Issuu on Google+

GED PAYS EUR 12 MILLION FOR 90 PERCENT OF INFOPRESS GROUP, SEE PAGE 4 FOCUS

MONEY

FOCUS

President Traian Basescu has an-

Banks are trying to balance brand

Unfazed by the volume of debt it is

nounced that both pensions and public

preservation with promotional drives as

seeking to recover from the state,

sector salaries will be slashed as the

they struggle to kickstart lending and

B.Braun is thinking of expansion, CEO

country grapples with its budget deficit

the banking market

Christian Braun tells Business Review

See pages 10-11

See pages 12-13

See page 16

BUSINESS REVIEW www.business-review.ro

ROMANIA’S PREMIERE BUSINESS WEEKLY

MAY 10 - 16, 2010 / VOLUME 14, NUMBER 17

TOURISM SAILS INTO CHOPPY WATERS Their wallets lightened by the recession, hard-up Romanians are turning their backs on pricey holiday destinations and opting for cheaper, local getaways, such as the Black Sea coast and accessible resorts in neighboring countries STOCKEXCHANGE

See pages 18-19


IN TOUCH

BUSINESS REVIEW

FORUM

LEAN TIMES AHEAD

Companies get the lowdown on employment issues at BR event

LAURENTIU OBAE

The next BR event is taking place on May 12

Business Review organizes this Wednesday the Employment – Practical solutions for implementing employment legislation event, as part of its Legal Business Series. The event will feature two discussion sessions, followed by the ‘Saying a proper goodbye: the right termination scenario’ workshop held by Salans on the topic of amicable ways of terminating a labor contract. The discussions will cover various legal aspects of the labor mar-

ket, ranging from the restructuring and legislative challenges associated with it, to outsourcing and offshoring from an employment law perspective. Speakers at the event will include Mihaela Buzila, advisory director at KPMG Romania; Silvia Radu, governmental programs executive with IBM Romania; Anca Harasim, executive director of AmCham; and Alina Dragan, HR executive director of UniCredit Tiriac Bank. The two sessions will be moderated by Anca Grigorescu LL.M.Eur, partner of bpv Grogorescu, and Tiberiu Csaki, local partner with Salans Romania. The event, which is organized in partnership with bpv Grigorescu, KPMG Romania and Salans, will take place at InterContinental Hotel on May 12. For more information and registration, please go to www.business-review.ro.

President Traian Basescu last week compared Romania’s bloated state to a fat man being carried on the back of a thin person – the country’s emaciated economy. He made the colorful analogy after announcing that public sector salaries and pension were to be slashed, though the feared tax rises did not materialize

TALK TO US !

IN TOUCH

Search for Business Review on LinkedIn - Business Review group

Better debtors Your feature on debt collection firms (Debt firms owe success to the recession, issue 16) brought back bad memories of the recession in my country (not this recession, the last one!), when many people had their homes repossessed as interest rates on mortgage soared. I truly hope that Romanians can avoid the woes of debt. Under Communism, it seems to me that people lived one day at a time, never looking too far ahead. This mentality was entirely understandable, but it is not the path to a settled and secure fi-

nancial situation in the modern market. Excessive debt can lead to misery and desperation – there is some wisdom in the saying “neither a borrower nor a lender be”. I hope the current economic chaos can serve as a warning and help young Romanians avoid the debt trap. L Broomfield, UK Going bananas over Apple Unemployment is increasing, the stock markets are falling, pensions and the public sector are being cut, businesses are closing – but at least we tech nerds and gadget fans have one thing to get excited about… Our

Apple iPads are coming! Delia B, Bucharest

Facebook - Business Review Twitter - BR_RO

Empty rhetoric Nice Zen principles last week (‘NO MIND’ – the way to mastering yourself and… quantum physics, issue 16). So “form is emptiness and emptiness is form,” is it? Now I get it: when reckless bankers were taking our economies to the brink, necessitating bailouts that have left our state coffers “empty”, they were in fact on “form”! David Ling, New Zealand

Please send your letters to editorial@business-review.ro, including your name and location. For consideration for inclusion in the next edition, letters must be received by noon on Thurs-

or connect via www.business-review.ro

B USINESS R EVIEW MAY 10 -16, 2010 / VOLUME 14, NUMBER 17

Founding Editor BILL AVERY Editor-in-Chief SIMONA FODOR Senior Journalists DANA CIURARU ANDA SEBESI OTILIA HARAGA Journalist SIMONA BAZAVAN Copy Editor DEBBIE STOWE Contributor MICHAEL BARCLAY Photographer LAURENTIU OBAE Layout BEATRICE GHEORGHIU

Executive Director GEORGE MOISE Sales & Events Director OANA MOLODOI Marketing Manager ADINA MILEA Sales & Events IULIAN BABEANU CLAUDIA MUNTEANU FREDERIC VIGROUX Sales Consultant GIUSEPPINA BURLUI Research & Subscription ALEXANDRA TOADER Production DAN MITROI Distribution EUGEN MU{AT

No.10 Italiana St, 2nd Floor, Ap.3 Bucharest - Romania Tel. Office: 031.040.09.31 Tel. Editorial: 031.040.09.32 Fax: 031.040.09.34 E-mails: firstname.lastname@business-review.ro; Audited 1H 2007

day. Letters may be edited for length, clarity and accuracy. BUSINESS REVIEW / May 10 - 16, 2010

ISSN No. 1453 - 729X Printed at: MASTER PRINT SUPER OFFSET

Business Review is a founding member of the Romanian Audit Bureau for Circulation (BRAT)

3


NEWS

BRIEFS FRD CENTER MARKET ENTRY SERVICES SIGNS DEAL WITH ENTRY POINT CONSULTING AUSTRALIA é FRD Center Market Entry Services, based in Romania, and Entry Point Consulting, which has offices in Australia and India, have signed an exclusive partner-

Austral-Asian companies to Eastern Europe. The two advisory companies will collaborate for

Independent Private Equity group GED has taken control of 92 percent of the share capital of Infopress Group in a transaction worth over EUR 12 million. The closing of the deal is expected to take place in the second quarter of 2010 following clearance from the Romanian Competition Council. Law firm Biris Goran advised the managers and current shareholders of Infopress Group SA in the move. Founded in 1990 as the publisher of Odorheiu Secuiesc newspaper, Infopress has grown steadily to become the largest printing company in Romania and South Eastern Europe, focusing on high-volume publications and the magazine market. It is also among the leaders in Eastern Europe. Anda Sebesi

STOCKEXCHANGE

ship for the market access of

GED acquires 92 percent of Infopress Group

Infopress has grown steadily to become Romania’s largest printing company

international market access projects offering their consulting, market intelligence and business matchmaking services to a number of Austral-Asian companies looking to expand to markets in Central and Southern Eastern Europe, such as Romania, Bulgaria, Poland, Hungary, the Czech Republic and Slovakia. GEOPOST ANNOUNCES CONSOLIDATED SALES OF EUR 3 BLN IN 2009 é DPD (Pegasus)’s majority shareholder GeoPost has

Fresenius opens medical center in Suceava Fresenius NephroCare Romania, the national leader of the private dialysis services market, has opened its second center in the Moldova region, in Suceava, with an investment of EUR 3 million. The center has 44 Fresenius dialysis machines, a treatment capacity of 260 patients and 60 employees. The company posted a RON 102.6 million turnover last year, an increase of 64 percent on 2008, as a result of opening new medical centers in Pitesti and Onesti and an extension in Iasi. Some 1,620 patients received treatment last year according to European standards and Fresenius international standards.

Alexandru Ciolan, general manager of Fresenius NephroCare Romania

The firm also invested EUR 3.5

million in 2009, with the number of employees reaching 550 (an increase of 30 percent on 2008). Company representatives estimate an increase of about 57 percent in their business in 2010, with opening new medical centers being one of the main objectives. “We intend to maintain our leading position on the public and private dialysis services in 2010,” said Alexandru Ciolan, general manager of Fresenius NephroCare Romania. At present, the company has 12 dialysis centers in Bucharest, Iasi, Constanta, Oradea, Bacau, Stei, Brasov, Pitesti, Onesti, Satu Mare, Deva and Suceava. Anda Sebesi

announced consolidated sales of EUR 3.093 billion for 2009. GeoPost’s 2009 sales were down by 4.6 percent on the previous year, due to a 1.9 percent fall in volumes and a drop in prices. “Despite the economic slowdown, we have managed to maintain our business volume, focusing on

customers,” said Lucian Aldescu, CEO of DPD (Pegasus) Romania and president of the AOCR (the Romanian Courier Operators Association). 4

Oil and gas company Petrom has decided to outsource some of its equipment maintenance activities to CDI Oilfields Services, the local branch of British industrial group Smiths. By taking this measure the company is reducing its total number of employees by 270. Last year, Petrom had a staff of some 27,000, far fewer than the over 50,000 who worked for the company in 2004, at the time of the privatization to Austria’s OMV. CDI Oilfields Services had a business value of EUR 16 million in 2008 and 20 employees. The Romanian energy company also made use of outsourcing in order to reduce costs in 2008, when it delegated its Petrobrazi maintenance activity to

COURTESY OF PETROM

reliability and stability for our

Petrom outsources operations, rebrands gas stations

Petrom has reduced its work force substantially

Siemens. Moreover, the firm recently

announced that it had decided to rebadge its PetromV filling stations, almost five years after the launch of the PetromV brand. The move could have been inspired by the cost-cutting resulting from reducing the number of managed brands. “All the 124 PetromV stations will be turned either into OMV or Petrom filling stations by yearend,” said Petrom representatives. According to company data, some EUR 1-1.2 million is invested in the transformation of a regular gas station into a PetromV filling station. Currently, Petrom’s portfolio numbers 550 filling stations, out of which 77 are OMV and 124 are PetromV. Dana Ciuraru BUSINESS REVIEW / May 10 - 16, 2010


NEWS

Less indebted CEE countries will grow more quickly, says European Commission

BUSINESS REVIEW / May 10 - 16, 2010

STOCKEXCHANGE

European Commission predictions for 2010 regarding the GDP of CEE-5 countries (the Czech Republic, Slovakia, Poland, Hungary and Romania) are better than those announced last fall and much closer to those of analysts from Erste Group. They believe that of all CEE countries, only Poland, Slovakia and the Czech Republic will exceed the level of growth of the Eurozone, while Romania will post a level close to that of the Eurozone. Erste’s analysts estimate that from 2011 the Romanian and Hungarian economies will post better performances that those of the Eurozone, which will face some constraints caused by the postponed consolidation. They add that only the deficits of Romania and Poland will exceed the Eurozone average (6.6 percent),

Debt burden: Erste analysts predict that Romania’s deficit will exceed the Eurozone average

but remain below the high deficits posted by Portugal, Italy, Greece and Spain.

“Compared with the Stability Program, the rhythm of economic growth was reduced to less than 1

percent in 2010 because of a slower recovery of the domestic consumption in compliance with our current estimation. The European Commission estimates a quicker growth in 2011, after a stronger recovery of domestic demand, both at the level of consumption and investments,” said Cristian Mladin, analyst at BCR. He added that the budgetary deficit remained a significant concern, as public sector reforms have been delayed. “It is possible that the government will be compelled to increase the VAT and the flat tax in order to respect the new objective regarding the deficit. We do not think an increase in tax can replace the public sector reforms – let alone the ever more powerful pressures on inflation,” added Mladin. Anda Sebesi

5


NEWS

BRIEFS

BNR CUTS INTEREST RATE TO 6.25 PERCENT é The Romanian National Bank (BNR) has announced that it has lowered the interest rate by 0.25 percent to 6.25 percent per year. The measure was expected by analysts as the economy struggles to exit the recession and inflationary pressures are low. The BNR maintained the current level of reserves both for RON and foreign currencies and reaffirmed its intention to supervise “the adequate management” of banking sector liquidities.

6

UPC has had a mixed bag of results

oped more, especially in the digital cable and internet categories. The company’s number of digital cable clients reached 245,000, while in the same period last year it had 147,300 subscribers. It focused on developing digital television services on the wave of the general trend to migrate from analog to digital television. “Due to our efforts to promote

digital television, at the end of the first quarter of the year we registered 245,600 subscribers for digital television services,” said Severina Pascu, CFO of UPC Romania. In Q1, 2010, the operator reached 182,600 clients on the segment of satellite digital television. UPC made progress on the internet segment. “In Q1, 2010 we had 10.6 percent more subscribers compared to Q1, 2009, and currently over 271,000 consumers benefit from our internet services,” says Pascu. For voice services, the company reached 153,100, which marks a 16.6 percent growth on the same period last year. According to the Liberty Global report, the company continues to face major pressure both at competition level and macro-economic level in Romania and Hungary, which affects its rate of growth in Central and Eastern Europe. Otilia Haraga

P&G Distribution reports EUR 280 million of sales locally

COURTESY OF P&G

UPS REGISTERS 45 PERCENT HIGHER INTERNATIONAL PROFIT IN 2010 Q1 é Package delivery company UPS has posted adjusted diluted earnings per share of USD 0.71 for the first quarter of 2010, a 37 percent gain over the adjusted USD 0.52 for the year before. Revenue increased 7 percent to USD 11.7 billion. The international package segment posted a 18 percent jump in revenue with operating profit increasing by 45 percent. On a reported basis, diluted earnings per share for the first quarter of 2010 were USD 0.53 compared to USD 0.40 the prior year, up by 33 percent.

UPC Romania, the second largest player on the local TV cable market, and part of Liberty Global, has shed approximately 46,500 analog cable subscribers, taking its total to 791,100 in the first quarter of the year. “As far as analog television is concerned, there has been a reduction in the customer base determined by current economic conditions which led to the erosion of the purchasing power of consumers. This is reflected in the fact that some people have abandoned analog television services while some clients have migrated towards alternative operators, especially at a local level. (…) The unfavorable economic context is directly reflected at national level through the growth in the unemployment rate in March 2010 when the level was 8.36 percent compared to 5.60 percent in the same month of 2009,” said Pascu. However, the other services offered by the company have devel-

STOCKEXCHANGE

INCRYS POSTS EUR 4.23 MLN TURNOVER IN 2009 é InCrys, specialized in software outsourcing services and complete hardware and networking solutions, posted a turnover of EUR 4.23 million in 2009, a 32 percent growth on the previous year. The company’s representatives forecast a 15 percent growth this year, both in turnover and number of employees. “In the context of the economic crisis, the outsourcing market has evolved interestingly, as some companies limited their activity, reduced their number of employees or did not start certain planned projects. There were, however, many companies in Europe that preferred the Romanian market to reduce their outsourcing costs,” said Gheorghe Pasa, CEO InCrys.

UPC Romania loses analog cable clients, gains on other segments

FMCG firm Procter & Gamble has been operating on the local market for 17 years

Procter & Gamble Distribution SRL, which coordinates P&G’s distribution activities in Romania, posted a net turnover of EUR 279,993,511, a gross profit of EUR 7,327,209 and a net profit of EUR 6,337,067. The figures were released by the firm along with those for the other three legal entities it uses to run its activities in the country. P&G Marketing Romania, which coordinates the firm’s marketing activities for the local market and another seven in the region.

This division posted a net turnover of EUR 27,932,457, a gross profit of EUR 2,971,059 and a net profit of EUR 2,459,971. The company division that produces detergents and bleaches in Timisoara, posted a net turnover of EUR 18,566,104, a gross profit of EUR 2,234,132 and a net profit of EUR 1,785,168. The FMCG firm’s fourth division, Procter & Gamble Materials Management, supplies raw material for Detergenti SA. It posted a net turnover of EUR 42,388,759, a

gross profit of EUR 6,233,106 and a net profit of EUR 5,204,090. According to company officials, these results confirmed the market had reached maturity in the previous year. The FMCG firm has been active in Romania for 17 years. P&G started its first greenfield investment in Romania – a production unit of shampoo and haircare products in Urlati, Prahova county – at the beginning of February 2009. The company had hired 150 people for this production facility by the end of the year. The majority of the production – 90 percent – is exported to markets in the region but also others such as Turkey, Russia and Ukraine. The brands that P&G sells in Romania are Ariel, Tide, Bonux, Ariel Professional, Ace, Lenor, Mr. Proper, Fairy, Pantene Pro-V, Head & Shoulders, Safeguard, Herbal Essences, Wash&Go, Blend-a-med, Camay, Always, Alldays, Discreet, Naturella, Pampers, Wella (Safira, Wellaton, Wellaflex, Wellaforte, Design), Londa (Londa Color, Londa Trends), Olay, Gillette, Braun, Duracell and Oral-B. Otilia Haraga BUSINESS REVIEW / May 10 - 16, 2010


NEWS

Local mobile market amounts to EUR 2.4 bln, says France Telecom

STOCKEXCHANGE

Down the line: the mobile market has been hit hard by the recession with revenues falling

Total revenues registered last year on the local mobile telephony market fell by 14.2 percent to EUR 2.4 billion, according to the annual report of France Telecom, the main shareholder of Orange Romania. In 2008, the total value of the mobile telephony market was EUR 2.8 billion. In spite of this, the number of active SIM cards rose to 29.1 million, according to the findings in the report. Of these, 10.3 million represented post-pay clients, a level similar to 2008. The number of pre-pay cards increased from 17.5 million to 18.8 million last year. The rate

BUSINESS REVIEW / May 10 - 16, 2010

of penetration of mobile telephony services in Romania went up to 135 percent in 2009, which represents a rise on the previous year when the figure was 129 percent. This indicates the growth in the number of SIM cards owned by postpay clients. According to the report, the telecommunication market was greatly affected by the impact of the recession. Revenues from mobile telephony services slumped by 14 percent in 2009, in spite of the fact that the number of postpay subscribers increased constantly. The internet market also saw strong growth due to the development of fiber optic networks, says the France Telecom report. Last year, Orange posted revenues of EUR 1,055 billion in Romania. In the first quarter of this year, the operator generated EUR 237 million, which represents a 10 percent decline on the same period of 2009. Orange had 10,809,000 clients in Romania on March 31. Its number of broadband clients hiked by 40 percent on Q1, 2009, to 2,641,000. Otilia Haraga

7


NEWS

Intact Media Group reports 21 CEC Bank sees RON 14.9 percent higher turnover for Q1 million gross profit

Intact Media Group has reported a 21 percent higher turnover and a 50 percent higher operating profit in the first quarter of 2010 on the same period last year, for its television division. According to company officials, the increase was mainly generated by Antena 1, with a 29 percent high-

LAURENTIU OBAE

Intact runs five TV stations

er turnover, and Antena 2, which had a 30 percent higher turnover in 2010 Q1 compared to 2009 Q1. “This year will be all about reaching full development, about evolution or extinction. We have taken our mission and our objectives very seriously and we have focused on results. In 2009, the group’s television division registered the biggest market share on the Romanian media market, approximately 30 percent. In 2010 we will capitalize on this advantage by developing a dynamic, efficient and relevant media platform,” said Sorin Alexandrescu, CEO of Antena 1. The company operates five TV channels: Antena 1, Antena 2, Antena 3, Euforia TV and GSPTV. Simona Bazavan

CEC and balances: the savings bank posted nearly RON 14.9 million in gross profit

CEC Bank posted a RON 14.9 million gross profit and a solvability rate of 16.89 percent at the end of the first quarter of 2010, the lender’s representatives have announced. It granted 7,378 new credits to companies in Q1 worth RON 374 million, with agriculture making up

Ford requests review of Automobile Craiova privatization contract

Ford wants its privatization contract reviewed

Ford Romania, which controls a 72.4 percent stake in carmaker Automobile Craiova, has asked the Authority for the Recovery of State Assets (AVAS) to revise a series of terms included in the privatization contract inked in 2007. The AVAS has already created a commission in charge of negotiating with the company. Ford paid Romania EUR 57 million for its stake in the Craiova-based plant. The European Commission (EC) investigated the deal and subse8

RON 271 million or 7,179 loans. The bank also posted a balance of credits of about RON 9.4 billion and RON 15.1 billion for deposits. The balance of credits to individuals dropped by 3.36 percent in Q1 2010 on the end of 2009. At the end of the first quarter CEC Bank had 1,544 restructured loans in its portfolio, or 9.29 percent of its total value of credit. The balance of deposits attracted from non-bank customers was about RON 15.1 billion, an increase of 9.8 percent on the end of March 2009. The lender had 1,285 operational units at the end of Q1 2010, half of which have been renovated and done out to reflect the new brand image. It also has a network of 838 ATMs and 1,394 POSs, with the number of active cards being 791,906. Anda Sebesi

quently concluded Romania had accepted a lower price for the plant in exchange for Ford’s pledge to produce over 250,000 cars in Craiova by 2011 and to create additional jobs. Romania was found to have granted Ford illegal state aid worth EUR 27.56 million and the EC asked the Romanian authorities to recover the difference from the carmaker. Later, the commission approved state aid worth EUR 143 million for a project Ford plans to develop in Craiova, as well as EUR 57 million in aid for staff training at the Romanian plant. The complex deal and the changes made afterwards prompted Ford’s call for a review of the contract, according to AVAS. In April, Ford Romania started production of the Transit Connect model at its Craiova plant. Before that, the carmaker had assembled only 400 Transit Connect compact panel vans using parts shipped from its Turkish plant. The automaker is slated to start production of the B-Max small-class model in Craiova later this year. Staff BUSINESS REVIEW / May 10 - 16, 2010


CALENDAR/NEWS

EVENTS, BUSINESS AND POLITICAL AGENDA MAY 10 – MAY 11 é The European Commission organizes a conference on the topic of the

EU’s strategies for the Danube Region, in Ruse, Bulgaria.

MAY 11 – MAY 12 é The Facility & Property Management Conference 2010 will take place

at Radisson Blu Hotel. By invitation only. é The Association for Digital Communications organizes the International

Digital Forum 2010 at Athenee Palace Hilton Bucharest Hotel. By invitation only.

MAY 11 é 10:00 Flanco International organizes a press conference at Athenee

Palace Hilton Bucharest Hotel. By invitation only.

MAY 12 é Business Review organizes another event as part of its Legal Business

Series, Employment – Practical solutions for implementing employment legislation, at InterContinental Bucharest. For more information, please go to www.business-review.ro. é 16:00 CEU Business School and Maastricht School of Management present a marketing lecture by Paul Garrison followed by a presentation of the new Maastricht School of Management MBA to be offered in Romania starting September 2012 at InterContinental Hotel.

MAY 13 é 10:30 Qetics organizes a conference on the topic of the proper setup of

thermoisolation materials at Pullman Hotel in Bucharest. By invitation only. é Impact Developer & Contractor organizes a press conference at Ramada Bucharest North Hotel. By invitation only.

WHO’S ALINA CULCEA, 38, is the new general manager of the Romanian subsidiary of Actavis after having held the same position on an interim basis for six months. She previously served simultaneously as HR and communications manager. In the last fourteen years Culcea has amassed extensive experience in the pharmaceutical industry, working for companies such as GlaxoSmithKline Romania for four years and Pfizer Romania. She joined Actavis Romania in 2006 as HR manager. Culcea is a graduate of the University of Medicine and Pharmacy in Bucharest. TIBOR PANDI, 41, has been appointed Citi country officer (CCO) at Citi Romania. He takes over from Shahmir Khaliq, who was appointed division head for Bulgaria, the

NEWS Czech Republic, Romania and Slovakia and Citi country officer for Czech Republic. Pandi has over 15 years of banking experience and before this appointment served as Citi’s head of Central Europe non present countries region, covering 12 countries across Central Europe. MIHAELA BALEA has joined Saatchi & Saatchi PR as media relations expert. She has over sixteen years of experience in the written press. Between 1994 and 2005 Balea worked as a socialeconomic editor focusing on issues of general interest and since 2005 she has worked as a business editor for various magazines, news agencies and TV networks.

Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Feel free to contact us at editorial@business-review.ro

Ford Romania gets new CFO

MAY 16 é Howard Johnson Grand Plaza Hotel organizes a fusion brunch. By

reservation only.

MAY 19 é Business Review organizes the British Business Forum at the InterConCOURTESY OF FORD ROMANIA

tinental Hotel. For more information, please go to www.business-review.ro.

MAY 20 – MAY 21 é SMARK organizes the Media Strategies 2010 event at Rin Grand Ho-

tel. By invitation only. Don Gelinas has spent over 30 years of his career at carmaker Ford

JUNE 9 é Business Review organizes the Investments in Renewable Energy

event. For more information, please go to www.business-review.ro.

JUNE 26 é The ‘Run Romania’ Sports Association organizes the ‘Run Romania’

project. BUSINESS REVIEW / May 10 - 16, 2010

Don Gelinas, 55, has been appointed chief financial officer (CFO) of Ford Romania, the position effective as of last month. Prior to this new appointment he was the CFO of AutoAlliance in the United States, a company which is a Ford/Mazda joint venture.

Gelinas joined the Ford team in 1978 and has since held several positions in its finance and business development department in Canada, the US, Mexico, Korea and the Philippines. Dana Ciuraru 9


FOCUS

Romania cuts public sector wages and pensions to comply with IMF deal, does not touch tax rates Public sector wages are cut 25 percent, while pensions and unemployment benefits are slashed by 15 percent. The Romanian government is taking drastic measures to reduce the budget deficit.

10

COURTESY OF PRESIDENTIAL ADMINISTRATION

President Traian Basescu announced last week that all public sector wages will be cut by 25 percent, while pensions and unemployment benefits will go down 15 percent in a move to comply with an IMF deal and reduce the budget deficit. According to an IMF forecast, Romania’s economic growth will be 0.8 percent this year, after contracting by 7.1 percent last year. These options were chosen over a much-speculated increase in VAT to 25 percent and of the flat tax to 20 percent. Under the terms of the loan, Romania must narrow its budget deficit to 5.9 percent of the GDP this year from 7.2 percent last year. “It is not an easy path but it is a necessary one because at present maximum 3 million people are working in the real economy. The real economy is the one that restructured heavily in 2009. It reacted correctly to the crisis. It is the state that did not react correctly to the crisis!” Basescu said, adding that the state “looks like a very fat man that has climbed on the back of someone very thin, and this is the economy.” The president said that the measures need to be implemented from June 1, and heads of institutions are

required to prune their staff, keeping only the best workers. All salaries are expected to be affected, the president said, including the minimum wage, but the government will compensate for the difference to prevent the minimum wage from falling below RON 600. Along with 15 percent cuts in unemployment benefits and pensions, subsidies will also be cut. “I want you to keep in mind the following thing: public sector salaries represent 28 percent of the budget. Social expenses represent 12 percent of the GDP, which is over 35 percent of the state budget. (…) We wonder how we can allocate enough money to schools and hospitals, and for the army and the police to function,” Basescu said. The president added that revenues to the state budget are 31 percent, while budget expenses are 41 percent, and the difference needs to be covered by restructuring the budget and social sectors. Other measures are expected like changes to the labor code to make the work force more flexible, and analyses of various taxes. According to local newswire Mediafax, the wage cut will bring savings of RON 7 billion (around EUR 1.7 billion). According to the same newswire, over 140,000 public sector employees will be sacked by the beginning of next year in order to keep staff wage bills within the limits agreed upon by the IMF. This is the equivalent of 10 percent of employees in the public sector being given their marching orders. Central Bank governor Mugur Isarescu said that so far the public sector has only managed to increase its deficit, while the external imbalance was adjusted only at the expense of the private sector. He added that going back to economic growth where adjustments have not been finished is not desirable, and that it was essential for these corrections to be made as soon as possible. Trade unions have threatened to protest against the measures. “Basescu and his people have ruined the country’s economy and we are in collapse because of their poli-

President Basescu has not minced his words about the state of the national economy

cies,” said Vasile Marica, the leader of Sed Lex trade union. Similarly, pensioners’ organizations have criticized the announced measures. “The likelihood that we will strike is high if these draconian measures are not abandoned,” said

Marius Petcu, head of the CNSLR Fratia union, which represents about 800,000 people, quoted by Reuters. “I think in two weeks we will know whether we will strike. We are talking about hundreds of thousands of people that need to be consulted.”

Money Romania has received so far Total: EUR 19.95 billion IMF: EUR 12.95 billion in a two-year stand-by agreement Yearly interest rate: 3.5 percent The loan will be disbursed in tranches until the end of 2010 Repayment will be made gradually until 2015 EU: EUR 5 billion loan Interest rate is calculated according to the Euribor rate World Bank: EUR 1 billion EBRD: EUR 1 billion BUSINESS REVIEW / May 10 - 16, 2010


FOCUS

Bailouts in the region Greece EUR 110 billion – a package of emergency loans from Eurozone governments and the IMF Greece needs to slash its budget deficit from 13.6 percent of the GDP last year to 2.6 percent in 2014 Latvia STOCKEXCHANGE

Tough times: The elderly will be hard hit by the move, which will see their pensions cut by 15 percent

The state looks like a very fat man that has climbed on the back of someone very thin, and this is the economy. President Traian Basescu

BUSINESS REVIEW / May 10 - 16, 2010

EUR 7.5 billion bailout in December 2008 It posted a budget deficit of 9 percent of the GDP for 2009 instead of the 4.9 percent initially promised Hungary In 2008, Hungary received EUR 12.3 billion from the IMF under the Emergency Financing Mechanism It also received EUR 6.5 billion from the European Union and EUR 1 billion from the World Bank

11


MONEY

Lenders balance brands and promotions With banks trying to revive lending activity, promotions for some of the credits in their portfolio have become a strong marketing tool meant to give impetus to the local market. Meanwhile, lenders intend to alleviate Romanians’ fear of finding themselves unable to repay their loans as a result of reduced purchasing power and insecure employment prospects. Anda Sebesi Many banks have tried to boost lending activity on the local market since the beginning of 2010, with promotions for some of the credits in their portfolio being one of the most popular marketing tools. UniCredit Tiriac Bank, CEC Bank, Raiffeisen, Garanti and BRD-Groupe Societe Generale are among the banks that have taken this approach to reviving lending. BRD is charging fixed interest of 7 percent a year for its Expresso de Primavara personal loan until May 31. The credit, up to RON 60,000, can be taken out in the local currency, for a maximum period of five years. Meanwhile, UniCredit launched in the middle of March the campaign “20 percent discount on the interest rate,” which promotes lower rates of both fixed and variable interest for its unsecured personal loan – for all five available products – by May 15. The “Credit for anything without a mortgage” product (Creditul pentru Orice fara ipoteca) is offered by UniCredit Consumer Finance in branches of UniCredit Tiriac Bank. “Now that we’re seeing the first signs of economic recovery, we are continuing to be close to our customers by reducing the interest rates for ‘Credit for anything without a mortgage’,” 12

Lenders’ marketing departments have been trying to promote their products without damaging their brands

said Gauthier van Weddingen, CEO of UniCredit Consumer Financing IFN. The TV campaign for this promotion is being rolled out under the name of Dancing for Me (Dansez pentru mine) and has the customer-led message that this loan allows you to make your dream come true. “At the moment it is extremely propitious to make such an investment, with interest rates for this product being very attractive,” says Greta Gabor, marketing communication manager of UniCredit Tiriac Bank. Elsewhere, Garanti Bank decided in the first half of April to continue to offer special conditions for its car loans until June 30. Customers have the option to choose between fixed and variable interest, reduced interest and a 50 percent reduction in commission. “We launched the offer for auto loans at the end of October last year and decided to extend it for the next three months because we intend to encourage our customers to benefit from the auto deals available in this period,” said Okan Yurtsever, manager of the

retail banking and bancassurance department of GarantiBank, in a press release in April. Raiffeiesen Bank has also announced that between April 6 and September 30 it is rolling out a promotional price campaign that targets mortgage-backed borrowing for individuals. During this period, customers benefit from reduced interest margins on new offered loans backed with mortgages – both in RON and EUR. Meanwhile, CEC Bank launched in April a promotion for its personal loan with life and lay-off insurance, which runs from April 6 to June 30. The interest rate for this type of credit is reduced from 12.15 percent to 10.4 percent, with the value of credit that can be taken out rising from RON 15,000 to RON 40,000, for a maximum period of 60 months. What is the significance of these moves, apart from trying to revive lending activity on the local market? “Firstly, it is the best sign that the competition between lenders has recovered. Secondly, it is one of the few

methods through which the appetite for loans can be revived. Purchasing power has dramatically decreased and people’s faith that they can pay a loan back to the bank has also diminished significantly,” says Roxana Marin, account manager at 2activePR. In her opinion, it would have been more efficient to build a mix between promotions and brand image communication. “It is well known that any promotion dilutes the brand, and as crowded as the banking market is at the moment, consumers will base their decisions strictly on the technical issues of lenders’ offerings,” says Marin. The retail segment has become the main source of profit for lenders in Romania, while risk on the corporate side is still high with some of the credits taken out by companies in previous years having proven to be nonperforming loans. In Marin’s opinion, this approach from lenders also has another objective: to alleviate Romanians’ fear of taking out a loan. But everything starts from the real needs of each individual to contract credit. BUSINESS REVIEW / May 10 - 16, 2010


MONEY

Raiffeisen Bank is promoting mortgage-backed borrowing for individuals...

... while BRD is charging a fixed interest rate of 7 percent for one of its personal loan products

“I think that the current crisis has overturned, in a way, the pyramid of needs for each of us, and financial decisions should take place on a more rational basis,” adds Marin. It is obvious that lenders’ battle for customers is fiercer at the moment, as the public’s disposable income has been hit. Plus, banks’ offerings are much more reserved than in the last few years, with the fall in interest on savings one of the outcomes. In terms of the means of communication, Marin says they are more diverse (with the football World Cup being an example), while endorsements are more and more popular (Millennium Bank-Holograf). “I think that promotions relate rather to potential customers than to existing ones. Let’s be honest, those who have already taken out a medium- or long-term loan can either still make the repayments or have handed back the keys to the properties they bought on credit,” says Marin. In her opinion, only those with no prior financial commitments to a bank will be able to take out a loan. She emphasizes that lenders should pay a lot of attention to adjusting their interest rates for their existing customers (who are already paying off credit at a certain level) and for those they want to attract (likely with lower interest rates). “It is sensible that this issue should be adjusted through adapted offerings and communication,” says Marin. But it would be very interesting to see – at least for one year – how consumers reacted (in value and volume) to these promotions and if the mechanisms promoted now have been strong and attractive enough to Romanians. “It is important to see if the current promotions reach their estimated objective. And I say this because they can’t simply be rolled out forever and lenders can’t afford the risk exposure of their entire marketing plan being based on promotions which it is known erode the brand,” she adds. BUSINESS REVIEW / May 10 - 16, 2010

13


PROPERTY

Metro expands network, brings total local investments to EUR 500 million

Baumit opens third plant with EUR 20 million investment

STOCKEXCHANGE

Baumit has now opened three plants X

Construction materials producer Baumit Romania has finished a EUR 20 million plant in Bolintin Deal, in Giurgiu county. This is the third plant it has opened, after construction works were started last year. The facility is located on a 42,000-sqm plot of land next to the Bucharest-Pitesti highway, which ensures better access to transport infrastructure. Last year, the company had a turnover of RON 158 million (EUR 43 million), up 30 percent from last year. Baumit Romania is controlled by Austrian group Schmid Industrie Holding. ■

Finnish investment fund puts EUR 25 million in Bragadiru project

14

Retailer Metro Cash & Carry has opened its fifth cash & carry distribution center in Bucharest in the eastern part of the capital. It is the 25th outlet of this type that the company owns locally. It spreads on a to-

tal surface of 13,000 sqm and required a EUR 15-20 million investment to be built. The total sales surface is 8,300 sqm, with 19,000 products being sold in the store, which employs over 250 people.

BNP Paribas: Office rents expected to fall, new stock at 280,000 sqm The available supply of office space for 2010 is approximately 280,000 sqm, with most of it set to be delivered in peripheral and decentralized parts of Bucharest, a BNP Paribas report shows. Rents are expected to go down but at a lower pace compared to 2009. Although the 280,000 sqm of new supply represents a smaller amount than deliveries in previous years, it is still a significant total that cannot be absorbed in the present market conditions, says the report. Overall, the lowest rents are in decentralized areas and in the outskirts, which are poorly covered by transport networks. In H2 2009, the variations in prime office rents in central areas, where supply is limited, suggest relatively stable levels for 2010, the report adds. In 2009 demand fundamentally changed compared to the boom period, when the majority of tenants were looking for high quality premises and the share of pre-letting in total transactions was very significant. Since the

STOCKEXCHANGE

Developer BDY Capital Invest, part of Finnish investment fund Ahlstom Capital, is set to invest EUR 25 million in a residential project with over 400 apartments in Bragadiru. The project, called Scandinavia Residence, is part of WRP West Residential Park, which also includes the Fortuna Residence complex. The land acquired in Romania a year ago was extended by 5,000 sqm, and architectural planning for the apartment buildings has started, shows the fund’s annual report. The first two buildings are set to be finished in the fall of 2010, according to the same source. ■

Metro’s new store will contain 19,000 products and employ a staff of 250

“The opening of the new distribution center proves that Bucharest is a continuously developing market, with a remarkable growth potential,” said Dusan Wilms, general manager of Metro Cash & Carry Romania. Metro Cash & Carry is part of Metro Cash & Carry International. It entered the local market in 1996 by opening its first distribution center in Bucharest. Today the store network includes 25 distribution centers: five in Bucharest (Militari, Voluntari, Berceni, Baneasa and Policolor,) two in Brasov, Constanta, Timisoara, and one center in Cluj, Bacau, Iasi, Craiova, Baia Mare, Galati, Ploiesti, Oradea, Sibiu, Suceava, Pitesti, Targu Mures, Arad and Deva. The company recently launched a new store concept – Metro Punct – targeting resellers. ■

Office rents are tipped to continue to fall

economic recession hit the real estate market, demand has shifted tipping letting conditions in favor of tenants. Currently, tenants are renegotiating rental contracts in order to secure discounts, found the report. As their main objective is cost reduction, they are also relocating to better areas or into higher quality buildings as soon as they obtain more favorable contracts. Demand has also changed in terms of office location. Areas in the

periphery or in decentralized zones are less in demand because of poor infrastructure and their distance from public transport. Another significant change the research found is tenants’ preference for final products delivered instead of pre-letting, which is considered to be riskier in the current economic environment. At present, average rents for class A offices located in central areas are EUR 190-220 per sqm per year. For class B properties situated in attractive areas the range is EUR 140-170 sqm per year while in secondary locations they vary between EUR 120140 per sqm per year, according to the report. Especially since H2 2008, net absorption fell significantly while completions remained at a relatively high level. Consequently, the vacancy rate more than tripled during this period. Even though take-up will be higher in 2010, the vacancy rate could increase as the decline in employment will continue to weigh on occupier demand. ■ BUSINESS REVIEW / May 10 - 16, 2010


PROPERTY Flanco opens new store in Kaufland gallery, plans ten new locations

Flanco’s new store cost RON 450,000

Flanco has opened a new store in Slobozia in the Kaufland gallery, following an investment of RON 450,000. The company expects sales of RON 5 million in the 480-sqm store’s first year of operations. Flanco estimates sales of RON 6-7 million in two years, once the

BUSINESS REVIEW / May 10 - 16, 2010

IT&C market picks up, after registering a significant correction of 50 percent in the past 18 months. “The positive evolution of Flanco sales in the past months makes us confident in the development of the company. The operational restructuring has been completed, and we are now focusing on developing and consolidating the network of stores,” said Adrian Olteanu, CEO of Flanco. “Flanco will continue to develop the network by opening stores in locations with high sales potential, looking at this point at ten new locations.” The company estimates that the store will attract 5,000 visitors monthly, out of whom 20 percent are estimated to make a purchase. Flanco International operates 70 stores throughout the country. ■

15


FOCUS

B. Braun puts faith in state and sets sights south

“Currently, the total outstanding debts of B. Braun Medical reach some RON 40 million, while our turnover last year reached RON 52 million,” Martin Wenderoth, managing director of B. Braun Medical, summarized the firm’s local situation for Business Review. As some 70 to 80 percent of the German company’s local market portfolio is covered by public hospitals, it follows that B. Braun Medical has to deal with a very ill patient in Romania: the state. 16

COURTESY OF B. BRAUN MEDICAL

Dana Ciuraru

COURTESY OF B.BRAUN MEDICAL

B. Braun Medical has to recover, mostly from the Romanian state, outstanding debts of some 80 percent of last year’s turnover, which reached EUR 12.3 million. Martin Wenderoth, managing director of the company, told Business Review that despite this situation, the German company plans to invest EUR 6 million in the next two years, to expand production and to make Romania a hub for South East Europe. Moreover, Christian Braun, CEO of B. Braun Central and Eastern Europe and member of the founding family, added that his plans are for Romania to reach the average European turnover, meaning EUR 100 million.

Christian Braun, CEO at B.Braun CEE

Martin Wenderoth, managing director B.Braun Medical

Wenderoth is still confident of recovering the debts despite the fact that Romania’s economy is ailing, as the EUR 20 billion bailout fails to give the patient a new lease of life. “I think the Romanian state has the same problems as many countries in the region. We have legally binding contracts so sooner or later I am quite positive that we will get the money back,” said the managing director. However, one might ask: What are the elements that keep B. Braun an active player on the local market despite the company’s situation and the economic climate that has been so severely affected by the recession? Wenderoth responds that the Romanian market has a current capacity of some 3.9-4.1 percent of the Gross Domestic Product (GDP), while the European average is 7-8 percent. “So, slowly but surely Romania will have to reach the European average,” he says. And the company has a tradition of being patient. “B. Braun started more than 170 years ago in a small pharmacy in a town in central Germany, since

when we have managed to develop a multinational company which last year registered a EUR 4 billion turnover,” Christian Braun, CEO of B. Braun Central and Eastern Europe and member of the founding family, told Business Review.

CAPITAL

INFUSION

Currently, B. Braun Medical has collaboration contracts with 400 of the total 460 hospitals, out of which 60 are in Bucharest. In addition, the company has inked contracts with another 200 customers, like veterinary clinics, pharmacies and distributors, betting on the private healthcare sector for the future. “I see the private healthcare market currently at 5-10 percent but growing, as companies like Euroclinic, Medlife and Medicover continue to open private hospitals,” said Wenderoth. Despite the economic turmoil, B. Braun Medical officials have announced that they have EUR 6 million of investment plans for the following two years. “This year, we are going to invest EUR 4 million to increase the capacity of the production site in Timisoara from 12 mil-

lion bottles of infusion solutions by an additional 6-7 million units next year, in order to reach a total capacity of 19 million bottles by 2011. We will create another 40 new jobs at the production unit in Timisoara. Also, for 2011, we have plans to invest an additional EUR 2 million. This money is from our private funds,” said the managing director. These investments will join the EUR 1 million project completed last year to move the company’s offices and warehouse to Remetea Mare, close to Timisoara. “Our plan is that this location will be used as a hub for other neighboring countries’ needs, a measure that will strengthen Romania’s position in the B. Braun group,” added the official.

REGIONAL

TARGETS

Locally, Braun has plans to reach a EUR 100 million turnover soon. “The total turnover reached in Romania last year was RON 52 million (EUR 12.3 million). The target is that Romania will reach the European average of EUR 100 million. For instance, last year B. Braun’s turnover in the Czech Republic was EUR 90 million,” said Braun. According to him, the general target for South Eastern Europe is for B. Braun to be the dominant and most reliable partner for the healthcare systems in the market. He gave an example: the European market for infusion solutions is approximately 600 million bottles per year, while B. Braun currently provides some 300 million of this quantity per year to the European market. And the company keeps expanding in the region. “At the moment we are going further south. We opened last year our subsidiary in Croatia, we started to promote ourselves in Serbia and Macedonia and we will expand to the former Yugoslavian republics in a few years. We already have an office in Ukraine and of course in Russia,” said the CEO. dana.ciuraru@business-review.ro BUSINESS REVIEW / May 10 - 16, 2010


ENTREPRENEUR

The man with the wind in his sails With an estimated turnover for this year of EUR 3.5 million, ROBERT AMBROZIE has big plans for Blue Marine Yachts. His company will launch, in cooperation with the UKbased Royal Yachting Association (RYA), Black Sea Sailing School, the first RYA school in Eastern Europe. Anda Sebesi Robert Ambrozie, general manager of Blue Marine Yachts, started his career back in 1990, after which he worked in different sales departments, and was in charge of managing a wide range of teams. After ten years of solid experience in sales he decided to set up his own company, specialized in interior design and project management. But he changed paths in 2004: “I found the inner strength to change my field of business and I took over the running of the sales department of a company specialized in motor boats,” says Ambrozie. Three years later, he changed direction again, to entrepreneurship. “In 2007 I decided that I wanted to go into yachting,” remembers the businessman. The idea to set up such a company came in the only place where such an idea could come: at sea. He saw the opportunity for this enterprise based on its significant potential on the local market. “I thought what a pity it was that so few people had enjoyed the extraordinary sensations of yachting. I wanted to do something to give other people the joy, thrill and challenge that can provide an escape from the tedium of day-to-day existence,” says Ambrozie. BUSINESS REVIEW / May 10 - 16, 2010

He chose to set up Blue Marine Yachts – a company specialized in importing sailboats – mainly because of his passion for yachting, but also because he saw the need for this business and the potential of the Romanian market. “The characteristics of the Romanian coastline and the possibility of developing a hub for yachting here played a significant role in my decision to establish this business. I had the premises, the impetus, and I had the vision of what was going to happen in the coming years. It was almost impossible not to take up the mantle,” says Ambrozie. The most difficult moment for the young entrepreneur was when he decided to invest a significant amount of money in a stockpile of boats, at a time when the market was still virgin. But despite the uncertainty, he preferred to rely more on his intuition and less on market research. “I felt I had to do it. Even in times of crisis,” adds the general manager. Like many other entrepreneurs he has no regrets, because everything evolved naturally. Plus,

“I contributed to the development of a noble sport and so I am running this business from passion,” says Ambrozie. He adds that he rues the fact that Romania’s nautical infrastructure is less developed than in other countries. “I am referring not only to Western countries; I am looking closer, to our neighbors in the Black Sea area,” adds the young entrepreneur. If he started another business, he would like things to happen more quickly than in the yachting industry. He also aspires to make his mark on the Romanian lifestyle. “I would like the power to change Romanians’ mentality towards unwinding and leisure time. They have resorted only to simple activities that don’t develop the spirit or the imagination in the last few years,” says Ambrozie. In his opinion both the biggest challenge and satisfaction in his business is when he manages to impart his passion for yachting to those who have never imagined being at the steering wheel of a boat, being propelled by the wind.

Although yachting is still a young market, it is also an effervescent one. While it might now seem that the local yachting scene is very crowded – with many companies importing luxury boats – the current players have focused on motor boats. But Ambrozie is not afraid of competition: he sees it as a driving force for the market. “It motivates us and eventually it is the engine for progress for every business,” says the entrepreneur. According to him, Blue Marine Yachts is market leader on the sailing boat segment. “We have tried to develop this segment of the market in recent years to the exclusion of motor boats because we believe that sail navigation offers more opportunities to explore the world,” says Ambrozie. He adds: “The great advantage of sailing boats is that wind is the main motor. And wind is plentiful and free.” As for the future, Ambrozie says that the company intends to do something more than “importing freedom”. “We already have a project we’re developing in cooperation with one of the top yachting association from Great Britain, the Royal Yachting Association (RYA), as part of which we will start the first professional school of yachting on the Black Sea in June. We are very proud that even though the accreditation process took more than one year, we managed to launch Black Sea Sailing School – the first RYA school in Eastern Europe,” says the general manager. He adds that in addition to the RYA courses the company intends to create an events calendar with many nautical activities and boat races.

Blue Marine Yachts é 2008 turnover: EUR 2.5 mil-

lion é 2009 turnover: EUR 2 million é 2010 turnover: EUR 3.5 mil-

lion é Number of employees: 8 é Initial investment: EUR

4 million é Total investment (estimation): EUR 5-6 million 17


BALANCE

Sun, sand and saving as tourists stay closer to home As the recession exerts pressure on expenses, tourists in Romania have had to lower their aspirations. This has meant that they have either decided to spend their holiday in Romania rather than go abroad, or chosen cheaper alternatives and destinations. The May 1 mini-break opened the summer season and signs are encouraging as pundits in the field were not expecting that many people to travel.

Some 80,000 tourists spent the May 1 break in Romania, kicking off the summer season. This influx exceeded the expectations of ANAT, Traian Badulescu, general manager of ANAT Media, tells Business Review. A detailed analysis shows that most of these holidaymakers went to the Romanian seaside, double the ANAT forecast. “This year we estimated 15,000 tourists would come to the seaside and there were 30,000. This means that many decided to go at the last minute and, let us not forget the good weather, which also played an important part. What can be seen is that Romanians have an appetite for tourism,” says Badulescu. Of these 30,000 seaside goers, the vast majority – 20,000 of them – chose the Mamaia resort. Some 6,000 went to southern seaside resorts such as Neptun, Jupiter and Eforie Nord while 6,000 went to Vama Veche and Costinesti. Certain operators had sold out their packages for May 1, especially hotels in Mamaia, from mid-April. “The Romanian seaside is performing well. People have started to learn to book early which ensures they get the package at a discount,” says Badulescu. “This year, there was a 40 percent hike in the number of tourists who went on the May 1 break through Eximtur, and the agency’s cash-ins also increased by 20 percent,” says Noemi Hagan of Eximtur agency. Other destinations that hosted 18

tourists on their May 1 break were mountains and rural areas. Valea Prahovei had an occupancy degree of approximately 50 percent, the equivalent of 10,000 tourists, while rural hostels were chosen by more than 40,000 tourists who went for regions such as Bran Moieciu, Marginimea Sibiului, northern Oltenia, Maramures, Bucovina, Neamt and Vrancea. “Compared to the Easter holidays, this time there were many more young tourists, who chose active relaxation such as biking,” said ANAT. The number one foreign destination was the Bulgarian seaside, to which 10,000 Romanians headed. This zone was the most accessible both in terms of distance and prices. Albena, Golden Sands and Balcik were the most popular resorts. And thousands of tourists opted for Northern Greece, Cyprus or Turkey, or purchased city-break packages to visit other European cities, says Badulescu. The recession has convinced Romanian tourists to drop their plans to spend their holiday abroad in favor of domestic destinations. “This is true especially in the case of short, out-of-season breaks,” says Hagan. The agency posted this year a hike of 98 percent for Romanian destinations (other than the seaside) from January 1- April 30, on the previous year. So those who choose to tighten their belts and take a more frugal holiday will go to more accessible places such as Bulgaria, continental Greece, Tunisia, Egypt, Croatia and European capitals where the package is cheaper because of low-cost flights.

COURTESY OF DANA CIURARU

Otilia Haraga

Penny-pinching Romanians have eschewed expensive long-haul destinations and opted to holiday closer to home this year

“Last year, a 20-25 percent decline in the number of tourists who chose to spend their holidays abroad was observed, while the number of people who preferred domestic destinations was also 10-15 lower,” said Badulescu, calling this “a natural thing in times of crisis.” Three examples of destinations that were not as lucrative are Tunisia, Turkey and Cyprus. “The market of charter flights (which is expected to recover this year) was significantly affected by the crisis, having posted drops of 2050 percent for some destinations. One of them was Tunisia, which saw a 40 percent decrease. Paradoxically,

Tunisia is cheaper than other destinations although it is more remote,” says Badulescu. Turkey also suffered a 20 percent decrease and Cyprus 20-30 percent. However, Romanians still go abroad more than foreigners come here. A study by the National Institute of Statistics found that in the first quarter of 2010, 1.42 million foreign tourists came to Romania. The number is 3.9 percent lower than during the same period last year. Most foreign tourists come from European countries, especially neighboring nations like Hungary and Bulgaria, but there are also Ital-

Low-cost options like camping are more suited to today’s financial climate BUSINESS REVIEW / May 10 - 16, 2010


BALANCE ian, German and Austrian tourists. By contrast, the number of Romanian tourists who go abroad is roughly double, at 2.4 million. What sold well last year were exotic luxury destinations and cruises. Badulescu attributes this to two reasons. Firstly, those who have money still spend lavishly even in times of crisis and secondly, there were substantial discounts from cruise liners, as much as 70 percent and averaging out at 20-30 percent. “The paradox of the crisis is that many went for an upgrade from pre-

mium to luxury packages and some ‘dared’ to purchase luxury packages – 25 percent more in 2009 compared to 2008,” said Badulescu. Among the most popular destinations in Romania this year will be the Black Sea coast with resorts such as Mamaia, Neptun, Jupiter and Eforie. Tourists will also go to spa resorts. Top foreign destinations will most likely be Bulgaria, Greece, Turkey, Croatia/Montenegro, Spain, Tunisia and Egypt, says Hagan.

Plenty of room: Foreign tourists holidaying in Romania are still relatively few in number

What destinations will sell this year? é low-season, advance booking

or last-minute charters to destinations such as Tunisia, Egypt, the Greek islands, Turkey, Spain é individual offers when tourists

drive to Bulgaria, Greece, Croatia, Hungary and Romania é the Romanian Black Sea coast,

because it is cheap, nearby, discounted and you don’t have to take the plane é spa resorts in Romania é Hungary and Austria, because

they are close by, the services are very good, and Austria has a longer ski season é European capitals for mini-

breaks (four nights on average) in Spain, France and Great Britain as the price of packages has dropped as a result of lowcost flights and special accommodation deals

BUSINESS REVIEW / May 10 - 16, 2010

19


CITY

Massive Attack to play Bucharest ... while Orquesta Buena Vista Social Club return for fourth time again next month...

Massive Attack will come back to Bucharest on June 27 to perform at Zone Arena, the newest and most modern concert location in Romania. Known as the pioneers of triphop and one of the most innovative and influential bands of their generation, Massive Attack have released

Michael Haneke retrospective

COURTESY OF FUNDATIA PHOENIX

COURTESY OF ONE EVENT

Trip-hop duo Massive Attack

in their twenty-year career five studio albums, two EPs, sixteen singles, one compilation and two soundtracks which have sold more than ten million copies worldwide. The duo, formed of Robert "3D" Del Naja and Grant "Daddy G" Marshall (the founding members of the group), will debut in Bucharest their new album, Heligoland, released in February almost seven years since their last studio effort, 100th Window. The mix between their hypnotic music, explosive show and cinematic visuals, which include messages about political persecution and civil rights, always manages to impress an audience eager for new and powerful experiences. The Massive Attack concert is produced by One Event. From April 30 tickets for the concert are available at prices between RON 95 and RON 175. Otilia Haraga

Cuban rhythm is heading for Romania

Orquesta Buena Vista Social Club will follow up their 2006 visit to Romania with a new show taking place on May 24 at Sala Palatului in Bucharest. Guajiro Mirabal, Manuel Galban, Barbarito Torres, Aguaje Ramos and ten other instrumental performers will play famous pieces like Chan Chan, El cuarto de Tula, Candela and Dos gardenias, and will pay tribute to their former col-

leagues, Ibrahim Ferrer, Compay Segundo, Ruben Gonzalez and Orlando Cachaito Lopez. The concert is organized by the Phoenix Cultural Foundation which since 2005 has brought to Bucharest celebrities like Omara Portuondo, Eliades Ochoa and Roberto Fonseca. Tickets for the Bucharest show will be available on the websites www.eventim.ro, www.bilete.ro, www.blt.ro or from Germanos, Vodafone and Muzica stores and also from Humanitas and Carturesti bookshops. The original albums by Buena Vista Social Club are distributed in Romania by A&A Records and will also be available at the concert, at promotional prices. Bucharest audience have had the chance to participate in many Cuban music concerts, with a lot of bands from the country making use of or referencing the Buena Vista Social Club brand. Otilia Haraga

Romanian Short Waves 2010

Michael Haneke’s films tackle controversial and hard-hitting themes Thirteen short films from Romania will be showcased as part of the event

A retrospective of ten movies directed by famous Austrian filmmaker Michael Haneke will run at the Romanian Peasant’s Museum between May 18 and 28. The event will open with the director’s latest film The White Ribbon, which received the Palme d’Or accolade at the Cannes International Film Festival in 2009. Other titles from Haneke’s oeuvre that will feature in this program include Cache, which explores the BUSINESS REVIEW / May 10 - 16, 2010

mechanisms of guilt and was inspired by the massacre of the Algerians in Paris in 1961. The Piano Teacher, starring French actress Isabelle Huppert as Erika Kohut, a 40-something piano teacher who lives under the same roof as her tyrannical mother and forms a strange relationship with one of her students, will also be shown. Otilia Haraga

Thirteen local short films that have been selected by the program Romanian Short Waves can be seen during this year’s Cannes Film Festival. The productions will run in a section called Short Film Corner. The list of shortlisted titles in this special program includes the most acclaimed short films made in Romania over the last year such as The Cage by Adrian Sitaru, which won

an accolade at the Berlinale Shorts, Music in the Blood by Alexandru Mavrodineanu, selected at Clermont-Ferrand 2010 International Short Film Festival, and Derby by Paul Negoescu, selected in the Berlinale Shorts Competition. The seventh Short Film Corner takes place between May 12-22, as part of the Cannes International Film Festival. Otilia Haraga 21


CITY

Europe Day celebrated with sarmale Take to the sky with Red Bull Flugtag 2010 tasting marathon

Making mincemeat of the competition

Europe Day was celebrated at Bucharest Sector 2 City Hall with a marathon of sarmale tasting. Bucharesters were invited to sample sarmale cooked to famous recipes by chefs from 12 top restaurants in the capital. Some 32,000 sarmale were served free of charge to anyone who cared to come, washed down with over a ton of wine from Romanian traditional vineyards. Attendees were invited to eat sarmale from the 12 chefs and Sector 2 City Hall and finally conclude which tasted and looked the best. Otilia Haraga

AG Weinberger opens Al di Meola concert Romanian guitarist AG Weinberger will warm up for Al Di Meola New World Sinfonia at the latter’s May 25 concert at the Palace Hall. Meola will be returning to Bucharest accompanied by New World Sinfonia. The two artists will reunite after playing together on the same stage in Budapest in 1992. Self-taught guitarist Weinberger has been playing since the age of 11, and had won numerous prizes by the time he was 20. In the mid 80s, he made the transition from rock to blues guitar, consolidating his musical style. In 1996 he released the first blues album in Romania, Good Morning, Mr. Blues, following it up a year later with his second disc, Standard Weinberger, which took blues in Romania from the underground to the mainstream. Weinberger was nominated for Grammies

Magnificent men with their flying machines

Unidentified flying objects (and we’re not talking alien ships) will fill the Bucharest sky before landing in the Dambovita River on September 19 at Red Bull Flugtag 2010. Participants who manage to defy gravity even briefly will be generously rewarded. Anyone willing to work laboriously on a flying object of

Europe Day marked in unconventional fashion

Romanian guitarist AG Weinberger

for his 2006 album Nashville Calling. Tickets for the concert are available in the www.myticket.ro network and in Diverta stores priced between RON 80 and RON 250. Otilia Haraga

The Parade of Unconventional Fashion, an event to mark Europe Day, May 9, took place last week. It was formed of three collections: clothing and accessories made from reusable materials (such as paper, plastic, cardboard); T-shirts painted with the national flags and symbols of EU countries (both collections made by pupils of the national college Elena Cuza); and coats painted manually by two members of the Center for Relaxation Activities and Occupational Innovation of Sector 2 City Hall. Otilia Haraga

SummerJamFest is taking place for the fourth time this summer, with much more urban music styles than in previous years, such as hip-hop, reggae and 22

soul, rock, electro, funk and drum ‘n’ bass. The event will take place from July 2-4 in Paulesti forest (Prahova County) and will feature Promoe, Ziggi, DJ Vadim’s The Electric, DJ Rafik, JFB, Sabac Red, A-Skillz, Gojira and Maximilian. Tickets for SummerJam Fest are on sale in the Diverta store network and are also available on the website www.myticket.ro. Between April 19 and May 10 tickets for all three days of the festival will be on sale at RON 80, including camping. Prices will depend on the date of acquisition, with tickets getting more expensive as the date of the event gets closer. Otilia Haraga

The event was held to mark Europe Day

Universitate Square statues to be relocated to Izvor Park

SummerJam Fest comes to Paulesti forest

SummerJam takes place in a forest

their choice is advised to submit their projects by June 4, using an application kit from Red Bull. Flying masterpieces must not be heavier than 150 kilograms, nor have a wing span of more than 8 meters. Those who manage to have their project selected (the lucky ones are set to be announced by June 15), move onto the second stage: construction of the flying machine. The deadline for that is September 18. The ‘flight,’ or something that will resemble a flight, will take place on September 19, the day of the competition. The overall winner will get a weekend in Salzburg, which includes a visit to the famous museum of aviation, Hangar 7, and a flight with an old B25plane. The second prize is a trip to the 2011 Red Bull Air Race Portugal. Third position wins a trip to Budapest for the Red Bull Air Race 2011. Set your sights high! Otilia Haraga

The statues are being moved to Izvor Park

Statues from Universitate Square will be relocated to Izvor Park to make room for the building

of an underground parking lot. Four statues will be hosted by Izvor Park for more than a year. Bucharest mayor Sorin Oprescu said he was advised to put the monuments in storage but that he had decided that the public space should not be deprived of them. The cost of relocating the statues will be borne by the investor. The underground parking lot will be built following a private investment of EUR 15 million and will have two levels and 325 parking spaces. No trees will be cut down to make room for it and the statues will be returned to their original locations once the works are finished. Otilia Haraga BUSINESS REVIEW / May 10 - 16, 2010



Business Review No. 17, May 10 - 16