Business Review Issue 11/2012 April 2 - 8

Interview: Manuela Furdui, managing partner of Finexpert, tells BR that the relatively low absorption rate of state aid lies in the lack of publicity surrounding the financing scheme and absence of major investments in Romania »page 9

ROMANIA’S PREMIERE BUSINESS WEEKLY

Local agencies are setting up specialized divisions to cater to the demand for content-driven, social media-related PR services »page 8

April 2 - 8, 2012 / VOLUME 16, NUMBER 11

HOTEL MARKET

HIT BADLY BY THE GENERAL ECONOMIC DIP, INDEPENDENT OPERATORS FACE HARD COMPETITION FROM BIG CHAINS, WHO IN TURN HAVE DIFFICULTY IN FINDING PREMISES »PAGE 6

A NEW VOICE FOR PR

GREEK INVESTMENT

RESTAURANT REVIEW

FILM REVIEW

Island of hope

Novi Aquarium

The Source

Greek investors active locally are trying to move beyond their country’s difficulties and shore up their interests in Romania » page 12

Our food critic finds fish galore at this elegant eatery, which has swum to a new location on Calea Floreasca » page 13

Local-born director Radu Mihaileanu’s latest film is a long way from Romanian New Wave. BR’s critic enjoys an inspiring fable » page 14

www.business-review.ro Business Review | April 2 -8, 2012

NEWS 3

NEWS in brief AGRICULTURE Agricover reaps 48 percent turnover surge in 2011 Romanian agribusiness company Agricover Group has reported total revenues of RON 920 million (approximately EUR 217.5 million) for 2011, up 48 percent y-o-y. The figure represents a four-fold increase on its 2007 results.

The group’s EBITDA amounted to over RON 44 million (about EUR 10.4 million), up 40 percent y-o-y. For 2012, the company is targeting a 29 percent turnover increase, said Agricover’s CEO.

ENERGY Transelectrica SPO 59 percent oversubscribed State-owned grid operator Transelectrica has passed its stock exchange test with flying colors, as its 15 percent secondary public offering (SPO) was oversubscribed by 58.8 percent, according to the latest available data from the Bucharest Stock Exchange (BSE). The SPO started on March 14 and was completed on March 27 at 17:00, when the oversubscription rate was 35 percent, but brokers also received offers the following day, taking the final subscription to 159 percent.

MACRO Romania wants to absorb EUR 6 bln in 2012 Romania is aiming to attract three times more European funds this year than it absorbed in its first five years since accession to the European Union, said Leonard Orban, minister of European affairs. “We wish to absorb European funds of a minimum of EUR 6 billion in 2012, made up of EUR 2.5 billion from funds allocated to agriculture and EUR 3.5 billion from cohesion funds,” said Orban. By September 2011, Romania had managed to absorb EUR 1.2 billion.

Unemployment rate inches up to 7.7 percent in Q4 2011 The number of unemployed Romanians increased in the last quarter of 2011, reveal data released last week by the National Institute for Statistics (INS). Romania’s unemployment rate stood at 7.7 percent in Q4 2011, up 0.5 percent compared to the previous quarter and 0.4 percent y-o-y. The employment rate for people aged between 15 and 64 years old was 57.9 percent, down 1.2 percent from Q3 2011 and unchanged compared to the same period of the previous year.

Eurostat: Romanians are ‘least computer literate’ in Europe Romania was the worst placed country in a Eurostat ranking of how widespread computer use is across the European population, as half of Romanians aged between 16 and 74 have nev-

er used a computer. The gap separating Romania from other countries is wide, with the average European computer use at 78 percent. The best performing countries are Sweden on 96 percent, Denmark and the Netherlands on 94 percent, Finland with 93 percent and Great Britain on 91 percent.

Romania’s budget deficit reaches 0.4 percent of GDP February’s budgetary deficit reached EUR 620 million, representing 0.44 percent of GDP, says the Ministry of Public Finance. Revenue to the consolidated budget was up by 6.6 percent y-o-y to EUR 6.7 billion in February, a growth of 0.1 percent in GDP. Fiscal revenue gained 12.7 percent y-o-y in February, mainly due to VAT revenue that was up 9.4 percent, excises which hiked 9.9 percent and tax income which rose by 26 percent against the same month of 2011. Additional revenue of EUR 48 million for healthcare expenditure was registered last month.

3Q Oana Iliescu

WEEK in numbers

5.25 percent is the new interest rate set by Romania’s Central Bank last week, an all time low, down from the current 5.50 percent American House at the initiative of Nicu Vasilescu, who is now president.

The latter has offices in Shanghai and Beijing. Members of the NGO include Chinese restaurants, large Chinese companies such as ZTE and Huawei, plus Romanian firms such as Murfatlar, Vincom, Alexandrion and Niro Group.

INVESTMENTS MONEY Symmetrica invests EUR 2.1 million in plant

Raiffeisen Bank net profit rose to EUR 96 mln in 2011

Local pavers and vibropressed borders manufacturer Symmetrica has opened its fourth production unit in Prejmer, Brasov county. The new factory is a EUR 2.1 million greenfield investment. Some 30 percent of the money came from the company’s own funds while the rest was through a bank loan, said Sebastian Bobu, managing director of Symmetrica. According to him the company has invested EUR 14.4 million in the past 18 years in setting up its other three factories which are located in Veresti (Suceava county), Podu Iloaiei (Iasi county) and Bolintin Vale (near Bucharest).

The net profit of Austrian Raiffeisen Bank grew by 16 percent y-o-y in 2011, driven by corporate lending and increased retail deposits. The lender’s assets rose by 8 percent y-o-y to EUR 5.5 billion. Operating expenses were up 3 percent y-o-y due to an increased contribution to the deposits guarantee fund and the 5 percent VAT hike, but additional revenue lowered the cost/revenue ratio to 63.1 percent last year.

Canadian firm acquires Cupru Min for EUR 200 mln

Swedish fashion retailer H&M has announced it will open its first store in Arad on April 5. The 1,600-sqm outlet will be located in the Atrium Arad shopping center. H&M has 11 shops in Romania, six of which are in Bucharest.

The first local H&M store was opened last year in March in AFI Palace Cotroceni. The Swedish retailer reported sales of EUR 37.3 million (VAT included) between March and November last year from its local units.

Roman Copper Corp, a company controlled by Toronto-based investment boutique Bayfront Capital Partners, has fully acquired state-owned mining company Cupru Min, in an open-cry auction for EUR 200.7 million, from a starting price of EUR 57.4 million. The auction was organized by the Romanian Office of State Ownership and Privatization in Industry (OPSPI) on March 26. Dutch Dundee Holding and Australian Oz Minerals were also bidders for Cupru Min, which owns the Rosia Poieni mine, with a copper deposit of around 1 billion tons.

NGO Romanian-Chinese House inaugurated this week The Romanian-Chinese House, a nongovernmental association which gathers under the same umbrella more than 40 Chinese related organizations in Romania, from domains such as business, sport, culture and education, was inaugurated last week. The NGO, headquartered at 11 Lascar Catargiu Street, was based on the model of the Chinese-

RETAIL H&M to open store in Arad this week

TRAINING Ascendis estimates EUR 4.5 mln of revenues this year Training and consultancy firm Ascendis estimates it will post a turnover in excess of EUR 4.5 million (RON 20 million) for this year, 10 percent up on 2011, due to the diversification of its portfolio and growth in demand for sales training. The cumulated revenues of the Ascendis group of companies exceeded EUR 4.1 million (RON 18 million last year), 31 percent up on the previous year.

managing director of DTZ Echinox How attractive is the Romanian real estate market to new investors from a regional perspective?

The signals we’re getting lead us to believe that on the short and medium term, at least, we shouldn’t expect new players to enter the market. The unstable business environment and the challenges investors face in their countries of origin and on most European markets where they have operations continue to keep many of them away from Romania. The market remains volatile and the transactions that are being closed are mainly atypical.

What do you think will be the most attractive real estate segments this year?

We believe that retail will remain one of the most attractive segments of the market this year, despite the significant reduction in deliveries of new shopping centers. Hypermarket and DIY retailers continue to expand and will generate new transactions and new real estate developments. Given the lack of new projects, the need to expand will drive the other retailers to turn to street spaces – such as Bucharest’s old center which has so far been dominated by restaurants and cafes – and to existing shopping centers which will undergo reorganization and repositioning in order to accommodate this demand.

What turnover did DTZ Echinox report last year and where do you see growth coming from this year?

The revenues reported by DTZ Echinox last year amount to approximately EUR 3 million, up 10 percent y-o-y. About half of this comes from the retail segment where we are the exclusive or co-exclusive representatives of ten shopping centers, totaling more than 400,000 sqm. We also manage four shopping centers that together cover 163,500 sqm. In 2011 we closed transactions involving 40,000 leasable sqm.

Since the market plummeted in 2009 we have managed to adapt and reach a stable cost structure which has ensured us profit in the past three years. Between 2009 and 2011 we reported a turnover increase of about 10 percent each year and for 2012 we estimate a similar growth pace. simona.bazavan@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

4 NEWS EVENTS

BUSINESS AGENDA April 3 17:00 ViitorPlus Association organizes a press conference to mark the launch of an afforestation program at Carturesti Verona bookshop.

By invitation only.

April 4 09:30 CFA Romania organizes a conference on the economic relations between China and CEE at Radisson Blu Hotel.

Jim Rogers, famous trader and emerging markets investor, will attend.

By invitation only.

10:30 Maguay organizes an event to mark the launch of a new range of servers at Radisson Blu Hotel.

By invitation only.

18:30 ∫EVENT BR organizes the fourth edition of the Greek Investors Forum at Willbrook Platinum.

By invitation only.

Find out more at http://business-review.ro/br-events/ April 4 11:00 E-Boda organizes an event to mark the launch of a new tablet at Charme restaurant & lounge.

By invitation only.

19:00 Funai organizes an event to mark its entrance on the Romanian market at Madame Pogany.

By invitation only.

TELECOM

iStyle opens largest Apple Tony Blair gives speech products store in CEE in Bucharest Tony Blair, the former British prime minister, used a speech in Bucharest last week to call for European unity as a way to maintain European countries’ power.

The politician, who spent a decade as prime minister of the UK, was in town to address the conference Europe’s Future in the New World Order, organized by the Multimedia Foundation for Local Democracy and the Center for American Progress.

The event, held at the Romanian-American University, was attended by a phalanx of Romanian political figures, including Ion Iliescu and Calin Popescu-Tariceanu. Blair was introduced by PSD president Victor Ponta.

The former PM argued for greater cooperation and common policy in Europe.

While in the 20th century the European project had been about preserving peace, he said, it was now about power in a rapidly changing world where the fast-growing BRIC economies will hold a greater sway. He referred to his 1999 visit to Bucharest when, Blair said, he advocated strongly for Romania’s EU membership.

The Briton also touched on the issues of the single currency, the phone hacking scandal in the UK, the Middle East, religion, technology and his style of politics and political philosophy. After his speech he answered questions from journalist Emil Hurezeanu, but the floor was not thrown open for audience questions. ∫ Debbie Stowe

premium reseller in Romania, has a total surface of 260 sqm of which 160 sqm is retail space. The outlet includes an area especially created for training and presentations for Apple customers. “We expect around 20,000 visitors per month,” said Popeneciu.

The store in Baneasa sells all the Apple products available in Romania: Macs, iPod, iPhone 4 and iPads. iStyle posted sales of EUR 6.2 million last year, which represented a 27 percent growth compared to 2010. This year, the forecast is a 15 percent hike.

The retailer has four outlets at the moment. Three of these are in Bucharestone outlet located on 4 Natiunilor Unite St., one in AFI Cotroceni and the store in Baneasa. The company also has a store in Cluj and at the moment iStyle is trying to find a bigger location for the Cluj outlet.

“We are looking for new opening opportunities in Timisoara and Constanta,” says Popeneciu.

The best sold Apple products in iStyle are MacBook Air 13-inch, the iPad and iPhone gadgets. This time, the company introduced the new iPad on the Romanian market at the same time as online retailers. “This put a pressure on the prices because they usually set a price that was approximately EUR 100 higher than the recommended sale price. Since we introduced the new iPad at the same time, they had to take the prices down,” says Popeneciu. “We estimate we will sell on average three new iPad gadgets a day,” she told BR. ∫ Otilia Haraga

Big Apple: the store is the largest in CEE

T

he largest outlet selling Apple products in Central and Eastern Europe opened on Friday in Baneasa Shopping City mall in Bucharest. iStyle Baneasa store was created following an investment of EUR 250,000 and meets the latest Apple standards. “iStyle has been in a constant process of looking for new locations. This is the only appropriate location that Baneasa Shopping City could provide to fit the Apple standards for an Apple Premium Reseller. Initially, we were looking for something smaller, pretty much the same as the space we already have at AFI Cotroceni, around 100 sqm,” Dora Popeneciu, general manager of iStyle Romania, told BR. The shop opened by iStyle, Apple’s

WINE

Sour grapes as Murfatlar enters insolvency

April 10 10:00 The Association of Mineral Wool Producers and Importers organizes a press conference to mark the official launch of the association at Ramada Nord Bucharest Hotel.

By invitation only.

April 24 09:00 ICAP Romania and CYCLE European organize a conference on credit risk at Radisson Blu Hotel.

By invitation only. ∫EVENT BR organizes the fourth edition of the German Investors Forum. Find out more at http://businessreview.ro/br-events/

Courtesy of Murfatlar

April 19 ∫EVENT BR organizes the third edition of Focus on Renewable Energy at Howard Johnson Grand Plaza Hotel.

By invitation only.

Find out more at http://business-review.ro/br-events/

Withered on the vine: Romania’s largest winemaker has bit hit by the economic problems

M

urfatlar, the largest wine producer in Romania, entered voluntary insolvency last week after its request was approved by the Constanta Court. The announcement came as a surprise but Murfatlar representatives said that the step was necessary due to cash flow problems.

“The main consequence of the slow financial recovery rate – a general characteristic of the business environment at present – is that it makes it difficult to pay off outstanding debts,” said Cosmin

Popescu, the company’s GM. The winemaker’s main shareholders are local businessmen Emanuel Corneliu Dobronauteanu and Ion Serban Dobronauteanu. Murfatlar is not their first business to go insolvent. Among other companies, the two brothers own the Biborteni mineral water business and Principal Company, which used to make Salonta and Matache Macelaru meat products, both of which also went bus.

Popescu said the insolvency procedure will not affect the winemaker’s objectives

and development plans. “Murfatlar Romania will develop its existing business lines, counting both on the development of the Crama Murfatlar network of wine stores, as well as the launch of new products,” he added.

After reporting RON 140 million (approximately EUR 33 million) of sales in 2010, Murfatlar saw its turnover hike to RON 180 million (approximately EUR 42.5 million) last year. The growth came from expanding the network of wine stores to 125 outlets.

This year, too, the company predicts its sales will go up. “We hope to surpass the RON 200 million benchmark. The growth will come from the maturing of the Crama Murfatlar network but also from another project which will bear fruit this year,” Popescu told BR. Last year the company invested EUR 550,000 in opening a new winery for premium varieties, and also announced plans to invest in attracting more tourists to its production facility near Constanta.

Since 2007, Murfatlar has invested EUR 15.6 million, including EU funds, in replanting 975 hectares of grapevine. EUR 2.1 million was spent last year, and another EUR 1.8 million will be invested this year – 20 percent of which will come from the company’s own funds. ∫ Simona Bazavan

www.business-review.ro Business Review | April 2 -8, 2012

NEWS 5

CONSTRUCTION

PARTNER CONTENT

Cement market could grow 2-3 percent this year says Carpatcement

Florian Aldea, country manager of Carpatcement Holding

L

The partnership regards the development and implementation of strategic projects for public servants in management positions and managers of institutions in Kazakhstan

The management of NUR Otan School of Political Sciences in Kazakhstan was recently in Bucharest to establish a permanent framework of cooperation with Romanian institutions responsible for the training of public servants in the central and local administration. The delegation was formed of Mrs. Bachyt Yessekina, Director of the Higher Party School of PDP - NUR Otan, PhD in Economics, Mrs. Raushan K. Satova – Doctor in Economy, Professor, Associate of the Engineering Academy in Republic of Kazakhstan, and Mr. Sayabek K. Sakhiyev – Head of the External Affairs Department of PDP - NUR Otan, Doctor in Sciences, Professor.

On this occasion, the Kazakh delegation paid a visit to the School of Political and Administrative Sciences in Romania, where they had academic meetings with professors and the management of the University, both parties agreeing upon their interest to support cooperation between the two institutions by exchanging models of good practice to enhance the performance of the system of training of public servants and those to be involved in political life.

During the same visit, the representatives of the Kazakh delegation had a formal meeting with the representatives of the National Agency of Public Servants and discussed specific aspects of their cooperation,

in certain exchange of experience actions, aimed at rendering more efficient the career guidance of servants in the public system.

During the three days of the visit, the Kazakh delegation had meetings in the Romanian Parliament with Mrs. Sulfina Barbu, member in the Commission for Public Administration, Land Improvement and Environmental Balance, Chamber of Deputies, and Mr. Bogdan Cantaragiu, Chairman of the Commission for Public Administration, Land Improvement and Environmental Balance, Chamber of Deputies, Chamber of Deputies.

Mrs. Bachyt Yessekina, Director of NUR Otan School of Political Studies, emphasized the interest in and excellent potential of further developing cooperation with Romania in the field of education and training of public servants by means of exchange of experience activities between the responsible institutions in the two countries, which would contribute to ensuring a high level of training for the graduates of the School of Political Studies in Kazakhstan and further strengthen and support the established good relations between Romania and Kazakhstan.

To this end, Mrs. Bachyt Yessekina displayed her interest in the eLearning solution developed and implemented by Siveco Romania in numerous countries in the Gulf Area and CSI.

ADVERTORIAL

arge-scale refurbishment projects, infrastructure works and investments in wind farms were the main factors behind the 5 percent volume increase of the Romanian cement market in 2011, said Florian Aldea, country manager of Carpatcement Holding. He added that judging from the poor results so far this year, it would be good news if the market stagnated in 2012, but a 2 to 3 percent increase could still be possible if large-scale construction projects are begun.

Overall, the Romanian construction market grew by 2.8 percent last year, reaching EUR 9.3 billion, but remains well below the EUR 15.3 billion level reported in 2008, he added.

“If we look at the market’s segments, this 2.8 percent increase came mainly from non-residential projects,” explained Aldea. The manager said that residential construction continues to decline.”One can see that the impact of the residential market continues to negatively affect the entire construction market,” he added.

Carpatcement, which is part of German HeidelbergCement, invested EUR 8.5 million last year, most of which went into cost-efficiency projects and modernizing its production facilities. The company also invested in extending the production capacity of its factory in Bicaz, a project which was completed last June. For 2012, it has a similar investment budget.

Asked about Carpatcement’s turnover last year, the country manager said it had posted single-digit growth and the actual figure would be made public after the company’s general shareholders’ meeting.

Aldea added that while 2011 was a challenging year, the company had managed to increase the sold volumes for all of its three divisions and retain its clients, albeit at the cost of lower profits.

In 2010 the company reported a combined turnover of EUR 219 million for all of its three divisions – cement, concrete and aggregates. ∫ Simona Bazavan

Romanian-Kazakh partnership on training public servants in central and local administration

www.business-review.ro Business Review | April 2 -8, 2012

6 FOCUS

Last resort: hotels fight for room on unwelcoming market The local hotel scene seems to be feeling the pressure of the current crisis slightly more than other industries.

With a significant drop in room rates, independent hotels are trying to hold their own against well resourced competitors. Meanwhile, international chains want to make their entrance in Romania, but face a different problem: the lack of properties that meet their standards. ∫ ANDA SEBESI

2012 Hilton Worldwide

The Romanian hotel market is going through a tough period because of the economic crisis. The boom over 2000-2007 was followed by a continued decline that still continues. According to a recent study conducted by TEN Association and Travel Advisor Media into three-, four- and five-star hotels in Bucharest, the city had about 6,500 rooms at the end of 2007, which outstripped demand at that time.

That made Bucharest an uncompetitive destination compared with other European capitals in terms of its pricequality ratio. The same study found that a single room in a three-star hotel in the center of Bucharest, with breakfast included, once cost an average of EUR 90100 per night, while now it barely goes for EUR 45-50.

“Looking at the reports from four years ago I can’t figure out what happened that we charge half as much now,” said Ioan Tudor, member of the TEN Association and manager of a hotel in Bucharest. “If we hadn’t halved our prices could our customers not have travelled? Wrong. We were the ones who reduced our chances of selling better. I don’t know how many of the existing hotels will manage to charge prices close to those from 2007 once the downturn is over.”

But what caused such a significant decrease in the local hotel market? One factor is falling corporate demand for hotel services, which suffered a severe drop as a result of companies cutting travel, training and teambuilding costs. Another is the lack of highly skilled professionals in the industry. According to a study conducted last year by www.hotel.info, a reservation service that covers over 210,000 accommodation units worldwide, Bucharest comes 17th in an international ranking of customers’ satisfaction with hotels. Warsaw, Helsinki and Tokyo top the list.

Researchers from TEN Association and Travel Advisor Media also found that there are 219 accommodation facilities in Bucharest at present (hotels, heritage properties, hostels, apart-hotels and guesthouses), divided as follows: 11 five-star hotels with 2,149 rooms; 71 four-star hotels with 6,532 rooms; 100 three-star hotels with 3,520 rooms, 27 two-star hotels with 1,038 rooms, 7 one-star hotels with 352 rooms, and about 150 unclassified (rental apartments). The study also found that Bucharest suffers from a lack of low-budget accommodation, while the three-star hotel market is dominated by locations opened by 2007.

Tinu Sebesanu, CEO of Trend Hospitality Consulting & Management, says the Romanian and Italian hotel markets

Warm reception? New chains may struggle to find an opening on the local market are atypical because of their low level of brand penetration. “While Romania has 23 percent penetration of brands in the total accommodation capacity and Italy has up to 10 percent, in Germany this indicator is around 70 percent,” says Sebesanu.

But while in Italy the reason is the culture of small family businesses, in Romania it is the lack of properties that meet the standards required by international brands.

Independent versus international One of the differences between an independent hotel and an international brand is perception, especially in Bucharest where people travel for business purposes rather than for leisure. “A brand is a promise that the hotel will meet your expectations and reach international standards, and reassurance that the price is the right one. International chains have access to international system distribution and that means a higher occupancy rate and profit,” says Sebesanu. But standards also

influence the quality of services. “There are no standards in many independent hotels. There are also many exceptions of independent hotels that perform better and have better services. But there is no rule about it. On average, we can say that affiliated hotels provide better services,” says Sebesanu.

Sonia Nastase, general manager at Howard Johnson Grand Plaza Hotel, says that guests take into consideration many factors when choosing a hotel, but one of the most important is the guarantee based on previous pleasant experience or trust that the facility will meet specific standards of comfort and quality. “Although independent hotels don’t enjoy the same support as chains, they can be major competitors for some segments of customers,” argues Nastase.

Addressing the theme of hotels in large cities that host mainly business customers, Daniela Dumitrescu, marketing manager at Radisson Blu Hotel, says that international brands have several advan-

tages. “Often these customers prefer a hotel that is part of an international chain in order to be guaranteed some quality standards that are already tested and approved at international level,” she says. In addition, large companies sign Europewide or international deals with international chains to accommodate all their employees in specific hotel networks. “This makes a major difference in distribution because independent hotels don’t have access to such international pitches where known brands have priority,” says Sebesanu.

A hotel seeking affiliation to an international network needs to meet, for example, some security standards, both from customers’ and employees’ perspective. Plus, international chains offer greater job prospects and therefore attract employees that are more career-oriented.

“They become more attractive to better educated employees,” says Sebesanu. Elsewhere, Meda Vasiliu, director of sales and marketing at JW Marriott Bucharest Grand Hotel, sees independent hotels as a challenge rather than a threat for large international chains in Romania. “We do not see them as a direct threat as they are designed to attract a different type of customer. I would say it is an excellent sign in terms of development as it indicates that the destination is evolving and setting itself up to eventually attract more lifestyle-driven guests. These smaller hotels are a necessary step in the development of Bucharest as an attractive leisure destination,” says Yann Marteau, director of business development at Athenee Palace Hilton Bucharest.

Sleeping versus eating According to Nastase, Howard Johnson Grand Plaza hotel posted a 2 percent higher average occupancy rate last year than in 2010. “It was a moderate growth due to the direct impact of the international economic situation on the leisure segment,” she says. She adds that the greatest weight in the hotel’s 2011 income was accommodation, accounting for 56 percent. The hotel posted a turnover of about EUR 8 million last year, a similar level to 2010. Elsewhere, Radisson Blu Hotel’s income was split fairly evenly between accommodation and organizing and hosting events plus food and beverage. “This balance is supported by our marketing strategy, which involves monthly activities that target each of these segments,” says Dumitrescu. Meanwhile, JW Marriott Bucharest Grand Hotel posted an increase of about 6 percent of its occupancy rate last year on 2010, with its hotel business and restaurants and events split evenly.

www.business-review.ro Business Review | April 2 -8, 2012

FOCUS 7

Daniela Dumitrescu marketing manager, Radisson Blu Hotel

Meda Vasiliu director, sales and marketing, Marriott

Yann Marteau director, business development, Hilton

Sonia Nastase GM, Howard Johnson Grand Plaza Hotel

International chains flex commercial muscle…

dependent properties. “Everything depends on what added value they can bring. They can do it by location or services but in order to perform on the long term they need to offer added value through both location and services, because this market is based very much on word of mouth,” says Sebesanu.

According to Toni Tatar, marketing and sales manager at Rembrandt Hotel, one of the main advantages of independent hotels is that they can make decisions internally. Plus, in general they have few rooms and this contributes a lot to the hospitality extended to their customers. “The majority of the services provided by an international hotel are standardized, while the flexibility of the services provided by a small one brings closeness to the customer,” he says.

Finding a range of niche services and offering additional benefits compared with an international hotel could be a solution for an independent hotel to keep its market position and to face down the existing fierce competition. “Independent hotels are finding it hard to survive on the market now and each new brand that enters the local market takes from the market share of the independent players.

They can create advantages like being more flexible or providing customized services,” suggests the CEO of Trend Hospitality. Elsewhere, Dumitrescu of Radisson Blu Hotel says that independent hotels can profit from leisure travel, because this segment needs authentic locations and different and original experiences. “Being less standardized, independent hotels can adapt more easily to the individual influences than the local branches of international brands,” she says.

According to Tatar, another difficulty that independent hotels are facing at present is that their room rates are greatly shaped by the competition, including international hotels with a significant influence on the market. “For example, a three-star hotel will be forced to price itself below a five-star hotel even though the quality of services is not always reflected in the number of stars,” says the Rembrandt Hotel representative. He adds that the average occupancy rate at Rembrandt was 75 percent last year, while the turnover was about EUR 450,000.

In Sebesanu’s opinion, one of the mistakes that some independent hotels made was to cut their prices. “This is not good for the long term. It would be better to improve their services. Customers are sensitive to price but up to a limit. Guests won’t come solely because of the low prices if they don’t find the services they expect. When you have alternatives you need to be very careful about price sensitivity,” says Sebesanu.

Asked whether independent hotels can become targets for other players,

Sebesanu says it could be possible only if they meet the standards for being affiliated.

“Hotels are not evaluated like office buildings or residential with a price per square meter. A hotel is bought depending on its capacity for generating profits.

It is about buying a business. That’s why transactions are more difficult and complex, especially for independent hotels that don’t have their accounts audited,” he adds.

Their management systems and expertise on other markets have helped international chains hold up against the difficulties of the current crisis better than independent players. They posted a smaller decrease and recovered more quickly.

Sebesanu says an international hotel can also be traded more easily than an independent one because the buyer can have greater confidence that it has bought a feasible business. In addition it can attract financing more easily.

Every detail counts, especially for the customers of a luxury hotel, because it’s the little things that make the difference. In addition, Dumitrescu says that the support of high quality management by the international chains, training processes for employees and regular audits can help hotels achieve high quality standards. Howard Johnson Grand Plaza Hotel in Bucharest, for example, is part of the international chain Wyndham Hotel Group, which has about 7,200 hotels in 66 countries around the world. So it benefits from the capitalization and standardization criteria and all the commercial and promotional advantages of the network.

“Plus, many hotel chains have developed loyalty programs for their customers at group level through which they are encouraged to choose the same hotel brand on every trip, regardless of their destination,” says Dumitrescu.

Vasiliu of the Marriott says that affiliation to a centralized reservation system managed by a specific chain in general keeps reservations over 60 percent. “Our main commercial advantage as part of a recognized international chain remains the strength of our distribution network which allows us to reach our consumers.

From a product point of view chains are generally more geared towards business travel and on the Bucharest market they can better meet the needs of the traveler,” says Marteau of Athenee Palace Hilton Bucharest.

… while independents hang on Independent hotels across many markets can often perform better than an international chain hotel because of their superior location and services and a stable base of customers. For example, in the mountain areas of Austria and the South of France the majority of hotels are in-

anda.sebesi@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

8 LINKS

PR spreads the word with different voices As brands are being forced to cope with a hectic and unpredictable climate due to digitalization and social media, some PR agencies have set up specialized branches this year to serve the demand, BR reports. Estimations put the public relations market around the EUR 20-25 million mark, and it looks set to grow further as the budgets allocated to PR are picking up. ∫ OTILIA HARAGA PR is moving away from the classical model towards a more holistic, integrated approach, which includes new areas such as digitalization, social media and social campaigns.

“Digital and creative lines did not exist a few years ago in PR agencies’ range of services. These are new directions which generate growth. This should be expected because the market was stagnant for a few years because of the crisis and lower budgets allocated by companies,” Hortensia Nastase, managing partner at GolinHarris, tells BR. However, this is not as much of a problem these days as budgets have been slightly higher even though the current economic context remains challenging.

“Since consumers make decisions under the influence of social networks and the current context brings new challenges for the client in relation to stakeholders and the target audience, trends are increasingly pointing towards social media and crisis management. At the same time, social responsibility is very much in focus,” Larisa Petrini, managing director at Saatchi & Saatchi PR, tells BR. More and more clients look at PR these days as the catalyst of content.

“PR is queen and content is king,” says Nastase. “All recent studies show that people are no longer influenced so much by TV, advertising and star endorsement. They are influenced by those closer to them.

Peer-to-peer has never worked better and people turn to friends, family, the communities or networks they belong to in order to find information and be convinced they made the right choice. Content is essential and this is where PR comes into play,” she says.

There are about 15 players on the market “who count and have a cumulated share of 80 percent”, but “fewer than 10 are actually setting the trends,” adds Nastase. The PR market is split among players including Nicola Porter Novelli, Ogilvy PR, McCann PR, Graffiti Public Relations, Grayling, GolinHarris, BDR Associates, DC Communication, The Practice, GMP PR and Saatchi & Saatchi.

“The fact that the Romanian market is so scattered right now can be seen as an opportunity. If you look at countries with a tradition where the market has settled down, such as America, the United Kingdom or Germany, it is much harder to change something that has already been settled for decades over there. That we are searching for a model at this point, this is our big opportunity, and we can implement some dramatic changes,” says Nastase.

She gives the example of the GolinHarris local office. “It took one year to change our business model in the Bucharest office, which numbers 23 people. Just think how hard it would be to do this in countries with hundreds of em-

Get online: the digital world is playing a bigger role in today’s PR scene

ployees.”

Just last week, GolinHarris announced the launch of a new business model after applying the G4 matrix, focused on hyper-specialization. “G4 means a division of talent. What we propose is holistic development and transforming PR into an aggregator. I hope within one year you will not call us just a PR agency, because we will offer many more services. What we propose is to develop into integrating the four new types of media: earned, shared, owned and bought,” said Matt Neale, international president of GolinHarris.

The G4 model now applied in Bucharest has already been implemented in offices in the United States, Great Britain and Sweden, and will see its official launch in China in a few weeks.

“I think this is a moment when the Romanian PR market will reinvent itself, maybe also due to this new model. There are many good agencies out there which are definitely considering rethinking their strategy,” Nastase tells BR. G4 was designed to move away from the traditional model based on teams of generalist PR people into teams structured around four core areas: strategists (who discover key information that stands at the basis of campaigns), creators (who generate ideas and create content), connectors (whose task is to connect the various types of fragmented and specialized audience), and catalysts (agents of change who coordinate the holistic im-

plementation of campaigns).

The agency now employs 23 people, having added more PR capabilities to its roster, from 15 people back in 2011.

“This is a very dynamic industry and even though at a certain point we stopped looking extensively for new talent, new positions can pop up anytime. At the moment, we have two openings in the team: we are looking to hire a connector in the corporate team and one connector for the

“PR is queen and content is king. Peer-to-peer has never worked better: people turn to friends, family, communities or networks to make sure they made the right choice” Hortensia Nastase, GolinHarris consumer team,” says Nastase. Last year, GolinHarris posted a turnover of EUR 1.4 million, about a 10 percent growth compared to 2010. “We expect similar growth, of around 10 percent, this year as well,” adds Nastase.

This year, another important player on the PR market, Saatchi & Saatchi, launched its 24\7 division, tailored for crisis management. Currently the firm has

three divisions: retail marketing, social media and the new crisis management one. It will launch a division specialized in corporate social responsibility in May. The agency’s PR team consists of 10 people.

“Public relations are going through an interesting transformation due to technological progress and the current economic situation. Over the coming years, we will move towards crisis management, CSR and digital – a component which is more and more important for a communication strategist,” says Petrini.She anticipates for 2012 an approximate 20 percent growth compared to last year. “Crisis management services have particularly soared,” she says.

In February, Felix Tataru and Ioana Manoiu teamed up with Austrian PR group Chapter 4 to launch Chapter 4 Romania on the local market. The two local entrepreneurs are co-founders of GMP PR, an agency with 25 employees which posted EUR 1.4 million in turnover last year, 30 percent up on the previous year.

The shareholders in the new agency are Chapter 4 Communications Consulting Vienna with a 30 percent stake, Felix Tataru and Ioana Manoiu, who together own the majority 70 percent stake.

The PR office in Romania is an exclusive affiliate of Burson-Marsteller in CEE/SEE countries. This is the sixth office opened by the group in CEE/SEE, following ones in Hungary, Serbia, Bulgaria, Bosnia-Herzegovina and Macedonia.

“Romania is the largest country in the Balkans and its development outlook is impressive, which is why the office in Bucharest was absolutely necessary for the expansion of the Chapter 4 group in Central and Eastern Europe,” Severin Heinisch, founder and CEO of Chapter 4 Austria, previously told the Romania media.

The agency offers a portfolio of services which includes strategic communication consultancy, crisis management, corporate and product communication, employer branding and reputation management, media training, media relations and public affairs.

Chapter 4 Romania is run by Raluca Ene, who has eight years of experience in PR. Having started the office in Bucharest with a team of three specialists and a portfolio of clients which includes HP (Enterprise Division), Lufthansa and SWISS, she plans to attract three-four new clients by the end of the year.“Having a relevant presence in the CEE/SEE countries, Chapter 4 Vienna concluded that Romania had tremendous development potential, and wanted to open a proprietary office here in order to expand the network’s capacities in this part of Europe. Moreover, the local PR market is very competitive and on a healthy growing trend,” Ene tells BR.

otilia.haraga@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

INTERVIEW 9

Local businesses seek state aid boost Manuela Furdui, managing partner of Finexpert, tells Business Review about the challenges and difficulties that companies face in accessing state aid and outlines the general conditions that a potential applicant must meet to secure such financing. lay the implementation of their project by about six months.

What are the main fields that have benefited from state aid so far?

The majority of state aid beneficiaries come from industry and production for the automotive market. So it could be said that automotive is the main field. As a result of legal changes in 2011, there are also beneficiaries from the tourism and medical sectors.

∫ ANDA SEBESI How can the state aid absorption rate be increased in Romania?

The relatively low absorption rate so far is most likely the result of the low publicity surrounding the state aid scheme established by HG 1680/2008 and of the current economic crisis and lack of significant investments in Romania. In addition, the cumulative eligibility criteria – the value of the initial investment and the number of new jobs created – limit the pool of potential beneficiaries.

Amending the legislation to diversify the types of activities that qualify for state aid could be a solution provided that the eligible fields of activity are in line with European Commission guidelines on regional aid. It is worth noting that the absorption rate has increased in the last twelve months, mainly because the minimum level of investment was cut to EUR 5 million. At present the main problem is time, as the state aid scheme runs only until December 31 next year.

Under such conditions, it is almost impossible to implement some large projects.

What are the main difficulties facing companies who would like to access state aid?

As the majority of investors are foreign companies, the difference between the organizational culture to which the applicant is used and the Romanian administrative-legal system is a major impediment. Looking at it another way, one of the conditions imposed by the relevant legislation is that the project can be started only after the financing is approved. From the business perspective, not many companies are inclined to de-

What general conditions must a potential applicant meet to secure state aid? Is a financial contribution or guarantee required from the beneficiary?

Job creation is strictly linked with the value of the initial investment which must reach a certain sum. In this area there are two new general conditions that the potential applicant must meet: to make an initial investment, as defined in EU legislation, and for the particular project to be worth at least EUR 5 million. The complementary financial sources to the state aid can be diverse: bank loans, share capital or credit from the mother firm. Companies seeking state aid have to prove the financial viability and sustainability of their project by presenting financial scenarios for five years. If the money is sought for a greenfield investment, the applicant needs to prove its commitment to the project, generally by acquiring the land on which it intends to build.

How hard is it to obtain state aid in Romania at the moment? How can access to such funds be eased?

Any company that meets the criteria set out by the state aid scheme and proves the economic viability of its project can qualify for state aid. A grant application form and the thorough documentation (the investment plan and a technical-economic study conducted by a specialized company) will be carefully analyzed by the implementation unit and has every chance of materializing into a financing agreement. After the company secures financing approval, accessing to the state aid is effectively done by applications for reimbursement, and this in fact is the key point of the whole process.

Can you give us some examples of companies that have accessed state aid in order to develop their business?

The list of beneficiaries of financial agreements between 2010 and 2012 is published on the Ministry of Public Finance website. Lufkin Industries, Delphi, Pirelli, Renault, Honeywell and Bosch have all been granted state aid.

anda.sebesi@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

10

Romanian tax remains tough nut to crack This year has brought about changes in VAT that aim to reduce tax fraud, and the unreported income of individuals will come under the scrutiny of the tax authorities. Meanwhile, tax specialists are calling for a consolidation of profit tax and VAT for group companies, as well as a holding law. These were among the pronouncements made at the tenth edition of Romanian Tax, Law & Lobby, organized last week by Business Review. ∫ OVIDIU POSIRCA

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Romania is trying to reduce fiscal evasion and increase its tax collection rate, which currently stands at 33 percent of GDP, but specialists say the tax authorities are actually increasing the bureaucracy.

Taxing fraud

All photos: Mihai Constantineanu

Dan Schwartz, managing partner at RSM Scot consultancy, said the latest anti-fraud measures in the fiscal legislation only increase bureaucracy, which in turn increases fiscal evasion. The country already has an Intracommunitary Operators Registry and inverted taxing on agricultural products, aimed at reducing tax fraud.

“Excessive bureaucracy was one of the reasons FDI went down in the first two months of this year against the same period of 2011,” Schwarz warned.

According to Ioana Sandru, tax partner at Zamfirescu Racoti Predoiu Tax Advisors, the start of 2012 brought several fiscal changes in VAT, such as 50 percent deductibility for fuels and road vehicles and a deductibility right for buildings started and abandoned and for services bought and not used. The extension of taxpayers that can form VAT groups was another welcome measure. In addition, companies can register for VAT after an inspection by the tax authorities, which can also remove the VAT right under certain conditions.

“The introduction of the holding concept is extremely useful, allowing the holding body to administer, manage and finance the group companies, granting greater flexibility in financing these companies,” said Sandru.

Starting this year, tax authorities will conduct risk analysis and find the taxpayers whose major assets exceed their reported income, which could be indicative of tax avoidance.

Tanti Anghel, director, general directorate of the fiscal procedure code at the Ministry of Finance, explained that if tax inspectors find a difference that exceeds 10 percent and is over RON 50,000 (about EUR 11,000) it will be taxed.

Romania has a flat rate of 16 percent on corporate tax, capital gains, withholding tax and personal tax, but this is not helping the country’s competitiveness, according to Mark Gibbins, partner and head of taxation services at KPMG consultancy. He said the high rate of social security contributions reduces the flat tax’s impact on individuals.

Companies facing a tax inspection have the right to delay this procedure if they need to gather additional documents to prove their fiscal health, according to Florin Gherghel, head of the tax department at

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Noerr Finance & Tax. He added that there are many situations when the inspection authorities only skim the documents and don’t conduct a thorough analysis.

Boosting cash flow Reverse taxing can be a solution for cashstrapped companies, according to Ionut Bohalteanu, partner in the fiscal consultancy

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1. Finding ways to increase companies’ cash flow 2. Florentina Susnea, general manager, PKF Finconta 3. Ionut Bohalteanu, partner, Musat & Asociatii Fiscal Consultancy 4.

Emilian Duca, general manager, Tax & Business Solutions 5.

Dan Schwartz, managing partner, RSM Scot 6. Tanti Anghel, director, general directorate of fiscal procedure code, Ministry of Finance 7. Florin Gherghel, head of tax department, Noerr Finance & Tax 8. Ioana Sandru, partner, Zamfirescu Racoti Predoiu Tax Advisors 9. Adrian Luca, managing partner, Transfer Pricing Services 10. Mark Gibbins, partner, head of taxation services, KPMG in Romania

department at law firm Musat & Asociatii.

“The application of reverse taxing for certain activities prevents and fights fiscal evasion, at the same time giving companies that have real liquidity issues a chance at survival,” said Bohalteanu.

Adrian Luca, managing partner at Transfer Pricing Services, said the number of fiscal inspections on transfer pricing increased from 150 in 2010 to over 500 last

year, while adjustments in transfer pricing jumped from EUR 2 million to approximately EUR 30 million over the period.

Luca suggested the creation of an adjustment mechanism and simplified documentation as means to improve the legislation in this area.

Unregulated lobbying Specialists described the Romanian lob-

www.business-review.ro Business Review | April 2 -8, 2012

bying market as still underdeveloped and at the same time lacking transparency, as there is no law to regulate these activities.

Roberto Musneci, senior partner at lobbying firm Serban & Musneci Associates, said the lobbying market in Romania is not developed and this is an opportunity.

“There are 15 registered companies but there are many more in other liberal professions who don’t portray themselves as lobbyists but represent legitimate interests for groups,” explained Musneci.

Adrian Moraru, deputy director at the Institute for Public Policy (IPP), warned that the lack of transparency in the Romanian lobbying scene creates a market that lacks competition. “We at IPP support the enactment of a lobbying law, not self-regulation by the industry,” said Moraru.

Agreement came from Aurelian Horja, co-author of the book Regulating Lobby Activities: On the Influence Hallway, and of the Lobbying in Romania study.

“Self-regulation is not a solution because it allows operators to do almost anything without any penalties,” said Horja.

Musneci said if the law regulates the lobbying activity and not the lobbyists themselves then he is not ideologically against it, adding that he always makes it known what group he is representing. Currently his firm is trying to push pieces of legislation in healthcare and renewable energy.

Financing your choice BR organized a special workshop on access to finance that presented procedures and eligibility conditions for EU funds, structural funds and state aid.

According to Cristian Dima, FCCA auditor and financial advisor at Noerr Finance

11 & Tax consultancy, the state is an important financing source of new investment projects, covering up to 50 percent of the eligible costs. “To date over EUR 300 million has been granted as financing agreements, creating over 7,300 jobs,” said Dima. He added this had attracted over EUR 1 billion in direct investment. The state aid scheme will be running through to October 2013, and has EUR 600 million still awaiting allocation.

Firms that apply for state aid need to prove that it will have a “stimulating effect” on the business, according to Manuela Furdui, managing partner at Finexpert consultancy.

“The application for state aid includes the investment plan and the socio-economic study,” said Furdui. She added the most delicate part is sticking to the business plan submitted to the authorities. However, she considers this scheme to be less bureaucratic than the EU funds mechanism.

Romania’s EU fund absorption rate reached 6.3 percent this February and the government plans to absorb EUR 6 billion this year to support economic growth.

Ramona Ivan, executive director of the directorate for financial institutions at BCR, said absorbing EUR 4 million would ensure Romania economic growth of just under 1 percent. “Different organizations in different areas should lobby for a better positioning of Romania in the next EU budget over 2014-2020,” advised Ivan.

BCR is among the banks that guarantee loans for micro and medium enterprises, a European financial instrument known as JEREMIE. The lender has a guarantee fund of EUR 42.5 million and credit resources of EUR 215 million for SMEs. The guarantee

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1. Camelia Barariu, regional director, associated partner, Relians 2. Manuela Furdui, managing partner, Finexpert 3. Cristian Dima, FCCA auditor and financial consultant, Noerr Finance & Tax 4. Roxana Mircea, managing partner, REI Finance Advisors 5. Ramona Ivan, executive director, directorate for financial institutions, BCR 6. Roberto Musneci, senior partner, Serban & Musneci Associates 7. Aurelian Horja, communication consultant 8. Adrian Moraru, deputy director, Institute for Public Policy comes at no cost for the beneficiaries.

Camelia Barariu, regional director and associated partner at Relians, said that obtaining grants from EU funds can take between eight months and two years, adding that the beneficiary needs to choose be-

tween grants and bank loans. However, if the project does not meet the performance indicators stipulated in the financing plan, the grants must be returned.

ovidiu.posirca@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

12 GREEK INVESTMENT

Paschalis: local busi- Firms hope for a less ness presence to grow dramatic climate Even though Greek investments in Romania declined last year, the signals are positive for trade relations between the two countries, Ioannis Paschalis, minister counselor in economic and commercial affairs at the Embassy of Greece in Romania, tells BR.

Photo: Laurentiu Obae

∫ OTILIA HARAGA What was the evolution of Greek investments in Romania last year and in 2012?

Going back, we see that in 2009 Greek investments in Romania increased by more than EUR 850 million and in 2010 by more than EUR 400 million. In 2011, unfortunately, they decreased by more than EUR 270 million. In 2009 and 2010, the largest sums of money were brought to Romania by Greek banks in order to increase their capitalization as requested by the Central Bank of Romania. In 2011, though, one or two Greek banks, after they found themselves in possession of surplus capital, exceeding their capitalization needs in Romania, transferred some back to their mother banks.

This year, there is not yet concrete information available regarding Greek investments in Romania. We expect, anyhow, that in spite of the crisis the Greek business presence in Romania will be further enhanced. Worth mentioning so far is that Alumil plans to invest in a new modern aluminum processing and storage facility in 2012. Also, cable factory ICME ECAB, which has more than EUR 100 million in annual exports, is also planning to invest in the modernization of its production capacity. Furthermore, interest continues in the agriculture sector.

How many new Greek-capitalized companies were registered last year in Romania?

More than 150 new companies of Greek

interest were established in Romania in 2011. So the number of Greek firms exceeded the 5,100 mark by September 2011.

At the same time, many of the existing companies of Greek ownership continued to invest last year in the modernization and expansion of their units in Romania. Worth mentioning in the food sector was dairy firm Olympus’s factory investment in Brasov. Karamolengos Bakery is another significant Greek investment in the production and distribution of bread. In aluminum processing and metal construction, investments by Doral Aluminium Industrie and MFB/Metal Frame Buildings in the extension of their capacities were also notable. Other sectors which attracted significant Greek capital in 2011 were healthcare (new gynecological clinics, hemodialysis clinics, stem cell banks), agriculture (including animal breeding farms), services (IT, transport services) and gastronomy. Moreover, the renewable energy sector also attracted the interest of several Greek investors but until now we don’t know of any investment.

Did the situation in Greece affect the activity of Greek companies in Romania?

The difficult economic situation in Greece did not affect directly or “bilaterally” the economic situation in Romania or the activities of the existing companies of Greek ownership. National Institute of Statistics data show that, after decreasing by 12.6 percent in 2009, Romanian exports to Greece increased by 4 percent and 8.6 percent in 2010 and 2011, respectively. This is an argument in favor of the positive impact of bilateral trade.

The fact that Greek capital inflow in Romania increased by more than EUR 1 billion over 2009-2011 is another argument.

The Greek banks in Romania, which operate as Romanian banks under the supervision of the BNR, are well capitalized and have enough liquidity. Recently the situation in Greece changed for the better with the successful adoption of the second loan agreement between Greece and Eurozone member states, the European Central Bank and the IMF, in connection with the implementation of the voluntary bond swap between the Greek government and the bondholders (known as PSI). No doubt the positive development of the Greek economy means less volatility in the markets and greater predictability, a fact which has a positive impact for sure, not only on the euro and the European economies but on the world economy. The positive impact on the economies of the countries in the region, which are linked with the Greek economy, like Romania, will be certainly bigger.

otilia.haraga@business-review.ro

The business climate improved last year for Greekowned companies doing business locally, with Greece ranked as the fifth or sixth most significant country among the top foreign investors in Romania. By September 2011, more than 5,100 firms with Greek shareholders were registered in Romania, ONRC data show.

No signs of flagging: troubles in Greece have not drastically hit local operations

∫ OTILIA HARAGA Greek investments amount to EUR 1.6 billion, representing 5.3 percent of the total value of FDI in Romania, according to the National Trade Registry Office (ONRC).

However, data from the National Bank of Romania indicate that Greek investments exceed EUR 3.1 billion, or 5.7 percent of total FDI. Meanwhile, the Embassy of Greece puts current Greek investments at over EUR 4 billion.

The business climate improved last year on 2010, but a significant number of Greek-owned companies continued to struggle in 2011. “The number of unpaid invoices is still high and risk assessment management is still more difficult than during the growth years. Insurers are not willing to cover certain clients, who they dropped in 2009 and 2010. Banks are still hesitating over granting higher credit lines.

Greek companies hope that 2012 will be better and they are therefore patient,” Ioannis Paschalis, minister counselor in economic and commercial affairs at the Embassy of Greece, told BR. Complaints by Greek investors in Romania center on long delays in getting VAT refunded, the confiscation of goods imported from Greece because the Romanian importer did not pay the VAT, various obstacles to trucks crossing the borders and the high tax evasion which harms fair competition. Also, investors in agriculture suffer many difficulties in searching for suitable land, according to information from the Embassy. “But the fact that year by year we receive fewer complaints leads to the conclusion that in many areas significant progress has been made,” says Paschalis.

Major Greek companies doing business in Romania continued to make investments and optimize their business in 2011. For instance, Octagon invested EUR 2.5 million in acquiring the majority share package in Comat Electro’s construction material base. Octagon’s participation in Comat is now 58.8 percent. The company put EUR 250,000 into opening an office in the Iraqi capital, Baghdad. It reported EUR 12 million in turnover last year and a EUR

465,000 profit, a result in line with the levels reported in the previous year. In 2010, the company’s turnover amounted to EUR 14.3 million.

“In 2012, we aim to consolidate our activity on the Iraqi market where we target geotechnical, civilian and infrastructure projects. We have also proposed capitalization and adding equipment and personnel to our office. Another investment project we have is upgrading the real estate assets of the Comat Electro base,” Alexandros Ignatiadis, general manager of Octagon Contracting & Engineering, told BR. Greek dairy producer Olympus estimates the turnover of its local division will almost double this year to EUR 40 million.

Last year, it amounted to EUR 23 million, out of which EUR 20 million came from exports. Olympus obtained a loan of EUR 30 million from the Black Sea Trade and Development Bank which will be used mainly to increase the production capacity of the company’s dairy factory in Halchiu, Brasov county. The firm’s total investment in Romania since 1999 is estimated to reach EUR 70 million by the end of this year. Olympus also owns a 23 percent stake in local dairy firm Prodlacta and it acquired local cosmetics producer Elmiplant in 2007.

Investment-wise, since establishing a presence on the Romanian market, Greek group OTE, which controls telecom operators Romtelecom and Cosmote, and GSM retailer Germanos, has put EUR 3 billion into developing its subsidiaries in Romania, which employ over 10,000 people. Cosmote posted stagnant revenues of EUR 468.2 million in 2011, but its EBITDA went up by 35.8 percent to EUR 100.1 million.

Romtelecom’s revenues declined by 8.6 percent to EUR 655.1 million, while its EBITDA also fell by 23 percent to EUR 119.1 million.

Greek banks fought to keep their heads above water and mostly managed to do so.

Piraeus Bank, the local operation of Greek group Piraeus, ended the first half of 2011 with a gross profit of nearly EUR 10.5 million (RON 44 million), down 28 percent on the same period of 2010.

Meanwhile, Bancpost, which had been struggling with losses for some years, managed to end 2011 with a net profit of EUR 3.8 million (RON 16.6 million). In February and March 2012, Bancpost announced nearly 380 sales of land, houses and apartments at auction, in an attempt to recover EUR 15 million in bad loans.

Last but not least, Alpha Bank strived to optimize its business, closing 14 subsidiaries and branches, mostly in small towns, giving it a territorial network of 165 units at the end of December 2011. The Bucharest network was maintained at 43 units, of which 12 are subsidiaries.

otilia.haraga@business-review.ro

www.business-review.ro Business Review | April 2 -8, 2012

RESTAURANT REVIEW 13

RESTAURANT REVIEW

Splashing out

Novi Aquarium, 111-113 Calea Floreasca, 031 405 0597 DEBBIE STOWE Up we pulled outside Novi Aquarium on Calea Floreasca, the new incarnation of the long-standing Aquarium, an Italian eatery near Piata Galati beloved of footballers and other fashionable types.

Parked out front were three high-end cars, any one of which alone probably cost more than our apartment. Behind them a vast dining room flanked by posh terrace complete with statues. This place says “money”.

Footballers, the super-rich and their entourages are not known for their sophistication and refinement, so the cautious diner could be forgiven for expecting the interior to be a ghastly fusion of try-hard trendy minimalism, styleover-comfort furniture and blaring plasma TV screens.

What a pleasant surprise. Novi Aquarium’s décor is a masterclass in traditional good taste and elegance. Imagine you’re in the waiting room of an oldschool law firm’s office in Manhattan, about to consult an expensive attorney, and you’ll get the idea: spacious, deep wooden panels, leather banquette type seating, the odd stylish lighting feature… the whole place exudes an assured and relaxed stylistic hand and whoever is responsible should be complimented.

I cannot think of many other Bucharest restaurants that look better.

Service is professional, in keeping with the overall look of the place, and our waiter was confident with his recommendations, which tended to avoid the costliest items – and in line with its aspirations prices can be fairly high here.

Starters range from approximately RON 30 to RON 80, pastas and risottos cluster around RON 50 to RON 60 (RON 150 for a lobster bavette), fish dishes are largely between RON 50 and RON 90 and steak

Photo: Laurentiu Obae

The life aquatic: fish is a large part of the menu at the elegant Novi Aquarium

between RON 70 and RON 120.

Fish features predominantly throughout the menu (available on the restaurant website although in a slightly different – presumably older – version from what we were presented with). This was refreshing in a town that sometimes seems to consider anything piscatorial to be a poor relation to meat, or to overcook it into oblivion.

Tagliatelle meravigli (RON 59), seafood pasta, was enjoyable, though would have benefitted aesthetically from the addition of a few large prawns atop and more watchful boiling (some tagliatelle strands had clumped). No freshly grated Parmesan cheese was offered, and though this omission was in line with Italian culinary orthodoxy, I would have liked the choice, philistine that I am.

Fillet with peppercorn sauce (RON 69), cooked to specification, was with local beef. Vichyssoise, a thick leek and potato soup, came with an inviting truffle twist.

There were nice touches. Parmigiana di melanzane, a Southern Italian baked eggplant dish, came in mini form as a complimentary appetizer, bookended by limoncello. There was also the odd “Romanian” intrusion. A green salad came doused in vinegar (and not balsamic) in the local style – aside from the slightest extra virgin olive oil, drizzling should be the diner’s prerogative.

And I was sorry to see the insidious “cover charge” stipulated on the menu, in this case RON 8 per diner. This is a cheap way of squeezing more money out of customers and has no place in the classy eatery as Novi Aquarium aspires to be.

The small sum the house gains in cash is nothing aside what it loses in customer goodwill through this practice. If items are offered on the house they should be on the house, not clawed back in enforced charges.

With its interior and ambience both excellent, Novi Aquarium is clearly aiming high. Some fine-tuning of the menu could certainly put it in the top tier of Bucharest restaurants.

www.business-review.ro Business Review | April 2 -8, 2012

14 IN TOUCH FILM REVIEW

WHO’S NEWS Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro

Violeta Luca has been appointed deputy CEO of Flanco, starting this month. She was formerly marketing director of the IT&C retailer and will now be in charge of the development of the Flanco business and positioning the company as market leader.

Between August 2011 and March 2012, Luca worked as marketing director at the firm. Prior to joining, she spent eight years at Whirlpool Romania, where she served as commercial director from June 2007. She graduated from the Academy of Economic Studies in Bucharest.

Catalin Tihon is the new GM of Hertz Lease Romania. Before joining the company he had held the same position at Deutsche Anlagen Leasing Romania Real Estate since 2009. He has ten years of relevant experience within the finance industry, leasing and lending, both in small-ticket and bigticket businesses, and has held management positions such as managing director, sales director, business admin manager, and restructuring & development manager at several multinational companies.

Saduokhas Meraliyev will step down from the CEO position at Rompetrol this June as part of a management rotation strategy, but will remain a member of the company’s board of administration, according to Mediafax.

He became CEO in July 2009, one month after Dinu Patriciu sold his remaining participation in the company to KazMunayGas (KMG) which thus became sole shareholder. Between 2007 and 2009, Meraliyev served as the company’s deputy general manager and prior to that held various positions at KMG.

business development manager of Hydro Power, Alstom Romania and Bulgaria. He graduated from the Polytechnic University in Bucharest.

Razvan Botezatu has been promoted to strategic account operations and services director of Xerox Central Europe, Israel and Turkey.

In this new position, he will be in charge of sales operations and document management services at the level of the region.

Botezatu joined Xerox in 2000, working in various key positions such as sales & services, operations and management.

Last year, he was appointed strategic account operations director. Between 2004 and 2010, he was manager of the document management outsourcing services division. Botezatu graduated from the Ovidius University in Constanta, the department of International Economic Relations. He has an executive MBA from the Central European University Business School, with a specialization in Marketing.

Source of hope: Leila Bekhti fights for women’s rights in Radu Mihaileanu’s fable

DEBBIE STOWE

In a village somewhere in North Africa, a group of young women struggle up a mountain in the scorching heat to collect water. Despite the trying conditions they laugh and joke. Then one of the women, pregnant, stumbles and begins to bleed.

Meanwhile, back in the village the men sit drinking tea and chatting, leaving the women’s repeated pleas for a water pipe ignored. Something must be done…

The village women decide they have had enough. With a few honorable exceptions their men are an unreconstructed, lazy bunch, and see no need for running water when their wives and daughters slog up the mountain to get it while the men shoot the breeze. Exercising the only power they have over the men, the women decide to withdraw sex – or go on “love strike” – until the men act. Can the women – led by the educated and determined Leila – get their way and their water pipe?

Or will the more brutal male villagers crush the rebellion and maintain the status quo?

If you come to this film only knowing that the director, Radu Mihaileanu, is Romanian and expecting another 432 or Mr

Lazarescu style effort, prepare for a surprise.

While the Romanian New Wave is characterized by its local focus, low production values, grimness and naturalism, The Source is international, lavish, uplifting and mythic. It’s also – whisper it – unashamedly feminist.

At two and a quarter hours long, such a straightforward fable could drag, but in Mihaileanu’s hands it retains its grip on audience interest. There is no weak link here.

The cinematography is sumptuous, with sweeping North African plains hinting at the universality of the story. The script and plot are super, with ardent social comment couched in a deceptively simple tale delivered with delicious humor.

And the acting, too, is top quality. Leila Bekhti is the undoubted star, powerfully conveying the gamut of emotions – pride, doubt, fear, family loyalty, love, anger, righteous indignation – of her plucky rabble rouser. Other impressive turns come from Saleh Bakri as Leila’s conflicted but loving husband and Hiam Abbass as her nightmare of a mother-in-law, who oozes bitterness. The show is stolen, though, by veteran Algerian performer Biyouna, whose spirited village matriarch channels the camp flamboyance of a pantomime dame.

With masterful control of his subject matter – which runs from lovelorn teenagers exchanging soppy notes to domestic abuse and even rape, but never feels disjointed or misjudged – Mihaileanu has crafted a movie that brims over with warmth and hope.

PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Ana-Maria Stanca SALES & EVENTS Ana-Maria Nedelcu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 Fax: 031.040.09.34 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro

Babak Fouladi will take up the chief technology officer position in Vodafone Spain, effective from May 1, after leading the technology operations of Vodafone Romania. Since joining the operator in September 2010, Fouladi has delivered billing transformation and other company-wide projects that simplified business processes and operations, while enhancing operational efficiency at the company.

Andrei Duica

is the new VP of the industry division at Schneider Electric Romania, as of Q4 2011.

Copoiu has 13 years of professional experience in energy and industry.

During this period he held positions such as CEO of Q-Power, the energy division of RTC Group, sales director of the energy division of Siemens Romania and

has stepped down from the position of director of the Audi sales department at Porsche Inter Auto Romania – Porsche Bucharest North. He has announced that he will dedicate himself to personal projects but will remain in the industry. Duica has ten years of professional experience in the car industry, seven of which were spent at Porsche Romania where he began his career as a sales consultant. He graduated from the Academy of Economic Studies and the Asebuss – Executive Education – Basic Lead Development program as well as other management courses.

ISSN No. 1453 - 729X

FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi ART DIRECTOR Alexandru Oriean PHOTO EDITOR: Mihai Constantineanu PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu

Razvan Copoiu

The Source

Director: Radu Mihaileanu Starring: Leila Bekhti, Saleh Bakri On: Cinema City Cotroceni & Sun Plaza, Glendale Studio, Grand Cinema Digiplex Baneasa, Hollywood Multiplex