dispute between the Central European University and Hungary’s government suddenly flared up on October 25 with the CEU’s announcement that, unless agreement is reached before December 1 of this year, students starting U.S.-accredited courses from September 2019 will do so in Vienna, not Budapest, although those who have already here will be able to complete their studies in the Hungarian capital. The university insists it has done everything required of it by the government to operate in Hungary since a change in the law in 2017, but says the latter refuses to sign an agreement. That has left CEU in a state of limbo, and it must act to give students and staff legal certainty. The government response was tweeted (the U.S. President would no doubt approve) by spokesman Zoltán Kovács: “The announcement by @ceuhungary is a @georgesoros style political ploy. Up to now CEU has operated here, it does so now, & we think that it’ll continue to do so in the future. The relocation to Vienna of the issuing body for its US degrees is simply part of that political ploy.” CEU’s management and supporters believe the university has been singled out for attack because it was founded, and for a long time financed, by the government’s favorite bogeyman, the Hungarian-born financier and philanthropist George Soros. Since the Fidesz government won its record third successive landslide term, it has carried on its fight with the university by doing, well, nothing. It feels as if it has calculated that it can whether any fallout from the dispute, and that is precisely what it intends to do. And yet CEU does have significant supporters, including the U.S. Ambassador to Hungary, David B. Cornstein. The embassy statement published on its website appears unambiguously under an image of the Twitter
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slogan #IstandwithCEU. It quotes the ambassador as saying “CEU remains a priority for the U.S. Government and has overwhelming bipartisan support in the United States. I understand CEU’s position – prolonged uncertainty is not sustainable for an academic institution. However, a solution is still possible. There is a small window to resolve this, but it needs to happen fast. I am working with both parties to continue the negotiations and find an acceptable resolution before December 1.” Virtually the first public act of Ambassador Cornstein when he arrived in Hungary was to visit CEU. He has also identified keeping the university in Budapest as one of his four key priorities, telling an AmCham event in early September that were CEU to relocate to Vienna it would be “bad for the city, the country and the government”. Were the move to Vienna to happen – and for all the CEU insists it will find some way to stay In Budapest, it is hard not to see this as the first stage in a total withdrawal – it would represent a massive dent to Hungary’s international reputation. The same could be said of rubbish waiting uncollected in the streets, which, at the time of writing could be seen in District XVIII (near the airport) and in Gödöllő, to name just two places. The decision to centralize the collection of refuse fees seems to have created a financial bottleneck, with waste collector Zöld Híd Kft. announcing it would suspend services in about 116 municipalities. The government has finally moved to plug the shortfall by transferring HUF 26 billion, including HUF 7.5 bln from the Ministry for Innovation and Technology, but a more permanent solution must be found soon. Robin Marshall Editor-in-chief
The Hungarian national flag is lowered to half mast on October 23 in front of Parliament, commemorating the Hungarian Uprising of 1956 against the Soviet-backed government of what was then the Hungarian Peopleʼs Republic. The black and white picture shows a destroyed former casino at the corner of Körösi Csoma sétány and Füzér utca in 1957, one year after the revolution.
Photo: MTI/Zoltán Máthé
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News///macroscope
MNB’s Dovish Policy Stance may Hang Around, Analysts Say
London-based financial analysts unanimously say that there are no macroeconomic or market factors that might force the National Bank of Hungary (MNB) to start to tighten monetary conditions any time soon. ZSÓFIA CZIFRA
Bank of America Merrill Lynch and Morgan Stanley have published their notes from their recent visits to Budapest and some other CEE capitals. “CEE trips reveal no major pressures on regional central banks to change their respective course of action. The Czech National Bank (CNB) keeps on hiking. The National Bank of Hungary (MNB) and the National Bank of Poland (NBP) stay dovish, delaying policy tightening as much as they can. The National Bank of Romania (NBR) has found reasonable justifications to pause,” BofA-ML summed up its findings on October 22. Analysts at BofA-ML believe that, as long as the EUR/HUF exchange rate is stable, the central bank will likely manage to stay in its current holding pattern until
Numbers to Watch in the Coming Weeks The Central Statistical Office (KSH) will publish Hungary’s retail trade data for September on November 7, followed by a first estimate of the economy’s industrial production for the same month. Also on November 8, KSH will release its first estimates on Hungary’s consumer price index in October.
Net financial asswets of households in Hungary (2002-2017)
billions of HUF
mid-2019. The MNB has expressed both readiness and reluctance to tighten policy at the same time, BofA-ML said. “We believe the MNB is sensitive to sharp HUF depreciation, so it will not delay changing its stance at all costs, but will need a significant trigger to move before Q2 2019,” the analysts wrote. In their view, the rate setting Monetary Council will only take key decisions in the months it publishes its “Inflation Report”, so that it can incorporate all factors, including the HUF developments, to assess the inflation outlook. “It downplays the impact of various volatile components on the CPI in recent months, while the second round impact of FX depreciation and higher oil is to be seen. If EUR/HUF remains within a stable range, we think the MNB will not want to tighten policies until H2 2019, with announcement for changes in its liquidity management probably in March at the earliest,” the analysts emphasized.
Main Toolkit
The main toolkit for the first steps of monetary tightening will be a combination FX swaps and overnight deposit rates, the analysts believe. Financial analysts at London-based Morgan Stanley, however, think that higher global crude oil prices could push the consumer price index
above
4%
year-on-year in Hungary in the first half of 2019, “potentially causing the MNB to start tightening liquidity in March or June,
though still at a measured pace”, Hungary’s business portal portfolio.hu wrote. The comprehensive study on emerging markets, published recently, found that in the CEE region, oil prices filter through to inflation most in Hungary and Romania. This is partly because the weight of fuel in the CPI basket is higher in these two countries (7.7% and 5.9%, respectively) than in Poland (4.4%) and Czech Republic (3.5%). According to Morgan Stanley’s forecast model, every 10% increase in oil prices could add 80 basis points to the annual inflation rate in Hungary, considering both direct and indirect effects on prices. As a result, ADVERTISEMENT
Deficit Target Achievable Next Year Hungary’s general government deficit could reach 2.2-2.3% of GDP this year, which is a bit under the 2.4% target in the Budget Act, the National Bank of Hungary (MNB) said in a freshly published biannual report. The central bank said in its Public Finance Report that its projection would depend on whether reserves in the Country Protection Fund are tapped. Tax revenues are expected to exceed the target in the Budget Act by the equivalent of 0.6% of GDP, supported by revenue from corporate taxes, as well as taxes on consumption and on labor, the report reads Pay rises pushed forward in the healthcare sector, vouchers awarded to pensioners, a subsidy for winter utilities bills and higher spending by budget-funded institutions could lift expenditures over targets, but these effects could be countered, in part, by lower than expected spending on fostered work programs and disability payments, the central bank added. The MNB said the deficit target of 1.8% of GDP in the 2019 Budget Act is achievable, but projected that revenue would be under the target by the equivalent of 0.2% of GDP as wage growth slows, affecting payroll tax targets. This could be balanced by higher European Union transfers and lower co-financing costs for EU-funded projects, it added. The central bank sees Hungary’s state debt as a ratio of GDP declining to 72.4% at the end of 2018, and approaching 70% at the end of 2019.
12-month inflation will likely rise to more than 4% for a short time in 2019. Hungary’s Inflation hit 3.6%, a 5.5-year high, in August. Interestingly, the MNB actually projects lower inflation: the central bank expects CPI to rise no more than 4%, the top of its tolerance band, and to remain stable at 3% from the second half of 2018, in line with the long-term target.
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CIB Bank Appoints Deputy CEO
Ákos Mátés-Lányi Joins Noerr as M&A Head
banking experience, having worked at BNP Paribas for 12 years. In his last seven years at BNP Paribas, he was deputy executive director for the large corporates branch in Hungary, Slovenia and Croatia. He also worked at Deutsche Bank in Budapest. Mészáros will be responsible for improving the dynamics of the improving large corporates unit, as well as strengthening cooperation within the Sanpaolo Group and providing global banking services for the growth plans of existing and new clients.
Marriott Names János Parti Marketing Director
Penny Market Hungary has new CEO
Balázs Szabó CIB Bank has announced the appointment of Balázs Szabó as its new deputy CEO and head of corporate, with Tamás Mészáros taking over his former job at the helm of the large corporates branch. Szabó is now responsible for the company’s whole corporate branch in Hungary from October 1. Upon completion of the official permit processes, he will also become a member of CIB Bank’s directorate. The deputy CEO will be responsible for accelerating the digital transformation of the branch, as well as expansion in the SME sector, and improving reach among international clients. He is also expected to increase the market share of the bank’s leasing branch and to regain its former position in the corporate field. Szabó began his career at MKB Bank in 1998, working for more than 15 years in the corporate and SME fields, rising to the position of executive director. He also worked as an external advisor for Deloitte before joining CIB Bank in June 2016, initially leading the SME branch, before being appointed as head of large corporates in March this year. Tamás Mészáros took over Szabó’s former position with effect from October 8. He also has extensive corporate and investment
German-owned discount supermarket chain Penny Market Hungary has announced the appointment of Florian Jens Naegele as CEO, taking over from Jens-Thilo Krieger. Naegele officially took over the role on October 1. The new CEO is responsible for sales, supplies, expansion, marketing, construction, revision, quality assurance, and project management.
Florian Jens Naegele He was formerly a member of the management of Aldi Süd and Aldi Switzerland, and also worked in a leadership position with supermarket rival Lidl. Prior to coming to Hungary, he worked in the management of Penny Market Germany.
and also in Germany as the case may be, on major transactions.” Mátés-Lányi is a member of the Budapest Bar and the ethics committee of the Hungarian Private Equity and Venture Capital Association (HVCA).
Ákos Mátés-Lányi Ákos Mátés-Lányi has joined law firm Noerr’s Budapest practice as counsel and head of M&A/transactions, bringing 12 years of experience in his field, according to a press release sent to the Budapest Business Journal. Working as a corporate M&A lawyer, Mátés-Lányi has built a professional reputation as a specialist advising in cross-border M&A, private equity and capital markets. He has more than 12 years’ experience advising both domestic and international clients through working at international law firms including DLA Piper and, most recently, Kinstellar. “We are proud and excited about Ákos joining us at a time when Noerr is developing fast in Hungary,” said Zoltán Nádasdy, office head of Noerr in Budapest. “Ákos will bring critical expertise to our young and dynamically growing team, which serves an increasing number of international clients.” “We very much look forward to Ákos coming on board, and this important move is evidence of our commitment to progressing Noerr into a truly regional force in all core areas of the legal advisory business in CEE,” added Jörg Menzer, regional managing partner for the CEE. “Ákos will work from day one with our leading M&A professionals across the region,
Hotel operator Marriott has announced the appointment of János Parti as director of sales and marketing for its Budapest properties. Parti will oversee all sales and marketing efforts for the Budapest Marriott Hotel, Courtyard by Marriott Budapest, and Millennium Court Marriott Executive Apartments. The expert has 20 years of experience in sales and hotel management, starting his career directly in the hotel industry at the Budapest Marriott Hotel, upon graduating from the College of Commerce, Catering and Tourism in Budapest. Parti gained experience in sales leadership with the AccorHotels Group and Danubius Hotels, before being appointed as sales director at the opening Courtyard by Marriott Budapest City Center in 2010. The new appointment is effective from October 1, with Parti joining the
János Parti Budapest Marriott Cluster from the Kempinski Hotel Corvinus Budapest, where he held the position of director of sales and marketing for eight years.
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Europa Design Headquarters set to Achieve WELL Accreditation The 400 sqm Europa Design headquarters, a refurbished building in Buda, originally built in the 1930s in a Bauhaus style, could become the first building in Hungary to receive WELL accreditation. The refurbishment and interior design is based on a living office concept by the furniture maker Herman Miller. GARY J. MORRELL
“By achieving WELL certification, Europa Design wants to strengthen the commitment of the company to the work-life balance idea in office spaces,” comments Emese Kovács, energy consultant and partner at MN6 Energy Agency, which is working on the accreditation. “WELL accreditation aims to support the wellbeing of employees in the building, inspiring creativity and
“This new certification provides a very good framework of how to create a livable and healthy internal environment, which is also managed in the long-term. This is a clear benefit for end-users. The building itself should benefit from green building certifications, like BREEAM and LEED, and the interior design and management should benefit from the WELL framework. WELL is currently a very new system, which is becoming popular in Hungary,” Barta says. The Europa Design HQ is expected to fulfill the WELL requirements and complete the certification process by next March. The cost of getting WELL accreditation for a 500-1,000 sqm (for example
50-100 working
Europa Design HQ in Buda. strengthening the employer branding of the company at the same time. Out of 25 employees [at Europa Design], 80% are
under
40,
thus making it a challenge to keep up with the different expectations of the young, highly qualified staff, and create an environment where they can all work effectively. The quality and architectural value of the new HQ building is a significant upgrade from Europa Design’s previous office, that better reflects the brand and its core corporate values,” Kovács explains. “Companies, as tenants, often think they have few possibilities to break out of the standard fit-out zone, but they have the possibility to invest in their employees, and create a really inspiring office space, with a fresh and clean air supply, acoustic and thermal comfort, healthy nourishment, natural light and inspiring spaces that
can be varied according to the changing requirements/preferences of staff. Buildings and offices can be used to ensure a positive experience for both employees and partners,” she adds. The Washington-based International Well Building Institute’s third party accreditation system examines the impact of buildings on the human body in terms of health and wellbeing and rates buildings based on air, water, healthy nourishment, natural light, fitness, comfort and mental freshness.
Healthy Environment
Zsombor Barta, vice-president of the Hungarian Green Building Council (HuGBC), comments that WELL is about a healthy internal environment and the wellbeing of end-users.
places) is estimated at USD 11,000-12,000 for the certificate itself, with the advisory fee on top putting the cost in the region of USD 15,000-20,000. “As long as the building itself provides the technical background required for the certification, or is already pre-certified in the core-and-shell phase, only the accreditation fees come as additional. High quality furnishings and ergonomic office furniture, healthy nourishment or water dispensers are already part of the budget. This can be measured against staff retention and the associated costs of head hunting and training required and energy and resources needed to replace staff,” says Kovács. “Eight new office building projects are registered in the core-andshell category. MN6 Energy Agency is supporting companies and also tenants to go WELL by creating new interiors both in WELL pre-certified and refurbished buildings in Hungary, mainly in Budapest. We expect five or six certifications, most of them in WELL core-and-shell certified buildings as new tenant space. WELL encourages a more collaborative approach between tenant and landlord; however, it always results in a win-win situation,” she concludes.
Lowest Budapest Office Vacancy yet Recorded The overall Budapest office vacancy rate has fallen to 6.4%, the lowest yet recorded in a market where vacancy was once in the 20s. This compares to, for example, 10% in the Warsaw market but 6% in Prague. GARY J. MORRELL
The lowest vacancy has been recorded in the Non-central Pest sub-market at 4%, whereas the periphery still records vacancy rate of more than 30%. This reflects the current trend for office development in central or suburban locations at recognized transport intersections with easy access to urban amenities and population centers as demanded by tenants and office staff. Some developers previously attempted to develop on an American model for office development in out-of-city locations where employees were expected to commute by car, but that is proving increasingly unpopular now.
Four new office buildings were delivered on the Budapest market in the third quarter of the year, totaling 111,000 sqm according to the Budapest Research Forum (BRF), made up from CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL and Robertson Hungary. Total modern office stock now stands at around 3.58 million sqm, with 2.94 million sqm of this consisting of class “A” and “B” speculative space, according to the consultancy group. From this,
644,000 sqm is owner-occupied.
This compares to total office stock of 5.42 million sqm in Warsaw
and 3.44 sqm in Prague, according to Cushman & Wakefield.
Stock Advances
The largest Budapest completion was the 58,000 sqm Magyar Telekom HQ by Wing in District IX, now regarded as a developing out-of-center business area. In another large delivery, Skanska completed the 35,000 sqm Mill Park. The 11,000 sqm Advance Tower 1 in Váci út was completed by Futureal. A further completion was the 4,800 sqm EcoDome office center by Redwood Real Estate in central Buda. As the Budapest office market was one of the first to be established in Central Europe and the quality and specification of office stock has dramatically advanced in reaction to demand in the last
by 27,000 sqm in three buildings. Total demand in the third quarter reached 111,000 sqm, representing a 32% yearon-year increase. Significantly for market demand, new leases accounted for 48% of this figure. The strongest occupational activity was recorded in the Váci Corridor, which attracted 33% of total demand. This was followed by the Central Business District with 17% and South Buda with 16%. The largest new deal was for 15,000 sqm in the Váci Corridor.
20 years
or so, consultants have argued that there is a significant amount of earlier generation stock that should be removed from the stock figures. Thus, the officially recorded owner-occupied stock has been reduced
Mill Park in Budapest by Skanska.
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Tungsram, Óbuda ‘WOW Hungary’ University Hackathon National Brand Unveiled Promotes Smart Lighting at Tourism Summit The Bright Smart City Hackathon organized by Óbuda University and Tungsram Group in Budapest on October 26-27 attracted the participation of 47 university students. The goal of the competition was to promote smart solutions to help the life of city dwellers through innovative lighting. BBJ STAFF
The Bright Smart City theme of this year’s hackathon drew in dozens of engineering students, who were sorted into ten teams, each with between four and five members at the preliminary meetup on October 18. The students were drawn from five faculties of the Óbuda University, although the competition also had an international flavor, since besides Hungary the home countries of the entrants were Tunisia, Kazakhstan, Ecuador and Vietnam. Their work was helped by an eight-member mentoring team, five taken from the university, and three supplied by Tungsram. The hackathon’s full title was “Bright Smart City: the LED Revolution, Modern Lighting Solution in the City of the Future”, and called for solutions that will make cities more interesting, safe and beautiful through new lighting technologies. “One of the goals was not just to make the life of those living is smart cities more pleasant, but also more healthy; even more, the solutions should be ‘loveable”, making their lives easier with their practical approach,” a Tungsram spokesperson told the Budapest Business Journal.
Fresh Thinking
The competition was launched on October 26 with a speech by Dr. László Náda,
the chairman of the Scientific Council of the Óbuda University. He said that the organizers expected fresh thoughts and useable ideas leading to interesting solutions. István Magyar, the COO of Tungsram said that the company HQ, situated in the “industrial golden triangle” of Budapest and the venue for the hackathon, should be inspiring for the future engineers. “These young talents have to meet the challenges of Industry 4.0 and smart cities,” he added. László Korányi, director of innovation at Óbuda University and one of the main organizers, advised the teams to keep in mind that, beyond the technological approach, their solutions should be for the end users The winning team was formed by four foreign students. Their ideas was traffic solutions based on LED lighting and named “e-Flow”, serving the drivers with an improved flow of information, thereby reducing traffic jams. The first prized was handed to the team by Richárd Gerendás, marketing manager for Tungsram. The members will travel to Milan, to one of the biggest lighting exhibitions in Europe. The team members said they had been really inspired by taking part in the hackathon and, though tired, they would gladly start it all over again.
A hackathon team in a mentoring session. Photo by Péter Kerekes.
The contribution of tourism to Hungary’s GDP, the results of the “Spice of Europe” campaign, a speech by PM Viktor Orbán, the new “WOW Hungary” national brand, and the “Pro Turismo” awards were all on the agenda at “Turizmus Summit 2018”.
Prime Minister Viktor Orbán speaking at the tourism summit. Photo by kormany.hu/Árpád Földházi. noting that the industry provides a livelihood to
BENCE GAÁL
The summit was held at MÜPA Budapest (formerly known as the Palace of Arts). Head of MTÜ Zoltán Guller told guests: “We came here to evaluate and set aims.” He talked about the “National Tourism Development Strategy 2030”, announced last year, describing it as a strategy developed with “Swiss accuracy” and “Hungarian bravado”. He called the recent growth in the tourism industry “incredible”, citing the favorable numbers, growing constantly
since
2010.
According to the development strategy, by 2030, tourism’s contribution to GDP should be 16%. Guller set the aim of achieving a 50-50 ratio of domestic and international tourists in the future. He also emphasized the need for countryside developments, while noting that currently “66% of international arrivals come to Budapest”. He also lauded the success of the “Spice of Europe” campaign, with CNN as the main media partner. Prime Minister Viktor Orbán also stressed the importance of tourism to the nation, labelling Hungary’s successful tourism entrepreneurs “patriots”. He explained that “what kind of world surrounds Hungary” is important, and argued that the EU is made up of two groups: “pro-migration federalists” and “anti-migration nationalists”.
Great Contributor
He called tourism, “One of the greatest contributors to the national economy,”
400,000 Hungarians.
The focal point of Orbán’s speech was the development of countryside tourism. Noting that Budapest is the “flagship”, he said, “It is my personal ambition to make as many people interested in the countryside as in the capital.” Dávid Farkas, MTÜ’s deputy CEO for tourism strategy, highlighted the importance of online platforms, with 60% of the agency’s appearances already happening online. He said that the agency involves a number of high profile partners such as National Geographic and CNN. He agreed with Orbán about spreading tourism, saying: “We know it is not enough to see Budapest; one should visit the Hungarian countryside as well.” The new national “WOW Hungary” brand, focusing on areas outside the capital, was announced in a video explaining that the name is short for “Wellspring of Wonders Hungary”, with the campaign logo based on an ancient Hungarian motif. The winning tender, upon which the brand project is based, was submitted by Graphasel Design Studio. The image film for the campaign involved the makers traveling 6,420 km, with the film crew visiting 90 towns in 22 days. The 30th “Pro Turismo Awards” were presented at the end of the event, with fashion designer and creator of the Nanushka brand Szandra Sándor, We Love Budapest co-founder and editor-inchief Regina Papp, chef László Ruprecht, festival organizer Zoltán Fülöp, president of the Hungarian Hotel and Restaurant alliance László Könnyid, and winemaker Bence Laposa all named winners.
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Business
particular opportunities to emerging economies such as Hungary? “This will be the way of doing business in all economies, going forward. The world is heavily interlinked, and unless we ALL change, the eco habitat seems unlikely to sustain given the loads we place on it.”
Time for new Business Models is Now A leading executiveturned-lecturer has told Budapest business leaders a new, sustainable business model is an inevitable consequence if companies want to thrive in the future. ROBIN MARSHALL
“Leaders have a primary responsibility to ensure sustainable value creation in an era of major change,” Doreswamy Nandkishore (Nandu) said at a Business Council for Sustainable Development in Hungary business lunch that focused on sustainable lifestyles. A former executive vice president for Nestlé SA, and currently executive fellow of strategy and entrepreneurship at London Business School, he was making his first business visit to Budapest at the invitation of the BCSDH. We are living in an era of huge changes, where the survival of organizations depends on their capability to adapt, unlike the former giants Kodak and Sears, said Nandu. Where the
Doreswamy Nandkishore speaking at the BCSDH lunch. average lifespan of an S&P 500 company was 90 years in 1920, today it is
15 years;
companies must adapt, he insisted “But one thing cannot change: commitment to principles and values, as this is the basis of trust, and is not concrete, but is still the permanent and everlasting basis of the value of companies. Thus, creating sustainable value and building trust are the primary responsibilities of leaders,” he said.
Business Council for Sustainable Development in Hungary The BCSDH is the national partner organization of World Business Council for Sustainable Development. It was founded in 2007 and now has 82 corporate members. The council is a coalition of CEOs of companies that account for around 30% of Hungarian GDP. Its mission is to promote sustainable development among its members and other actors from the Hungarian economy, thereby generating new and innovative thinking that will improve their competitiveness and should ultimately contribute to promoting the sustainable development of the economy, quality of life and
the preservation of environmental and natural resources. Its Action 2020 Hungary program is a platform that business can use to put forward their solutions to environmental and social challenges, as well as the business challenges facing our country. The Future Leaders Talent Program, another BCSDH program, aims to introduce the leaders of the future to the complex conceptual system of sustainability, and help them to integrate these considerations into their decision-making processes throughout their careers. More information, see: www.bcsdh.hu; www.action2020.hu
Wider Changes
Nandu argued that it is increasingly urgent for businesses and companies to make act, and responsible managers need to prepare their companies for wider changes in business models. Recalling his childhood in India, or the way grandparents have always reused things, he said the answers for business are right in front of us, they just need to be applied differently. “I am bemused by the concept that the circular economy is new. It is not new. We have known about it for a billion years,” he said, siting traditional farming as an example. “We are moving beyond CSR to sustainable value creation with a total life cycle approach that covers end of life issues [for products produced].” Asked by the Budapest Business Journal if this means an end to the traditional Anglo-Saxon profit-driven model, Nando said sensible business leaders had to follow where society was heading. “Consumers and therefore customers are more and more making choices based on the company behind the brands they buy. They demand better accountability, and commitment to sustainability, in addition to healthy offerings. This is already forcing companies to change the way they behave and operate. A commitment to sustainability now becomes as much a ‘basic rule of business’ as ‘following the law’. So, yes, managers and boards will have to question, reevaluate and understand the purpose of business and their role.” Do new business models such as the circular and sharing economies offer
Sustainable Future
The BCSDH’s “For a Sustainable Future” prize was also presented at the lunch for the second time in three categories (Change Leader, Leading Women, and Business Solutions), and there was an introduction to the two-point recommendation for the business sector to promote sustainable lifestyles. “According to a report by the United Nations, we only have 12 years left to stop climate change and step onto a path of sustainability. For this to happen, it is essential that sustainable lifestyles become more general. In promoting their uptake, companies have a clear role and responsibility. Fortunately, the commitment of companies to this goal is increasing both globally and on the domestic level too,” said Attila Chikán Jr., president of the BCSDH. The twopoint recommendation which was put together by the council and the leaders of its member companies to help the business sector take the steps necessary for promoting the uptake of sustainable lifestyles. The first suggestion is to change business models to make sustainable products and services competitive, while the second is to shift consumer demand towards sustainability through brands More than 80 senior executives, civil and scientific experts took part in the preparation and wording of the recommendation. As a result, solutions for both the business sector and its stakeholders have been identified that can positively impact the sustainable lifestyles.
Sustainable Future Award Irén Márta, managing director of BCSDH and member of the professional jury for the “For a Sustainable Future 2018” prize explained: “We established this complex prize with the purpose of recognizing and disseminating to a wide audience the activities of leaders and companies in the field of sustainability. The goal of the prize is to set an example, and moreover, to promote and increase the contribution of business to meeting the Sustainable Development Goals.” The winner of the Change Leader prize was Ferenc Molnár (of Ilcsi Szépítő Füvek), while the winners of the Leading Woman Prize were: Zdravka Demeter Bubalo, HR director, MOL Group; Anita Urbán, HR director, Grundfos; and Barbara Verő, Head of HR, Nestlé.The best Business Solution prize-winners were: Biofilter, for its circular approach in its digital switchover office program; Heineken, for its Plastic-free May compostable cup program; and MOL for its Limo car-sharing program.
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Budapest Business Journal | November 5 – November 15, 2018
PRESENTED CONTENT
Flexibility and Localized Knowledge key for SAP Business One Hungarian SMEs have traditionally been regarded as very much grounded in the present, not really prepared to invest in the future. The mentality has been survive today, rather than thrive tomorrow. But one of SAPs leading global marketing experts says a generational change, coupled with new ways of using technology and working with partners, can overcome that. ROBIN MARSHALL
Paulo Almeida, the global head of SAP Business One marketing, was in Hungary in October to meet face-to-face with local partners. “It strikes me that Hungary is not that different,” he told the Budapest Business Journal in an exclusive interview. “OK, maybe it is different from Dubai, but it is not that different from Latin America, South East Asia or Southern Europe.” SAP Business One is business management software (ERP) specifically designed for SMEs. Originally designed by an Israeli company and first launched in 1995, SAP acquired it in 2002. Sold through SAP’s global partner network, it aims to automate key business functions
Paulo Almeida, the global head of SAP Business One marketing. in, for instance, financials, operations, sales and customer management, working either onsite or in the cloud, operating as a digital hub. And it has proved a huge success. According to Almeida, there are 800 partners worldwide, with 500 plus industry specific solutions, supporting more than
60,000 customers
and one million users. The ability for partners to develop their own applications from SAP Business One is key to the success, for it enables the software to becomes much more nuanced: retail fashion companies in Brazil will have very specific and different needs to retail fashion companies in Milan, but both can be addressed through localized Business One apps, the head of marketing says. Almeida is Portuguese, and still lives in the country. He believes that gives him an insight into how smaller markets work that he might not have were he an American living in Texas. Localization is important, he says. That is why SAP offers country-
specific versions, he says. But he also sees change in the way small- and mediumsized businesses look at the future. “SMEs are usually family held, and in many cases are now managed by the second generation, and the second generation is usually a little more open to technology, because they have grown up with it,” he reasons. The advantage of a market the size of Hungary is that it is almost impossible not to know your customers. But more important than just knowing them is understanding their needs and challenges. “What pain points does a customer have, and how can you evolve a solution to make life easier?” Almeida asks.
Using Technology Differently Sometimes solving that pain point simply means using existing technology differently. Almeida tells the story of a partner who had a client who had to take an inventory of his stock every morning, requiring the manual scanning of bar
codes. Almeida wondered if it could not be done faster and easier by something like a drone. The partner undertook the relatively cheap adaptation of a drone using SAP software, and Almeida did the marketing for him. “Drones were originally introduced as a toy, but now they can be adapted to improve business practices. This is the modern world. Everything needs to be fast, simple and cheap, because if it is expensive, nobody is going to do it.” Applications for SMEs also have to reflect this if they are to take off, and that is as true for development as it is for selling the end product. The technology needs to be digestible, the marketing head says. “In North America, for big projects we will still be asked to organize everything at once. In this part of the world, our experience is
“Drones were originally introduced as a toy, but now they can be adapted to improve business practices. This is the modern world. Everything needs to be fast, simple and cheap, because if it is expensive, nobody is going to do it.” that a decision starts with something small. If you can make that work, show that it delivers added value, then you can move forward. SMEs need to see results, so you deal with phased implementation.” Timing also matters, he insists. “The number of days required to go live is really not too crucial in bigger markets, but here if they want to go live in four weeks and you take five, you lose respect. You must respect the deadline, you must make it happen.” SAP Business One has built a reputation for flexibility and adaptability over the past more than
20 years.
So what is next? “Alexa [Amazon’s virtual assistant]. You’ll actually be able to speak with SAP Business One,” says Almeida. “Alexa, how is my business doing?”
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Budapest Business Journal | November 5 – November 15, 2018
Company ///news Aranykocsi Inaugurates Hungary’s 1st Fully Automated Cowshed Agrobusiness Aranykocsi inaugurated a HUF 1 billion fully automated cowshed in Kocs (76 km northwest of Budapest), magyarmezogazdasag.hu reported. The cowshed is the first in Hungary with a robotic milking parlor, said CEO Kálmán László. Feed distribution and manure management are also fully automated, requiring just two people per milking shift, he added. The systems were delivered by Sweden’s DeLaval. Aranykocsi covered half of the cost of the investment from its own resources and the rest with a preferential loan from MKB Bank. Aranykocsi is the legal successor of a farm cooperative. It has about 400 owners and employs 170 people. Last year, it had revenue of HUF 3 bln. The company produces about 9.2 million liters of milk a year.
Bunge Completes HUF 9 bln Feed Plant U.S. cooking oil manufacturer Bunge has completed a HUF 9 billion feed plant at its base in Martfű (157 km east of Budapest), profitline.hu reported. The plant will turn
out high-protein, GMO-free, sunflowerbased feed that will be sold under Bunge’s SunPro brand, the head of the company’s local unit, Wojciech Jachimczyk said. He also added that the plant is expected to generate more than HUF 10 bln in revenue a year. The plant should reduce Hungary’s dependence on imports of high-protein feed, mostly soy meal, which comes to 600,000 tonnes worth HUF 70 bln-75 bln annually. Net sales of Bunge’s business in Hungary reached HUF 140.4 bln last year.
Rail Cargo Group Launches new International Cargo Service Rail Cargo Group has launched an international cargo train service connecting the biggest seaport of Europe, Rotterdam, with the Budapest Rail Cargo Terminal - BILK Logistics Center, kamaraonline.hu reported. This is the fourth such project started by the group in the past 12 months. Ágnes Hernád, managing director of Rail Cargo Operator - Hungária Kft., said the train covers the route of about 1,400 km in one day. She said the company started developing its project train systems one year ago. The “Maria Theresia” project train connects
Daimler Launches HUF 3 bln Mercedes Benz Academy in Kecskemét German carmaker Daimler has inaugurated its Mercedes Benz Academy, a training center completed through the investment of more than HUF 3 billion next to the car factory in Kecskemét (88 km southeast of Budapest), gazdasagportal.hu reported. The investment was supported with a HUF 622 million grant from the state of Hungary. The ceremony was attended by Minister for Innovation and Technology László Palkovics. Speaking of the reform of dual vocational education, the minister said there are now almost 2,000 dual vocational students participating in higher education and more than 100,000 students studying
industrial regions in Czech Republic and southern Poland with Budapest, mainly the Csepel Free port, the “Balkan Express” service carries goods from Western Europe via Hungary and Serbia to Greece and Turkey, and the “Multigroup” train system, launched in September, carries cargo from Western Europe and Hungary to Ploiesti, Romania, and
Innovation Helps Haul Waberer’s on Road to Success A driver shortage in the transportation industry is spurring revolutionary changes, Hungarian haulage company Waberer’s tells the Budapest Business Journal. As such, the most important areas of innovation include better capacity utilization in terms of drivers and vehicles – including alternative engine technologies – before autonomous driving might change the way we think about transportation. CHRISTIAN KESZTHELYI
As part of the process, Waberer’s says it has called upon decision makers in the EU to revise the planned regulation of driving and rest periods in the transportation industry. The company has also reached out to clients for modification of their logistics processes in order to shorten waiting periods. Innovation is among Waberer’s declared corporate values and the company says it is constantly looking for the latest developments in its operational field. As such, the company says it puts a strong focus on modernization, both internally and in cooperation with partners. Additionally, the firm is open to take part in partners’ R&D projects.
“We want to be the first to adopt cutting-edge technologies to enhance our efficiency and strengthen our market leading position in Europe, as we believe that the near future of road transportation will be determined by several innovations,” Waberer’s tells the BBJ. As a way of showing commitment to cheaper and more environmentallyfriendly propulsion methods, the company has been testing both LNG (liquefied natural gas) and CNG (compressed natural gas) fueled vehicles. “We plan to use these trucks in our fleet from 2019, but of course the filling station infrastructure must be further improved to let this happen. In accordance with sustainable development we are also building partnerships in
Business | 9
in the dual vocational education system. The number of partner companies involved in the system is more than 700, he added. Christian Wolff, managing director of Mercedes-Benz Manufacturing Hungary said the factory played a pioneering role in introducing dual training in Kecskemét. The Mercedes-Benz factory in the city employs about 4,000 workers and turned out more than 190,000 Mercedes-Benz compact cars last year.
Stara Zagora, Bulgaria. Non-Hungarian destination consignments arriving from Rotterdam to Budapest BILK terminal are forwarded by Rail Cargo Group trains to Romania, Greece, Turkey and Italy and southern seaports. Thus, trains provide connection between not only Hungary and Netherlands, but the West and Southern and South Eastern Europe.
Future driven innovation
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the field of intermodal transportation and we are preparing routes where we can operate the roll-on roll-off model effectively. As for other freight technologies, we concluded a successful platooning [automated convoys] test last autumn,” Waberer’s says. The company also focuses on carrying out IT development, aiming to improve both workflow and decision-making processes.
Route Optimization
“Big Data technology is something that provides great support in route optimization and fuel-efficient operation. Waberer’s center can gather a huge amount of on-board data from the 4,400 trucks in our fleet,” the company says. It adds that the introduction of an SAP system last year supports the realization of its financial and management goals. “Technological innovation and digitalization generally is an increasingly important factor in a freight forwarding company’s operation in providing good and trustworthy service, streamlining business as well as reducing ecological footprint,” Waberer’s says. Innovative solutions popping up in the industry are in line with the challenges
everybody is facing, such as emissions control, protecting the environment, cope with changing fuel prices, exploring more sustainable new technologies in trucks, and also workforce questions. “We at Waberer’s believe that road transportation will remain a stable segment of transportation of goods in the future, but the development of technology will help us to operate this industry much more sustainable than in the past,” the company adds. While automation and digitization does raise concerns about job losses in Hungary and the CEE markets, in the case of road transportation this tendency would only be felt in the long run. Waberer’s says its employees need not worry. “Self-driving vehicles can be the future, but they will not be the vehicle of the near future. This technology still needs to run a great number of tests before it unfolds in practice and, until then, transportation will still need a truck driver’s competence and knowledge, which can’t be replaced by technology itself,” the company adds. This regular column, run in association with Audi, looks at how some of Hungary’s biggest companies involve innovation in their daily practice.
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Budapest Business Journal | November 5 – November 15, 2018
Hungarian Healthcare: a Self-inflicted Coronary Attack
M LIN E O T T O B E H T
Ask a Hungarian about state healthcare and prepare for a tirade involving long operation waiting times, over-burdened staff and hospitals lacking toilet paper. It has been so since at least the 1980s, although reports of gloom have intensified in the past decade, with hospitals piling up bills to suppliers and doctors leaving in droves for better salaries abroad.
KESTER EDDY
Qualified medical staff are now in short supply, and the situation is reportedly dire in many rural areas. As a solution, sort of, hospitals have increasingly been offering a choice
between private treatment – for cash – along with traditional, national healthfunded “free” care. Anyone seeking to beat the queues – and hoping for a better all-round stay – only has to pay the price. But a dual service within the same institute creates issues: it provokes
jealousy and suspicions that patients who are, legally, eligible for free treatment, are being coerced into paying in order to raise hospital revenues. So news that the government is planning to separate state-run and private health care would appear, at first sight, to be a sound idea. Mixing such services “slows down” treatment under the national health, Bence Rétvári, state secretary at the Human Resources Ministry, told a medical conference on October 27 – although he warned that the separation process would generate “serious conflicts”. So far, there has been no explanation of how the insular national health service will cope financially: still, at least the institutions offering different services will be apart. But what if the results of ‘dual treatment’ appear in the patient? An obtuse and rare situation, you might think? Far from it, as Dr. László Székely has found out, to his cost. Székely is a specialist in invasive heart surgery: modern, pin-point cardiological treatment that involves minimal incisions into the body. It also involves less risk of infection and death. Last March, this surgeon, working in the state system, was operating on a female patient in the National Cardiological clinic when he noticed that one of her breast implants was damaged. Not only was the situation medically serious – silicone was leaking into her heart – but the remedy was complicated because, though he could remove the implant, he could not replace it: under Hungarian health regulations, breast implant operations are not covered by the state.
Understanding that inaction could result in intense emotional shock for his patient, Székely called in a plastic surgery specialist and – at his own financial risk – had a new implant inserted. The cardiological operation was also successful. Today, his former patient is alive and well. A great, if unsung, all round achievement for Hungarian medicine - and humanity? Not quite: six months on, Székely was dismissed for involving a private practitioner in a national health operation. Worse, shortly after his dismissal, one of the patients on his scheduled list of operations, died. Székely insists other surgeons in Hungary face similar dilemmas – albeit involving different operations – on a regular, if infrequent basis. His dismissal, he claims, is down to personal vendettas in the medical hierarchy rather than malpractice. He is turning to the courts for redress. But that is a process likely to take years. Meanwhile, unemployed, he is reluctantly pondering at least one offer for a post abroad. For a country with one of the poorest health statistics in the European Union – and facing a chronic shortage of medical staff – that is shameful. The Bottom Line is a monthly column written by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest Business Journal. To comment on this column, or on anything else in the BBJ, email the editor at robin.marshall@bbj.hu
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Hungary’s Largest Winery Looking to Balance Quality and Cost With 15 million bottles sold annually on what is a 120-million bottle market, Varga Winery is currently the largest wine producer in Hungary. Besides making some smart investment decisions, the company says it owes much of its success to the use of high-level technology and marketing. ZSÓFIA VÉGH
Varga Winery has come a long way from a lower-segment mass producer to the country’s largest winery. Twentyfive years after its launch, Varga Winery aims to strengthen its premium wine selection while maintaining its market leading position in the market of midrange wines. Varga wines were long identified with lower-quality and mass-production. This comes from the fact that the familyowned business started out in the lowersegment and has been building up from there. Over the years, however, it has achieved quite an improvement in terms of quality which, to a large extent, is the result of high-level of technology. Another key to growth is quality offered at a favorable price. “We continually improve quality by using the latest technology while trying
Founder Péter Varga (left) and his son Máté at their state-of-the-art winery. to maintain a decent price,” Máté Varga, son of founder/owner Péter Varga told the Budapest Business Journal. The use of state-of-the-art technology in large-scale production is something smaller wineries could also benefit from, says Péter Bakonyi, founder and owner of the Bakonyi Winery in Villány, if only they could afford them.
Human Interaction
“All the technology used by large producers including filter systems, bottlers, containers, etc., allows for better and more automated quality assurance. Small wineries could also take advantage of these, but they hardly have the funds for such large scale investments,” he adds. This doesn’t mean that the wines produced with less technology are not on par with those of large-scale production, but they do require more attention and human interaction. “The rate of investment per bottle, with which large producers can achieve
Varga: the Path to Number 1 Varga Winery Ltd. was founded in 1993 by Péter Varga. The winery cultivates 200 hectares of vineyards around the country: 125 ha in Badacsony, 20 ha at Balatonaliga and 55 in the Eger wine region. The sales revenue of the winery was HUF 4.6 billion
in 2017, while the number of employees stood at 186. For more than a decade, Varga Winery has been the top seller of bottled wine in Hungary, shipping nearly 15 million in 2017. Its wines can be bought in almost all stores in Hungary.
roughly the same quality as we do, is far lower than that of small wineries,” Bakonyi says. Fortunately, when it comes to the wine market, versatility still matters, he adds. “Wines have to be unique and need some charm that justifies the existence of smallproduction wineries as well.”
“In fact, this is what I find challenging: to be able to offer wine that earned a gold medal in Bordeaux at HUF 700-800.” Organic cultivation is another field where small wineries, including Bakonyi, stand out. “Among traditional wineries, going organic is quite commonplace. Large ones are not there yet,” Bakonyi says. For small cellars, this can be a path: being closer to nature and using methods that enhance the terroir aspects of the wine. This is in contrast with reductive wine production, but a growing number of large producers are starting to look at it. Market presence also counts. Varga contributes a large extent of its success to marketing. “We were the first to run a TV commercial and have a strong presence on social media as well,” founder/owner Péter Varga says. He also recognized the importance of being on the shelves of hypermarkets
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Traditional and Large Scale Smack in the middle between the mall- and large-scale win producers sits Skizo, a winery in Badacsonytördemic (172 km southwest of Budapest, threequarters of the way down the northern shore of Lake Balaton), whose owners have decided to produce wine both with traditional and large-scale industry methods (hence the name, Skizo). “Originally, it was pure ideology which later turned out to be an economically sound choice as well,” founder and owner Balázs Sike told the BBJ. “At the time, there was a stark contrast between the proponents of both methods, each party claiming their wines to be superior to the other,” he adds. By now, this conflict has mellowed. Consumers have also become more aware of and apt to the differences of wines made in small or large-scale production. Sike started off producing wine using large-scale technology due to his track record and ties to large-scale production wineries. Later, he added traditional wine production to the portfolio. “This is completely different from the other line,” he says. “Using little technology, we are able to produce really nice wine.” Wines produced with largescale technology provide the basis for the winery’s production. They come in large volumes and the selection is also wide. Wine variety in small-scale production is far more limited – in fact, it is the specified region that puts a limit on growth. The vines of such regions cannot be replaced with other varieties either. Thanks to their unique character, this vine doesn’t require that much technology – it is the quality of the vine defines the wine. and discount-chains early, important as this is the place most people would buy wine. Though Varga winery says it is planning to increase the share of its premium wines from
500,000 bottles
to roughly two-to-three million in the next five-to-ten years, it doesn’t want to do it at the expense of the mid-range wines to which it owes its market-leading position. “We wish to keep it as this provides the basis of our income,” Máté Varga says. “In fact, this is what I find challenging: to be able to offer wine that earned a gold medal in Bordeaux at HUF 700-800,” he adds. For more on this subject see our regular wine column on page 22.
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Budapest Business Journal | November 5 – November 15, 2018
Special Report Telecoms
How is the telecom market changing in Hungary, where might growth come, and what does the future hold?
Telenor’s Chatbot Educates Kids About Internet Usage
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Vodafone’s Ready Business Index Shows SMEs how to Tackle Digital Challenges
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5G Coalition Looking to Establish Pioneering Path for Hungary
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Budapest Business Journal | November 5 – November 15, 2018
Telco Market Changing to Match Customer Needs and Habits Mohamed ElSayad, chief commercial officer at Telenor Hungary, talks to the Budapest Business Journal about how the Hungarian market is changing.
“We already provide our services for a lot of M2M [machine-to-machine] solutions, but I expect that, thanks to 5G, half or more of our ’subscribers’ will be machines by 2028, though we have to see the business potential of this technology more clearly.”
BBJ: How would you describe the telecommunications market in Hungary? M.E.: As customers’ usage habits have been changing, the telco market is transforming as well, not only in Hungary but throughout the world. The Hungarian market has already been heavily penetrated, the competition is getting sharper, and prices have been decreasing; that is good for customers. 2018 was the year when multiple operators merged or got a new owner – just like Telenor Hungary itself. There are important market segments besides the consumer segment where we would like to significantly grow our market share, for example in the B2B and IoT [Internet of Things] areas.
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dynamically growing. Most of our customers now use mobile data; even grandparents are now using smartphones to be able to chat and share photos with their acquaintances. The devices have become more and more complex partners in our everyday life, and not only for entertainment but in work, as m-health tools, etc. Through these functions, people generate more and more data for sharing. That’s why we develop our network continuously; our goal is to provide the best customer experience on Hipernet [Telenor’s superfast network]. BBJ: As is well known, Telenor changed hands this year. Do you anticipate either any consolidation of the market or the entry of any new players? M.E.: According to OpenSignal’s independent analysis, Hungarian mobile networks are among the best in the world. We see a huge potential in the exponential
BBJ STAFF
BBJ: What trends do you expect in Hungary in the coming years? M.E.: A few years ago we would have downloaded music on our smartphones at home and listened to it offline, but now mobile data is so affordable that we can stream it easily, anywhere. The next milestone, which many of our customers have already reached, will be video streaming. We offer a 100 GB monthly data allowance at a very reasonable price that enables users to easily watch their favorite TV show or movie while on the go. In the longer term, artificial intelligence solutions have big potential, will help us to understand better our customers’ needs
Special Report | 13
Mohamed ElSayad, chief commercial officer at Telenor Hungary. and enable us to serve our customers even better. The 5G technologies also have the potential to change the market: this technology will offer not only higher download speeds but much lower latency time, paving the way for new solutions like autonomous vehicles and millions of smart devices equipped with multiple sensors. Because 5G will be able to provide a data connection to low-powered sensors and devices that can operate for years from a single battery, sensors will be applied
much more widely than today. We already provide our services for a lot of M2M [machine-to-machine] solutions, but I expect that, thanks to 5G, half or more of our ’subscribers’ will be machines by 2028, though we have to see the business potential of this technology more clearly. BBJ: How are the phone habits of Hungarians changing? M.E.: We have already been experiencing that the demand for mobile data has been
growth in mobile data usage, which will require each operator to enhance and upgrade their networks continuously to be able to maintain Hungary’s current very high service quality. From our perspective, the main goal is basically to offer our customers the best experience with Hipernet as a network, to offer the best quality of experience when it comes to retail or digital. This is why we are more concerned about the overall experience rather than looking into consolidation of other players and other new entrants. Our purpose is to grow the market and any competition is always welcome. Editor’s note: The other two major players in the Hungarian mobile telecoms market, T-Mobile and Vodafone, were also asked to contribute to this article but had not got back to us by our deadline.
Special Report
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Telenor’s Chatbot Educates Kids About Internet Usage to-five scale (where five is the best),” Telenor Hungary adds. Since the world wide web went live on
Telco Telenor Hungary has recently launched a chatbot to help educate Hungarian youths about conscious surfing. Already, thousands of youngsters have gone online to use the feature.
August 6,
1991,
online possibilities have come a long way. The current generation has been born – and future ones will be born – into a world of online presence, and seem to be left hanging as the older generation is still trying to figure out what is going on with online payments or trusting websites with storing our personal data. “As the importance of personal data protection is increasing, I believe that the time is coming when conscious internet usage will become part of the official curriculum in elementary schools. Nowadays internet service providers – like Telenor – do a lot to reach out to youngsters,” Telenor explains. “We support not only children, but have also created support material for parents. This educational material helps parents approach their children when they’d like to talk about the positive and potentially dangerous side of the internet,” the telco adds.
CHRISTIAN KESZTHELYI
Telenor Hungary launched “ChatStory” on September 19. Within 30 days of its launch, more than
7,300 people
have conversed with the chatbot launched on Facebook’s instant messaging platform, Messenger. Talking to this computer program, which is designed to simulate a conversation, users are able to engage in a story, the storyline of which can entirely be customized by the users. Taking the users on a dating journey, the youth can familiarize themselves with concepts such as digital footprints and the handling of personal data, just to mention a couple, while relationship psychology also plays an important part of the storyline. Telenor Hungary vows that, by playing around with this chatbot, children can have fun and be educated at the same time. Using the innovative online application, Telenor Hungary says it aims to communicate to the youth on a platform that they use every day and find familiar. However, despite the curiosity of the youth and the fact that
they are technology-natives, conscious internet usage might lag behind the speed of the online world being exploration by them. “The main topics where we support children with our safe internet activities are personal data protection and online bullying. We have special education materials and tools in these topics for different age groups of children, and even for parents,” Telenor Hungary tells the Budapest Business Journal.
Long-term Potential
And such a knowledge base might well be utilized by a chatbot application as Telenor sees potential in the solution in the long-term. “One of the main advantages of Messenger or Viber chatbots is that people don’t have to install any additional application; they receive the solution within the app which is already installed and used on their smartphone,” Telenor tells the BBJ.
Although automated solutions are sporadically spreading around the international online world, with artificial intelligence possible being a big hit, still important barriers seem to be slowing progress, such as missing elements — i.e. a proper natural language processor for the Hungarian language – to reach the expected quality of service. Telenor Hungary has some promising data related to chatbots carrying advantages in the long term. “Based on the huge number of users and their completed ChatStory sessions – every second player played twice –, we can say that people like this way of communication/gaming/education,” Telenor Hungary says.
Positive Experience
Furthermore, those who played and left feedback, appeared to have collected positive experiences. “There is an evaluation option at the end of the ChatStory, and two-thirds of the evaluations are four or five in a one-
“The main topics where we support children with our safe internet activities are personal data protection and online bullying. We have special education materials and tools in these topics for different age groups of children, and even for parents.” The latest internet buzzword is blockchain, and Telenor says it can imagine that such technology could be integrated into chatbot. “Integration of blockchain solutions depends on what the company wants to use a chatbot for. If there are payment or money transfer solutions integrated into a chatbot, then blockchain can be an important part of it,” Telenor Hungary adds.
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Budapest Business Journal | November 5 – November 15, 2018
PRESENTED CONTENT
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Vodafone’s Ready Business Index Shows SMEs how to Tackle Digital Challenges István Király, Enterprise Business Unit Director at Vodafone Hungary, talks to the Budapest Business Journal about what his company is doing to help SMEs, the coming 5G revolution, its innovative car parking project and SmartCity adaptations.
Kingdom; and in all these markets it was warmly welcomed by companies. BBJ: Following the successful 5G demo in Siófok, what will be the next step in making a domestic 5G network available for the public? According to market expectations, the new networks will be put in operation in the beginning of the 2020s. Currently, a standardization process is underway; the various manufacturers are trying to reach agreement regarding common technical parameters. One of the benefits of this approach is that it might make the technology cheaper for users. At the same time, the principle of frequency distribution needs to be determined as well. The preparation of these regulating models is in process. 5G will mostly support communication between machines, for instance industrial and public use, therefore it will have a strong role in these areas. Since 5G makes
“With the sensor network, parking time is considerably less, therefore traffic, air pollution and noise pollution are all decreasing. Our plan is to let the public enjoy the benefits of this new technology as early as next year, and there is nothing against implementing the new parking solution in other districts of Budapest as well.”
BENCE GAÁL
BBJ: How does Vodafone’s Ready Business Index help SMEs prepare for future challenges? István Király: The Ready Business Index provides an opportunity for future or existing customers to fill out an online questionnaire. It contains a four-level question series following the identification of the size and the industry of the company. About ten minutes are needed for completion. Those filling out the questionnaire receive a detailed report, evaluating the company in four important areas of digital readiness, and placing it among its competitors, taking the industry into account. With the help of the Ready Business Index, customers learn where they are currently in digital readiness compared to their competitors. Specific questions determine the business challenges detected in the operations of the business, such as strengthening customer relations, data and hardware safety, optimizing costs; also, the readiness value of the company’s preparedness for the challenges. Our aim is supporting our customers in achieving their goals; therefore, we offer them relevant Vodafone products and services following the completion of the questionnaire, helping them to operate their business more effectively. If the results show, for example, that there is room for improvement in business flexibility, the customer will be informed immediately about those value-added Vodafone solutions that might make the company’s life easier, and allow its devices to be connected into a network. Our palette contains plenty of services that would help them improve their digital maturity. Such a service is ReadyPay, a solution for SMEs for electronic payments.
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István Király BBJ: What is the most important problem that Hungarian SMEs neglect or forget when preparing for the future? I.K.: Digitalization is a competitive factor in the business sector. Digital changeover could be the key to increased effectiveness but the situation is very inconsistent. Although companies consider increasing effectiveness extremely important, only about onefifth of them regard digital development as a priority, even though real reserves can be found in this area. It is not a good idea to think of digitalization simply as a matter of effectiveness. On one hand, digitalization might decrease costs; on the other hand, there is customer experience. For the generation of the last 15 to 20 years, digital infrastructure is a completely obvious thing. They expect to reach services digitally, as many as possible. This generation holds the purchasing power, therefore companies who do not develop digital channels will fall behind. We have to mention that there is a tendency toward resisting digitalization amongst companies working for a local market, or trying to make business
in their own town or county. Even if they consider a digital changeover, they don’t necessarily know the first step. It is noted that steps towards this goal are often dismissed, even in case of low cost investments with a short time return, because the know-how is missing. The Ready Business Index helps these companies start and provides information on what area needs most attention in their own business. BBJ: What has been the most popular area of this initiative so far? I.K.: Based on our experience the Ready Business Index, with all its elements, is a unique initiative on the domestic market, providing consultation services in a very unorthodox way. Besides its consultation profile, it is also unique with regards to its marketing communication, since it points to the purchase of a service or product indirectly, offered to potential or existing customers on completion of a questionnaire. This service has been available in Hungary only since April, and already almost 4,000 companies have evaluated their digital maturity. The Ready Business Index is available in Germany, Spain, Italy, Romania, and in the United
it possible to have millions of devices communicating with each other almost without delay, these devices will become prevalent very quickly, and there will be developments in our everyday life where the presence of devices is potent. Looking at industries, the new system will have a huge effect on public transport, traffic and traffic control, and car manufacturing. BBJ: Does Vodafone plan to extend its NB-IoT parking solution, which has been trialed in Budapest, to other areas of the city, and do you have any other SmartCity projects? I.K.: We have installed 135 parking sensors in Belváros-Lipótváros, working with NB-IoT technology, currently in pilot operation and being tested continuously. With the sensor network, parking time is considerably less, therefore traffic, air pollution and noise pollution are all decreasing. Our plan is to let the public enjoy the benefits of this new technology as early as next year, and there is nothing against implementing the new parking solution in other districts of Budapest as well. Another initiative linked to SmartCity is our project with ELMÜ-ÉMÁSZ. In the framework of this, we have handed over streetlight smart poles connected into groups in Lechner Ödön fasor, in District IX. Five poles were installed, each of which has various functions, for instance Wi-Fi connection, electric car recharger, LED panel, surveillance camera, air pollution meter, etc. The poles’ internet connection is supplied by Vodafone.
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Budapest Business Journal | November 5 – November 15, 2018
5G Coalition Looking to Establish Pioneering Path for Hungary Launched last June with the intention of supporting fifth generation development in Hungary and creating a strategy for the country, the 5G Coalition (5GC) now counts 65 members from industry, academia and the government.
The more than 130 experts are organized into five working groups: strategy; network development and infrastructure; test environments, applications and trial systems and international cooperation. The members of the coalition are working on advancing the technology and helping Hungary to be among the first to adopt 5G and become a major European center of 5G development. By now, there have been around
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professional
ZSÓFIA VÉGH
Zsolt Marosvári, Nokia.
proposals from 5GC members, and Hungary is also more aware of where it stands in international comparison, Ákos Mácz, a consultant at the Digital Success Program told the Budapest Business Journal. “We are dedicating this fall to devise the country’s 5G strategy. The first draft will be ready for discussion by the end of November,” he says. To achieve the main goals set by the organization – creating conditions that allow Hungary to become a center for 5G development and have a say in setting global 5G standards – a number of conditions have to be meet. Chief amongst these is legislation that supports the development of 5G. This entails, among other things, speeding up licensing procedures and reviewing current taxation practices that impact players in the telecom sector.
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Edge Computing: The Disruption of Data Center Management The data center sector has been transformed over the last ten years. In a decade, we’ve seen mass migration into the centralized architecture of cloud computing, and now a swing towards decentralization as edge computing starts to grow. According to the experts of Schneider Electric, another wave of complexity will be hitting us soon. What does edge computing really mean? Edge computing is a way to streamline the flow of traffic from internet of things (IoT) devices and provide real-time local data analysis. Edge computing allows data produced by IoT devices to be processed closer to where they are created, instead of sending them across long routes to data centers or the cloud. Doing this computing closer to the edge of the network lets companies analyze important data in near real-time – a need of organizations across many industries, including manufacturing, healthcare, telecommunications and finance. As research firm IDC says, edge computing is a mesh network of micro data centers that process or store critical data locally and push all received data to a central data center or cloud storage repository, in a footprint of less than 100 square feet. Typically, this is done by the IoT devices transferring the data to a local device that includes compute, storage and network
connectivity in a small form factor. Data is processed at the edge, and all or a portion of it is sent to the central processing or storage repository in a corporate data center, co-location facility or IaaS cloud. How does it work in real life? Let’s see an example of edge computing: There’s an oil rig in the ocean that has thousands of sensors producing large amounts of data, most of which could be inconsequential. Perhaps this data confirm systems are working properly. This data doesn’t necessarily need to be sent over a network as soon as it is produced, so instead the local edge computing system compiles the data and sends daily reports to a central data center or cloud for long-term storage. By only sending important data over the network, the edge computing system reduces the data traversing the network. The emergence of this type of data handling represents a big shift from the
way things were a decade ago. As edge comes of age, organizations may have hundreds of edge data centers to monitor and manage. It’s going to be a tremendous data center infrastructure management challenge to make sure that distributed IT facilities are secure. A solution for the new era Micro Data Center from APC by Schneider Electric makes it fast, easy and cost effective to design, procure and deploy the physical layer of IT systems at the network edge. Some industries are constantly changing and developing, so deployment speed, reliability and security are paramount.
Designed to allow IT equipment to be pre-installed by the customer, partner or integrator before shipment, it features complete data center physical infrastructure and management software in a single self-contained and secure enclosure that includes power distribution, UPS, cooling, software, and environmental monitoring. With the on-site ready arriving the customer significantly reduces installation time and, more important, cost. The customizable, prefabricated modules are built to precise specifications in a controlled factory environment and can support IT needs in applications such as mining, oil and gas, industrial factories, military operations, and regions with high heat and humidity. Micro Data Centers form a key part of Schneider Electric’s EcoStruxure™ architecture; an open, interoperable, IoT-enabled system architecture delivering enhanced value around safety, reliability, efficiency, sustainability, and connectivity for customers.
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Budapest Business Journal | November 5 – November 15, 2018
“We are dedicating this fall to devise the country’s 5G strategy. The first draft will be ready for discussion by the end of November.” applications that will become relevant for 5G,” the expert says. The group prepared a table summarizing the most important applications with potential for Hungary from the 5G viewpoint and also what
5G
technology
will be necessary for those to work. These include automated industrial halls, selfdriving/intelligent vehicles in agriculture, drones, and sensors in homes. One application theme the company is focusing on is autonomous driving. Beyond having the technology available, a number of conditions have to be met for selfdriving to gain more ground, Marosvári says. One is legislation. “It is crucial for us to see how legislation evolves so we can plan ahead with technology,” the expert says.
Test Systems
Another element to the fast and widespread expansion of 5G is the ability to test systems and run pilot projects. These require a suitable frequency that is available long enough to experiment safely. Legislators therefore should consider making such a frequency available, Marosvári notes. Ericsson Hungary was a keen supporter of creating the 5GC in Hungary. “Previous generations of mobile networks addressed consumers predominantly for voice and SMS in 2G, web browsing in 3G, and higher-speed data and video streaming in 4G. The
transition from 4G to 5G will serve both consumers and multiple industries,” Roland Jakab, director of Ericsson Hungary told the BBJ. “The technology of 5G will bring about changes and provide opportunities that will transform every industry and we need to be prepared for that,” he adds. With a strategy ready, the introduction of some programs and having the right frequency
“The technology of 5G will bring about changes and provide opportunities that will transform every industry and we need to be prepared for that.” bands available will set a path for implementation that could speed up the expansion of services, Jakab says. The fact that everyone concerned in 5G is involved in the creation of the strategy will likely enhance commitment when it comes to the execution of the plan, he adds. 5G is more than a mobile communication technology: it encompasses several industries and will cause a real paradigm shift, those involved insist. Being able to manage these will require certain expertise. So the country needs to start the education and training of experts early, Mácz says. Hungary has recognized the importance of 5G in good time, the Nokia man notes. “Such a wide cooperation among parties is quite rare elsewhere; it is more common for professionals working together on a specific goal or development,” he explains. “Any new technology, the impact of which people are unaware of, can cause tension. Therefore when we get [close enough to deployment], we need to start raising awareness among public and industry players,” Mácz adds.
5G Growing From a Leading 4G Base In terms of its 4G networks, Hungary fares quite well; it is generally in the top five countries in global surveys. This comes down to the network service providers and suppliers, but also engineering expertise and the government’s role in frequency management, Mácz says. Two of the global leaders in 5G, Nokia and Ericsson, both have R&D centers in Hungary and the cooperation between academia and these market players also contributes to the quality of networks development in Hungary, he adds.
INSIDE VIEW
AI: Control it or be Controlled Dóra Petrányi
Márton Domokos
Partner, CEE Managing Director, Head of TMT
Senior Counsel, TMT
CMS BUDAPEST
CMS BUDAPEST
Governments and industry recognize that Artificial Intelligence (AI) is opening up transformational opportunities in all areas of human activity. At the same time, it poses unique risks: ethical, legal and regulatory challenges. These issues need to be carefully addressed in Hungary as well. The scope, speed and nature of the response will have a significant impact on the success of AI. When AI Fails to Perform One of the most important legal issues raised by the increasing use of AI technology is dealing with the damage caused by its potential failure. As a result, we will likely see an increase in AI-related disputes over the next decade. For example, a driverless car may hit a pedestrian, a drone partially operated by a pilot may crash and cause damage, AI software may diagnose the wrong medical treatment. As there are many parties involved in the operation of an AI system (data provider, designer, manufacturer, programmer, developer, user and the AI system itself), liability is difficult to establish when something goes wrong. Ownership of the Creations of AI Another challenge is that the current intellectual property laws are not well suited to deal with the situation where an AI creates potential intangible assets. Patent law generally considers the inventor as the first owner of the invention. If an autonomous AI generates an invention, there is no legal owner; the AI technology cannot own the invention, and in many cases tangible assets can only arise if there is a human creator. At this stage of development, it may not be possible to give autonomous AI the status of a legal person. Humans should have the ethical duty to take responsibility for any autonomous AI technology they commission, deploy or use. GDPR Compliance Data protection has taken center stage this year with the EU General Data Protection Regulation (GDPR). The use of AI solutions may involve the processing of personal data and engage someone’s obligations as a data controller. As in the case of determining the liability of AI, it is difficult to determine who is the controller of the personal data processed by the AI (data provider, designer, manufacturer, programmer, developer,
user or AI system itself). The data controller will need to bear in mind the data protection principles set out in the GDPR, all of which are likely to be relevant to data collection through AI, analyzing and potentially acting on the results. On the Radar of Competition Authorities Competition authorities in Europe and beyond are beginning to pay closer attention to the effects of AI and big data on competition. The U.K.’s Competition and Markets Authority is currently establishing a new Data Unit across different disciplines to increase its understanding of the impact that data, machine learning and other algorithms have on markets and people. In May 2016, the German Federal Cartel Office and the French antitrust authority published a joint report on the theories of harm connected to big data. Rise of the Internal AI Ethics Board To address the legal concerns which arise, organizations may appoint an internal AI ethics board to provide thought leadership and guidance on how to reach and exploit AI technology and associated data. For example, Microsoft established its AI and Ethics in Engineering and Research Committee. Among other steps, AETHER is investing in strategies and tools for detecting and addressing bias in AI systems and implementing new requirements established by GDPR. The Artificial Intelligence Coalition The fact that AI can be no longer pushed aside on a national level of decision making is illustrated by Hungary’s new Artificial Intelligence Coalition, which was formed in October and comprises more than 70 Hungarian and international companies, universities, scientific workshops, and professional and public administration organizations, including CMS. Its purpose is to create a cooperation platform, determine the framework of R&D and bring Hungary to the forefront of the utilization of AI. The coalition is working as part of the government’s Digital Welfare Program. Its members are involved in the development of the Hungarian AI strategy – in particular, in the analysis of social and economic impacts associated with the spread of AI, and the numerous, sometimes entirely new, legal issues.
cms.law
NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
New Frequencies
The deployment of 5G will require the use of some new frequencies; the European Union has set three pioneer bands: 700 MHz; 3.6 GHz; and 26 GHz. Beyond frequency harmonization at EU-level frequency management is the responsibility of member states: in Hungary, it is the National Media and Infocommunications Authority (NMHH) that announces auctions for tenders. The possibilities presented by the coalition and the opportunity to steer the country’s 5G strategy have ensured major buy-in from the likes of Nokia. “Since 5G will bring about significant changes, it is important that we take part in the discussion and communicate what we see as important,” Zsolt Marosvári, Nokia Hungary’s delegate to the coalition told the BBJ. This discussion between the government, other market players and future users as well as the information gained from running test projects is very valuable for all participants. What Nokia also brings to table is the company’s experience in 5G development worldwide. Marosvári heads the working group dealing with applications and trial systems. “Here we discuss the
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Budapest Business Journal | November 5 – November 15, 2018
INSIDE VIEW
The new EU Geo-Blocking Regulation and why it Affects You Dr. Bettina Kövecses
Senior Associate
BIRD & BIRD
NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
As of December 3, 2018, the EU Geo-blocking Regulation will apply. The regulation is relevant for all traders actively offering their goods or services to end-users (both B2C and B2B) in the EU, regardless of whether the trader is established in the EU or in a third country (i.e. a non-EU Member State). Geo-blocking is an important focus area of both the European Commission’s E-commerce competition law sector enquiry and the Commission’s Digital Single Market strategy. The aim of the latter is to remove barriers to online trade within the EU and so to strengthen the single market. Geo-blocking refers to practices used by online sellers that result in the denial of access to websites from other Member States. It also includes cases where access to a website is granted but customers are automatically redirected to another website. Under the Geoblocking Regulation (EU) 2018/302, geo-discrimination (such as offering different terms and conditions to customers from other Member States and/or preventing a customer from finalizing the purchase or restricting payment by a debit or credit card from a different country) will, in addition to geo-blocking, also be prohibited. This regulation does not apply to purely internal transactions within a country, i.e. where all the relevant elements of a transaction are fulfilled within a single Member State. The Regulation The Regulation targets unilateral behavior of companies that is in some way discriminatory on the basis of where a person is from, where they live or where a business is established. The rules of the regulation apply in principle to both B2C and to B2B transactions, to the extent that the latter take place on the basis of general conditions of access and the transaction is for the sole purpose of end use, hence made without the intention to re-sell, transform, process, rent or subcontract. The regulation will take effect on 3 December 2018 and be applicable in all Member States of the EU.
What Does the Regulation prohibit? Geo-blocking: A trader must not block or limit customers’ access to online interfaces because of a customer’s nationality, residence or place of establishment. Redirecting a customer without permission: A trader must seek explicit permission from a customer before redirecting a customer based on their nationality or location. Even if the customer agrees to being redirected, the trader must provide a straightforward option to return to the originally sought website. Applying different conditions: Discrimination on the grounds of nationality/residence/place of establishment is prohibited. In a nutshell a trader cannot use different terms and conditions for customers based in different Member States. This applies to: • sales of goods when the trader is based in a different Member State to the customer; • all electronically-supplied services (except access to copyright-protected content); and • physical services provided in a physical location where the trader operates provided those premises are in a different Member State to where the customer is a national, is resident or is established. It always raises interest whether this provision would prevent a trader charging extra for delivery outside a Member State. In short, where there is a clear objective justification, for example additional costs of delivering cross-border such extra charges would be compliant with the regulation. Applying different conditions of payment: Differential treatment on the basis of nationality, residence or place of establishment of the customer, or for any reasons based on the location of the payment account or payment service provider or the country in which the payment instrument is issued, is in each case prohibited. Prohibition of passive sales: The regulation further provides that any agreement which requires traders to act in violation of the regulations in relation to passive sales (i.e. sales where the trader does not actively solicit the customer’s business) is automatically void. Are there any exceptions? The regulation is broad and there are few carve-outs except for where required by law. There are certain further exceptions, including transport services, audio-visual services, gambling activities and healthcare services.
www.twobirds.com www.twobirdsideas.hu
Telecom ///briefs Vodafone Performs Hungary’s 1st 5G Live Video Broadcast
According to research by OpenSignal, Hungary offers the second-best option for viewing online videos on smartphones, with only Czech Republic achieving a higher score. The research involved 69 countries in total, of which only 11 achieved a “very good” rating. Hungary achieved a total score of 67.89 points out of a possible 100, a score high enough to beat countries such as Norway, which achieved 67.41 points. The networks of Germany, Romania, Poland and France were all given a sub-60 score, consigning them to mid-table. “I wholeheartedly agree with the creators of the report on the view that it’s not the speed that is the most important for our clients, but the quality of the online experience, when they are streaming, chatting, and using social media,” commented Jan Hanuš, CEO of Telenor Hungary. The report’s authors also measured the average 3G/4G download speed, with Hungary achieving seventh place with a result of 31.93 Mbps
Vodafone performed an online live video broadcast via a 5G trial network for the first time in Hungary at the Internet Hungary conference in late September. “Today we brought the future closer. The future we call Gigabit Hungary,” said Amanda Nelson, CEO of Vodafone Hungary, at the live 5G network demo. “Vodafone will continue to take an ever-larger share in turning the country into one of the top five most competitive economies within the European Union, and to this end dynamically continues with its Hungarian network developments.” The Vodafone Group has been experimenting with 5G-related developments and tests, with Vodafone Spain becoming the first operator succeeding in the establishment of a 5G call in February. Since that call, Vodafone has been involved in several trials in markets including Italy, the U.K. and Germany. Budapest to Host ITU According to Vodafone, 5G will allow Telecom World in 2019 live broadcasting of HD-quality videos The ITU Telecom World conference will not only at sporting events, but also for ambulances, allowing hospital diagnostics be held in Budapest in 2019, vg.hu has reported. ITU Telecom World is the global to take place during the patient’s journey platform for governments, corporates and to the hospital. tech SMEs to accelerate ICT innovation for economic growth and social good. The Hungary Boasts World’s exhibition brings together companies and Second-best Mobile countries, investors, innovators, projects Video Network and decision-makers, with industry stands, Hungary is the second-best country in national pavilions, thematic pavilions and the world for watching online videos on a SMEs from around the world. Hungary is phone due to the availability of rapid 4G happy to undertake the organization of the networks and high-quality smartphone conference, secretary of state Péter Sztáray video services, according to a press release said, because it will help the government sent to the Budapest Business Journal strengthen its commitment to the digital by U.K.-based OpenSignal, a company innovation ecosystem and to establish specializing in wireless coverage mapping. partnerships, vg.hu reported.
Vodafone Presents ‘The Future is Exciting’ Award Vodafone Hungary presented Hungarian physicist Albert-László Barabási with its “The Future is Exciting” award, in recognition of his work on network theory. The physicist is best known for his network theory-related research, authoring several publications such as “Linked: The New Science of Networks.” The award was presented by Vodafone Hungary CEO Amanda Nelson. “As the CEO of a company operating in a network-based industry, I am especially pleased that on the very first occasion I can hand over ‘The Future is Exciting’ award to a Hungarian scientist who created something of global significance in network research,” she said. Vodafone said in a press release introduced the award to recognize the work of “role models who contributed to the advancement of
the world with their outstanding scientific life achievements, allowing us to look forward to the future with real excitement.”
Vodafone Hungary CEO Amanda Nelson with award-winner Albert-László Barabási
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Budapest Business Journal | November 5 – November 15, 2018
Special Report | 19
Internet service providers Ranked by total net revenue (HUF mln) in 2017
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2
vodaFone magyaRoRszág mobil távközlési zRt.
172,000
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telenoR magyaRoRszág zRt.
4
upC magyaRoRszág kFt.
5
digi távközlési és szolgáltató kFt.
46,248
Ÿ
Ÿ
✓
✓
✓
–
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6
invitel távközlési zRt.
26,524
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Ÿ
✓
–
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7
inviteCH megoldások zRt.
8
netFone teleCom kFt.
1,416
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9
aCe teleCom kFt.
1,340
Ÿ
3,695
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10
dRávanet zRt.
417
298
7,136
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www.telekom.hu
www.vodafone.hu
www.telenor.hu
www.upc.hu
www.digi.hu
www.invitel.hu
www.invitech.hu
www.netfone.hu
www.acetelecom.hu
www.dravanet.hu
158,408
72,909
23,168
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1991 9,230 (March 31, 2018)
Free float (40.64), other (0.15) Deutsche Telekom AG (59.21)
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1999 1,703
– Vodafone Europe B.V. (100)
amanda nelson Zoltán Gelencsér Anita Carra
1095 Budapest, Lechner Ödön fasor 6. (1) 288 4288 (1) 288 3200 sajto@vodafone.com
✓
1993 1,093
– PPF-group (100)
Jan Hanus Martin Oravec Mohamed ElSayad
2045 Törökbálint, Pannon út 1. (20) 930-4000 (20) 930-4100 –
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1994 913
– UPC CEE Holding B.V. (100)
Robert-daniel Redeleanu Ádám Endre Jakabos –
1095 Budapest, Soroksári út 30–34. (1) 456-2600 (1) 216-0058 upc@upc.hu
2004 1,961
– RCS&RDS S.A. (100)
dragos spataru – Gergely Cserép
1134 Budapest, Váci út 35. (1) 707-0005 (1) 708-7009 ugyfelszolgalat@ digikabel.hu
✓
1995 577
DIGI Távközlési és Szolgáltató Kft. (100) –
dragos spataru, Ryszka sambor – István Iski
1134 Budapest, Váci út 37. (1) 801-1500 (1) 801-1501 info@invitel.co.hu
Ÿ
2016 575
China CEE Fund (99.99), other (0.01) –
david blunck Gerald Grace Csaba Bőthe
2040 Budaörs, Edison utca 4. (1) 801-1500 (1) 801-4424 vip@invitech.hu
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–
2012 40
NETFONE-INVEST Kft. (Ÿ), Zsolt Wilhelm (Ÿ) Scanwinavia AB (Ÿ)
zsolt Wilhelm Zsolt Wilhelm Lajos Varga
8900 Zalaegerszeg, Nefeljcs utca 2/A (1) 878-1814 (1) 325-5675 info@netfone.hu
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1997 41
Individuals (68), ThreeF Kft. (32) –
attila Farmosi, gábor varga Gábor Varga Viktória Krall
1037 Budapest, Zay utca 3. (1) 437-0590 (1) 437-0599 office@acetelecom.hu
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1996 11
Pallas Office Kft. (81.42), other (18.58) –
zsombor attila papp Rezső Dunay Csaba Csizmadia
7624 Pécs, Budai Nagy Antal utca 1. (80) 811-118 (1) 890-0891 info@dravanet.hu
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top loCal exeCutive CFo maRketing diReCtoR
addRess pHone Fax email
tibor Rékasi János Szabó Zoltán Pereszlényi
1013 Budapest, Krisztina körút 55. (1) 458-0000 – –
4g
mobile
yeaR establisHed no. oF Full-time employees on July 1, 2018
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miCRoWave
5,297,842 (March 31, 2018)
oWneRsHip (%) HungaRian non-HungaRian
adsl
0
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610,851
leased line
no. oF subsCRibeRs on July 1, 2018
magyaR telekom nyRt.
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modem
net Revenue FRom inteRnet seRviCes in 2017 (HuF mln)
1
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total net Revenue in 2017 (HuF mln)
means oF aCCess
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Special Report
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Budapest Business Journal | November 5 – November 15, 2018
Telecommunications equipment manufacturers
samsung eleCtRoniCs magyaR ZRt.
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no. oF Full-time employees on July 1, 2017
otHeR teleCom and netWoRk equipment
industRy-speCiFiC solution
message Handling system
CtC/CRm solution
voip
vsat system
Call/ContaCt CenteR
business pHone system/ pbx
Fax maCHines
ansWeRing maCHines
isdn pHones
analog pHones
tRi-band mobile pHones
dual band mobile pHones (900/1800 mHZ)
types oF equipment
1778
yeaR establisHed
1
Company Website
total net Revenue in 2017 (HuF mln)
Rank
Ranked by total net revenue (HUF mln) in 2017
oWneRsHip (%) HungaRian non-HungaRian
top loCal exeCutive CFo maRketing diReCtoR
addRess pHone Fax email
1989
(100) –
Hwanseog Choi Sang-Woo Lim, Witsch Gerda –
5126 Jászfényszaru, Samsung tér 1. (80) 726-7864 (1) 453-1103 –
2007
– Foxteq Integration Inc. (100)
péter tálos Gabriella Pistauer –
2900 Komárom, Bánki Donát utca 1. (34) 886-069 (70) 716-3025 komarom@emea. foxconn.com
1992
– LG Electronics European Holding B.V. (100)
bum seop lee – –
1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 (1) 455-6066 kapcsolat@lge.com
2005
– Huawei Technologies Cooperatief U.A. (100)
li Jian, shi yanli, tang xiaoming – –
1138 Budapest, Népfürdő utca 22. (1) 555-2300 (1) 555-8989 peter.hegedus@ huawei.com
– Telefonaktiebolaget LM Ericsson (100)
gábor Éry, edina Rózsa, bernadette mária bohács – –
1097 Budapest, Könyves Kálmán körút 11/B (1) 437-7100 (1) 437-7467 valaszolunk@ ericsson.com
www.samsung.com
pCe paRagon solutions kFt. 2
3
www.foxconn.com
lg eleCtRoniCs magyaR keReskedelmi kFt.
304,168
109,128
✓
✓
–
–
–
–
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–
–
–
–
–
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–
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–
–
–
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–
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–
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–
214
91
www.lg.hu
4
HuaWei teCHnologies HungaRy kFt.
57,720
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
Ÿ
–
168
www.huawei.hu
5
eRiCsson magyaRoRsZág kFt. www.ericsson.com
6
nokia solutions and netWoRks kFt.
7
neC easteRn euRope kFt.
8
avaya magyaRoRsZág kFt.
www.nokia.com
www.nec.com
www.avaya.com
9
CisCo systems magyaRoRsZág kFt.
10
moHanet mobilsystems ZRt.
www.cisco.hu
www.mohanet.hu
panasoniC maRketing euRope NR gmbH soutH-east euRope Fióktelep www.panasonic.com
47,099
32,071
6,754
4,826
2,832
683
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Ÿ
Ÿ
–
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1638
2291
25
2007
– Nokia Solutions and Networks B.V. (100)
béla Zagyva Erzsébet Tóth Rita Sebők
1083 Budapest, Bókay János utca 36-42. (20) 977-7797 (1) 216-9715 nokia.hungary@ nokia.com
2002
– NEC Europe Ltd. (100)
lászló magyar, edit Hontiné Cserháti – –
1142 Budapest, Ungvár utca 64–66. (1) 814-6424 (1) 321-8202 eszter.nagy@ emea.nec.com
1990
– Sierra Communications Internationa LLC (99.99), AVAYA Emea (0.01)
györgy gombár, massimo palermo, andrás turai – –
1062 Budapest, Váci út 1–3/B (1) 238-8200 (1) 359-0583 ikovari@avaya.com
evan sloves, ottó Zoltán dalos – –
1123 Budapest, Csörsz utca 45. (1) 225-4600 (1) 225-4611 –
–
–
✓
Desktop UC system with messenger and telephone functions, videoconference and telepresence systems
46
1997
– Cisco Systems Inc. (Ÿ), Cisco Systems Management B.V. (Ÿ)
✓
–
23
2006
Zoltán Havasi (100) –
Zoltán Havasi Norbert Szabó –
1152 Budapest, Telek utca 7–9. (1) 271-1141 – info@mohanet.com
2010
– Laurent Abadie (100)
takashi Furumoto – –
1117 Budapest, Alíz utca 4. (1) 382-6060 (1) 382-6066 reception.psee@ eu.panasonic.com
Ÿ
–
104
1990
28
4
www.bbj.hu
Budapest Business Journal | November 5 – November 15, 2018
Socialite
so I have no idea where the monster in the net came from. I was reminded of the last line of Roman Polanski’s 1974 movie “Chinatown”. Jake, the private detective played by Jack Nicholson, is told: “Forget it, Jake, it’s Chinatown.”
Does This bus go to Chinatown? Much as I’ve grown to love Hungarian food, I began to hunger for something different around a year or so ago. Budapest has many great culinary delights, but a wide choice of authentic ethnic restaurants is not one of them. DAVID HOLZER
I’m a great fan of good Chinese food especially but none of the restaurants I’ve seen on my wanderings around Budapest look remotely promising. And there are few things worse than bad Chinese food. So, when a Chinese friend of mine and her boyfriend came to visit from London earlier this year, the last thing in the world on my mind was taking her to a Chinese restaurant. I wish I’d known then about the Monori Center out in Kőbánya, about 30 minutes by bus from Deák Ferenc tér. Kőbánya is Budapest’s District X – which sounds like it should be the title of a 1940s film noir or a sci-fi movie set in a dystopian future. Believe me, Kőbánya would make the perfect location. If I hadn’t become obsessed by the desire to eat real, good Chinese food, there’s no way I would have taken the number nine bus out to Kőbánya in the eastern part of the city. Apart from the delights that awaited me at the end of my journey, I’m glad I did.
vast edifice – a former locomotive factory, it turns out. But I was on my way to the Monori Center and this wasn’t it.
The Right Place
If you follow my lead out to the Monori Center you need to get off the number nine at Kőbánya alsó vasútállomás. Trust me, even though you’ll be next to a large patch of waste ground in what looks like the middle of nowhere, you’re in the right place. At least one Chinese-looking person will get off the bus with you. Follow them – discreetly, of course – and you should end up in the Monori Center. If you’re deeply unlucky and there are no Chinese people around, walk back down Kőbánya street and turn left when you get to Monori utca. Opposite the fantasticallynamed Milky Way hotel is HeHe, the restaurant I suggest you try.
HeHe is everything I hoped a Chinese restaurant at Monori Center would be. From the outside, it’s nothing special. Inside, it’s scruffy and you might say refreshingly unpretentious. Pride of place on the counter was taken up by a plate of slices of smoked pig head. There was one of those gold waving cats. No Chinese restaurant or store is complete without a Maneki Neko or “beckoning cat”, waving good fortune into the establishment for its owners. Beckoning cats were originally Japanese. I wonder if that’s what inspired Hello Kitty.
Good Signs
It was lunchtime and the restaurant was filled with Chinese people – always a good sign – and a few Hungarians. There were no hipster types around. An excellent sign. I was shown upstairs by a young girl wearing an olive-green face mask that matched her short skirt. That wasn’t such a great sign, but it was certainly intriguing. The HeHe menu is not large and the pictures of the dishes don’t help very much. I ordered tofu with some kind of black mushroom, and egg rice. The waitress marched off. I half-expected her to reappear with a giant syringe. As I waited for my food, a man came out of the kitchen carrying a large fishing net with a wooden frame and trotted downstairs. He came back a few minutes later carrying something fishy, alive and writhing inside. The restaurant didn’t have a fish tank,
There are actually two Chinatowns in Budapest. Neither is marked by the ornate pagoda-gateways and hanging lanterns that signpost the entrance to a touristsavvy Chinatown like the one in Central London, so you need to keep your eyes open. I didn’t have long to wait for my tofu and rice. It was freshly cooked, steaming and delicious. There was also plenty of it – enough for two people. Given that it cost HUF 2,800 (about EUR 8.60), this was reasonably good value for money. Perhaps not surprisingly, there didn’t appear to be any prices on the menu. Next time, I’ll get to the HeHe in time to breakfast on congee, hot rice soup served with pork, mushrooms and shredded scallions, and youtiao breadsticks. Apparently, they also do a good breakfast at the Hong Kong Bufé on nearby Jegenye utca.
Take the number nine bus to Monori Center from Deák Ferenc or Kálvin tér and remember to get off at Kőbánya alsó vasútállomás. You can also take the 28 tram from Blaha Lujza tér to Mázsa utca.
A Different Budapest
I saw a whole different side of Budapest. The bus took me past abandoned factories, battered warehouses and over patches of cobbled street; the scar tissue of the past. I have no idea what it’s actually like to live in these stubbed out streets or drab tower blocks. I’m also not saying that they’re any more authentic than other neighborhoods, but this was the kind of journey into the city’s ripped underside that I love. If I was making a movie set in Budapest, I couldn’t think of anywhere better for a lowlife car chase. There are actually two Chinatowns in Budapest. Neither is marked by the ornate pagoda-gateways and hanging lanterns that signpost the entrance to a tourist-savvy Chinatown like the one in Central London, so you need to keep your eyes open. I followed a Chinese dude off the bus when it stopped at what looked like a giant factory on Kőbánya utca and I started to see grubby ice-cream colored storefronts with Chinese lettering. This was Józsefvárosi Piac (Josephtown Market, also called Euro Square). The wrong Chinatown. Don’t get me wrong. There may well have been great restaurants inside the
Women from the Budapest Chinese community perform traditional dance on February 17 this year, celebrating Chinese New Year in the Budapest China Mart shopping mall at Szentmihályi út 171, District XV. But can you find the right Chinatown in District X? Photo by Zoltan Tarlacz/Shutterstock.com.
22 | 4
Socialite
www.bbj.hu
Budapest Business Journal | November 5 – November 15, 2018
Tales of Basalt and the Carpathian Basin We wine geeks get our kicks from scarce grapes of which tiny amounts are grown, but sometimes so excited are we that we forget to consider whether the grape in question is any good or not. In fact, could it be a case of natural selection, whereby the survival of the fittest and indeed tastiest has left some grapes struggling for air and their share of the vineyard? ROBERT SMYTH
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The Mitiszol? (What are you Drinking?) wine tasting event will be held at the Millenáris Hall “D” in District II on November 17, between noon and 7 p.m. This brings us to Kéknyelű, which is grown almost exclusively in the black volcanic basalt of Badacsony, on Lake Balaton’s southern shore. Accounting for just 44 hectares, it is nevertheless considered a flagship of Badacsony. At the Bormedence 2018 event held at the Hungarian National Museum on October 27, John Szabo, author of Volcanic Wines: Salt, Grit and Power, held a masterclass on Kéknyelű from Badacsony,
which also included a couple of other grapes connected with it. The Canadian, who has Hungarian roots and is also involved in wine making in Eger, is a master sommelier. He explained the effects of volcanic soil on the wine in the glass as imparting mouth-watering freshness and saltiness, with the flavors more savory than fruity. While I’m a self-confessed cynic about the use of the word minerality, which is so oft loosely banded about, I’ve certainly detected a saline streak running through Badacsony wines, including the wines presented by Szabo. Kéknyelű is a grape that doesn’t show much when it’s young – it tends to be painstakingly neutral on the nose with a touch of citrus and aggressively acidic on the palate, as several examples showed. [An exception was Laposa Birtok’s Kéknyelű 2017, which managed to get a good smack of pear and pineapple alongside a hint of candlewax]. However, give the wine time and your patience will be rewarded.
A Grape Worth Keeping
These neutral grapes are usually better articulators of terroir than aromatic ones. Indeed, the complexity coming through on Szeremley’s Kéknyelű 2006, with its floral, baked fruit, nutty aromas and dense, long palate with structure-building acidity, certainly had a strong sense of place. It is a bargain for around HUF 3,800 from In Vino Veritas. I’d go so far to say that it hasn’t yet reached its peak. The 1996 Magnum, however, was quite tired with the acidity having dropped off and making the wine flabby rather than tense. On balance, it’s a grape worth keeping, as long as you do just that – give it a chance to capture that richness. In that respect it’s a bit like Hunter Valley Semillon from New South Wales, Australia, which also starts out as thin and sharp but ramps it up over a decade or two. Kéknyelű’s future doesn’t look particularly secure, though. Szabo lamented the fact that it is not even a recommended grape for planting in Badacsony, meaning that no subsidies are available for planting it. This late-ripening, fully female grape that makes wines that be described as thoroughly masculine needs to be pollinated by another grape variety – a deed long carried out by Budai Zöld. The latter grape usually makes
light floral wines (Válibor’s is the pick of this variety for me while Folly Arborétum’s is also good), although Rózsakő – a crossing of Budai Zöld and Kéknyelű created by Ferenc Király in 1957 for propagating Kéknyelű shows good potential. Wine was positively flowing at the Bormedence 2018 tasting, which celebrated the wines of the Carpathian Basin and particularly those made by Hungarians, including those who strut their vinous stuff beyond Hungary’s present-day borders. While some kind of patriotic-cumnationalist theme could be felt fermenting behind the scenes, the event passed off peacefully – and a certain Romanian red wine grape stole the show for some of us. Imre Szakacs-Orha, an ethnic Hungarian himself, held an exciting masterclass on the Fetească Neagră grape, known in Hungary as Fekete Leányka, but it’s difficult to find. He showed a broad selection of wines made exclusively from the grape, coming from far and wide across Romania. This ancient variety is thought to originate from around the village of Uricani in the Prut River valley in Iasi county, in the historical region of Moldavia. One of the most exciting offerings, for my money, came from an ethnic Magyar – Géza Balla, with his Sziklabor 2015. It was elegant and smooth but also deep, spicy and earthy with delicious black fruit. I recall visiting the winery, which is located in the Minis (Ménes in Hungarian) wine region, near Arad, not far from the Hungarian border, when Balla was waiting for his first harvest of the grape. It has turned out to be a great decision to plant it in the graniteand diorite-based soils. From Hungary, Páger Pince’s 2017 from the Gereg vineyard in Gyöngyöspata in Mátra was promising, if a tad on the thin side.
Dry November? Not Likely It will be a considerable challenge to negotiate a “dry November” with several epic tastings in the offing. The annual Mitiszol? (literally “What are you drinking?”) event, held in the suitably contemporary setting of Millenáris on November 17, showcases so-called “natural wines”, one of the hottest topics in the world of wine. These are wines made without the use of pesticides and herbicides and such artificial products, with natural treatments like copper, sulfur and orange oil used to spray the vines. Last year’s event served up plenty of unique and sometimes outstanding wines. Nevertheless, a few twists of nature brought about some highly unconventional and unpleasant turns to the flavors, which is indeed what can happen in this minimalintervention, back to basics, school of winemaking. For the second year running, Mitiszol? clashes with the Bordói November Nagykóstoló (Grand tasting), which will be held at the Corinthia Hotel Budapest. Of the Bordeaux varieties, it is Cabernet Franc which appears most at home in Hungary. “Franc & Franc”, which will also feature Cab Franc from the New World, will be held in the grape’s Hungarian epicenter of Villány November 23-24.
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