Business Review Issue 38/2013 November 25 - December 1

INTERVIEW: Spanish playwright Alfredo Sanzol was in Bucharest earlier this month to attend two performances of his play La Luna.

He sat down with BR and shared his thoughts on the value of stories in society and his place in Spain’s literary scene »page 14

ROMANIA’S PREMIER BUSINESS WEEKLY

November 25 - December 1, 2013 / VOLUME 17, NUMBER 38

RETAILERS GO BACK TO BLACK The third local Black Friday shopping spree saw Romanian retailers boost their stock, step up their website infrastructure and rally their staff to avoid past glitches and cope with the customer spike » page 10

T OUOW! N

NEWS

NEWS

Cash injection

Hemp hopes

The controversial clawback tax will see pharma firms hand over more than EUR 400 million to the government next year, according to the CNAS

Hemp products maker Canah International plans to almost double its business after an 85 percent increase this year on the back of growing exports

» page 4

» page 6

www.business-review.eu Business Review | November 25 - December 1, 2013

NEWS 3

NEWS in brief

BUSINESS AGENDA November 25

AGRICULTURE Foreigners get green light to buy Romanian farmland from 2014 Foreign citizens will be able to buy farmland in Romania after the 2014 liberalization, but Romanians will have pre-emption rights to purchase land that is up for sale, according to a new draft bill, Mediafax has reported.

The Ministry of Agriculture had previously proposed a draft bill which would have imposed stricter conditions on those looking to buy farmland in Romania, be they Romanians or foreigners. Under the initial draft, ownership of farmland was to be limited to 100 hectares and interested buyers had to prove they had a background in farming and agricultural know-how.

The bill was criticized by legal experts who argued that had it become law, it would have blocked the market.

According to the latest draft, the only limitation that will be imposed on foreign buyers will be the pre-emption rights to purchase farmland that is up for sale granted to Romanians.

Domeniile Sahateni to grow to EUR 1.3 mln in 2013 Romanian winemaker Domeniile Sahateni estimates it will grow its turnover by 30 percent this year to about EUR 1.3 million, Aurelia Visinescu, the com-

WEEK in numbers

pany’s oenologist and managing director, told BR. The firm has recently expanded its portfolio with a new wine: Anima Syrah, which is available in a limited edition of only 14,204 bottles. The company’s future development plans include the planting of 14 hectares with local grape vine varieties in 2015. Visinescu is also considering the acquisition of an additional 10-20 hectares of land. “As for increasing the production capacity, the answer is definitely no. We are, however, planning to increase the winery’s performance in the near future,” she said.

AIRLINES Tarom cuts losses by 30 pct in first 9 months State-owned airline Tarom has reported nine-month revenues of RON 972 million (approximately (EUR 218 million), up by 1 percent y-o-y, while losses reached RON 83 million (approximately EUR 18.6 million), down by about 30 percent y-o-y, according to company data.

The loss reported for the first nine months was 13 percent below the target set in the company’s management plan.

During the same period, the Romanian carrier operated 12,532 flights, down by 188 on the same period of last year, but reported a 2.6 percent increase in the number of passengers.

Last week, Tarom named Dante Stein as the new president of the board of administration. He is honorary counselor to PM Victor Ponta. Manuel Donescu, state secretary at the Ministry of Transport, will act as VP.

EUR 410 mln IT the value of total sales of durable goods so far this year in Romania, according to the GfK Temax survey, carried out by the firm’s retail and technology division

8% Romanians drank 8 percent less beer in the first eight months of 2013, according to Constantin Bratu, general manager of the Brewers of Romania Association, speaking during a Mediafax event

Intrarom to provide EUR 4.2 mln of IT&C services to Ministry of Education IT&C company Intrarom, part of Greek group Intracom, will supply the Ministry of Education with IT services worth EUR 4.2 million (approximately RON 18.5 million), VAT included. The winning offer was submitted in collaboration with Siveco Romania and Power Net Consulting.

The contract was awarded a month ago and will be implemented over 13 months, according to Mediafax newswire. Companies such as UTI Grup, S&T Romania and a consortium made up of Insoft Development & Consulting, Insoft Application and Romsys also took part in the tender.

The IT services will be used in a

methodological and IT platform for organizing and developing programs regarding high-school admission, the certification of professional qualifications, and the movement of schoolteachers.

The project will be financed from European funds.

ENERGY Big industry seeks exemption from green energy tax

09:00 ∫EVENT Business Review organizes the fourth Focus on Telecom, where big telecom players outline their plans for the local market, at Athenee Palace Hilton. Registration is open. Find out more at www.business-review.eu/brevents 10:30 – 13:00 Renault Romania and the Romanian Sports and Olympic Committee (COSR) organize an event at the Olympic House in Bucharest. By invitation only.

November 26

The Association of Big Industrial Energy Consumers (ABIEC) said last Monday that the amount of eco-taxes its members have to pay on top of their energy bills is threatening the future of local industry.

The ABIEC, whose members include steelmaker ArcelorMittal Galati and cement maker Lafarge Romania, suggested the country follow the model of more powerful EU members and exempt large consumers from paying some renewable subsidies.

For instance, exemption for big industry in Germany can go as high as 95 percent for the green tax, while in France it stands at 96 percent. ABIEC members are seeking the same levels in Romania, arguing that they have constantly invested in reducing their energy costs.

The green certificate costs for big energy consumers have spiraled in the past two years as more renewable projects have started operations.

09:15 Hart Consulting organizes the conference Gender Diversity: How is it seen in Romanian Business? at Elisabeta Restaurant. By invitation only.

PROPERTY

December 4-5

Local businessman invests EUR 35 mln in eco-residential complex near Bucharest The first stage of the Casa Vlasia residential complex being developed

by Romanian businessman Valentin Bitoiu was opened this week. Some EUR 15 million has been invested in a farm and 35-room inn. Another EUR 20 million will be put into 200 villas, the construction of which should start next year, announced the businessman.

Bitoiu, who is co-owner of the ACMS construction company, developed the S-Park office complex in Bucharest which he sold for EUR 100 million to Immoeast in 2007. His fortune is estimated at around EUR 22 million.

Casa Vlasia is located some 30 km from Bucharest near the Snagov Forest and is promoted as the first eco-residential complex in Romania.

09:00 - 10:30 AmCham Romania hosts a committee meeting on competition and state aid at its HQ in Bucharest.

10:00 Sanador organizes an event to inaugurate the heart surgery department at its hospital in Bucharest. By invitation only.

November 27

November 28

11:00 - 12:30 AmCham Romania holds an event to mark the launch of the AmCham Impact Study, comprising an analysis of AmCham’s impact as an organization as well as its members’ collective impact on the Romanian economy.

By invitation only.

November 29

14:00 The healthcare taskforce of the Foreign Investors' Council organizes a meeting at its HQ in Bucharest.

The first Strategic Leadership Forum is organized at Hilton Bucharest. Luis Huete, IESE Business School professor, who is also a top management consultant, speaker, author and executive coach, will be keynote speaker. Event is fee based. For registration and additional info, visit www.strategicleadeship.ro

December 9

17:30 ∫EVENT Business Review organizes the first Romanian Investors Forum, an event dedicated to the Romanian companies and entrepreneurs that have stood out on the local market or abroad at Pullman Hotel. The event includes a session of discussions and presentations, followed by a ceremony and a networking dinner. Registration is open. Find out more at www.business-review.eu/br-events

www.business-review.eu Business Review | November 25 - December 1, 2013

4 NEWS PHARMA

Government expects to collect over EUR 400 millon in clawback next year

P

ulation. “I believe that for this tax to work it needs to be bearable and for this to happen it needs to be reasonable,” said Stoica.

Clawback remains unpredictable

Photo: Vlad Virban

roducers of medicines are expected to pay RON 1.9 billion (EUR 427 million) in clawback tax next year, in a scenario that does not take into account the update of the reimbursement drugs list, said Cristian Busoi, president of the National Health Insurance House (CNAS), during the second Pharmaceutical Industry Roundtable, organized last week by Business Review.

Busoi acknowledged the current level of the clawback contributions, accounting for between 16 and 20 percent of a producer’s turnover, “cannot be easily supported” by producers of generics, which are drugs with expired patents, or by the innovative industry. “I think the clawback tax had a strong motivation and the idea of having a mechanism to control costs in the healthcare system for prescriptions and the release of drugs to patients is fundamental,” said Busoi.

The clawback came into force in 2009 in a move by the authorities to control the consumption of drugs. However, the contribution mechanism is on its fourth version to date and producers are claiming they have to finance the surplus consumption of drugs. “The clawback

Panelists debated various issues around the claw back tax The current clawback mechanism is basically overspending. Whatever is overspent on the budget is paid by one has been challenged in court by several player in the industry, the producer. No producers, some of which have won faone else, including the one who drew vorable decisions to be relieved from up the budget, has to deal with it,” said paying it.

Valeriu Stoica, founding partner at Luca Visini, general manager of Eli Lilly, a member of the Romanian Association law firm STOICA & Asociatii, blame the of International Medicine Manufacturers contradictory decisions in court on a “series of hesitations” in the current reg(ARPIM).

The authorities are currently pondering the approval of a differentiated clawback system for generics and originals, although the CNAS head hinted this could happen only if the estimated collection of the contribution for next year remains the same. With Romania set to approve the update of the reimbursed drugs list next year, Busoi warned that the additional consumption will have to be paid for by producers through the clawback tax. He says that 141 new molecules are on the approval list.

According to Mihaela Iancu, head of the pharmaceuticals and medical devices departments within the Ministry of Health, the list will be updated next year. Busoi stated the quarterly approved budget for pharmaceuticals stands at RON 1.51 billion (EUR 337 million) for next year. ∫ Ovidiu Posirca

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

Jean Baptiste Dernoncourt is the new executive director of Carrefour Romania, the retailer has announced. He replaces Melchior de Polignac, who stepped down. He had held the position since May 2011. Dernoncourt is Carrefour Romania’s former financial director.

Nicolas Maure

will take the helm at Dacia and Renault Romania from January 2014, replacing Jerome Olive, who will become industrial manager at Renault for the European region.

Maure will also take over the position of Renault industrial manager for the Euromed-Africa region. He started working for the French carmaker in 2000 and was manager of Dacia’s mechanics plant between 2006 and 2008. After leaving Romania, Maure was appointed vicepresident of mechanics at Renault-

Nissan’s purchasing organization and manufacturing performance director at Renault. He graduated from Ecole Central de Paris (ECP) with an engineering degree and holds an MBA from INSEAD.

Alessandro Barini

is the new Italian chef at Cucina Restaurant, at the JW Marriott Bucharest Grand Hotel. His career spans over 20 years. Barini was born and started his professional career in Modena, where he attended the culinary arts school in Carpi, and went onto learn his trade in the traditional Emilia trattoria and osteria. In 2000 he became the chef patron of a restaurant and winery in Cesena, and went onto earn mentions in Italian guides such as Gambero Rosso and Michelin. In 2007 he moved to Vienna, where he lived and worked for five years.

www.business-review.eu Business Review | November 25 - December 1, 2013

6 NEWS FMCG

Former Medicover shareholder looks to double hemp business R

omanian maker of hemp products Canah International is looking to almost double its business, which grew by 85 percent this year to about EUR 4 million, fuelled mainly by growing exports, said Dan Lazarescu, the company’s main shareholder and manager. He is a former shareholder of private medical supplier Medicover and software firm TotalSoft.

“2013 has been a very good year.

We got close to our production capacity limit sooner than we had thought,” he said. The factory – which produces hemp oil, hemp seed flour, hemp seed fibers and other related products, both organic and conventional – could double its capacity in about seven or eight months following an investment of about EUR 700,000EUR 1 million, he said. The company is now looking for ways to raise the money, but Lazarescu has ruled out a bank loan or EU funds. “Financing an industrial business should be treated differently from financing a real estate one. Banks don’t really understand this and they don’t finance industrial projects (…) As for EU funds, from what we’ve learned, the best case scenario would mean waiting at

least two and a half years to get the money,” he said. By comparison, it took less than a year to get the factory operational after securing SAPARD funds in 2006.

While Romanians’ interest in healthy eating is on the rise, exports represent some 80-85 percent of total sales. “In Romania we sell under the Canah retail brand but we export in bulk,” said Lazarescu. The main foreign markets are the UK, Germany and the Netherlands, but the company says it exports all over the world. “We have exported everywhere from Australia and South-East Asia to North America and the Vatican. Because this is a niche market, consumers are spread everywhere,” he added. In Romania, where its products are mostly available in specialized shops, the company has invested some EUR 80,000-EUR 100,000 in a promotional project.

Canah International’s factory is located in Salonta, western Romania. It has a production capacity of 1,000 tonnes of hemp per year. This year it processed 850 tonnes but almost all of this was imported from China and France as there are very few local sup-

Dan Lazarescu, Canah International’s main shareholder and manager pliers, said Lazarescu. “In 2014 we will spend between EUR 1.3 million and EUR 1.5 million on raw materials.

It is a shame this can’t go to Romanian farmers,” he said. Back in 1990 some

170,000 hectares were cultivated with hemp in Romania, but this has dropped to several hundred at present, according to company data. ∫ Simona Bazavan

FMCG

Ale-ing market: high taxes stifle beer consumption and hospitality industry, warn brewers

R

omanians drank 8 percent less beer in the first eight months of 2013, marking the lowest volume during this period since 2008, said Constantin Bratu, general director of the Brewers of Romania Association, during a Mediafax event last week.

The drop comes after the authorities hiked the excise tax on beer by 10 percent (in euro) at the beginning of the year, despite the lower purchasing power, said Bratu, who warned that the drop in beer sales is creating ripple effects in other industries as well.

For every job in the beer industry, six are generated in the hospitality trade and 12 in the entire economy, according to Brewers of Romania data.

Moreover, some 28 percent of sold volumes go into HoReCa. Even without tax hikes, the local hospitality industry is under strain from consumer belt-tightening – de-

Constantin Bratu, general director of the Brewers of Romania Association

spite the fact that the industry still has room for growth. In Romania there is one hospitality unit for 1,050 people, compared to 375 people in Italy, said Bratu.

Economic growth should come from improving the tax collection and fighting tax evasion, recommended Bratu. According to him, the beer sector already contributes 60 percent of all the excise tax revenues collected by the state for alcohol products, twice the European average. The authorities now need to focus on combating tax evasion in other industries instead of hiking taxes, he urged.

With 98 percent of the beer drunk in Romania being produced locally, the industry is an important player in the local economy, according to the association. Since 2007, it has generated EUR 4 billion for the state budget.

In 2012 alone, it contributed EUR 283

million in the form of VAT, excises, social security and other taxes.

This was EUR 11 million above the 2011 level. Should consumption pick up, also helped by an advantageous tax regime, the sector could generate even more and not only in the form of budget revenues, says the association.

Brewers of Romania Association members employ over 4,250 people in the 12 breweries they operate.

The association’s main five members – Bergenbier, Heineken Romania, Romaqua Group, United Romanian Breweries and Ursus Breweries – account for over 90 percent of the beer sold in the country.

Some 8 million hl of beer was sold in Romania in the first semester of this year, down by almost 3 percent y-o-y. ∫ Simona Bazavan

www.business-review.eu Business Review | November 25 - December 1, 2013

8 MONEY

Local energy listings fuel investors’ appetite With Romania raising over EUR 460 million from listing two state-owned energy companies on the stock exchange this quarter, experts say the country has to stick to its robust pipeline of IPOs next year to support investors’ confidence in local companies. ∫ OVIDIU POSIRCA The initial public offerings (IPOs) were launched shortly after Romania had inked a new EUR 4 billion precautionary agreement with the IMF and the European Commission. As part of the deal, the country pledged to further reduce the deficit and reform key sectors of the economy such as energy and healthcare. The listing of minority stakes in state-controlled companies is one action included in the new standby agreement.

“The recent successful IPOs have placed Romania on international investors' map; it happened at an important juncture, after a few failed privatizations like Oltchim's and CFR Marfa's,” Madalina Rachieru, counsel in capital markets at law firm Clifford Chance Badea, told BR. “This is a window of opportunity and Romania should use this momentum to kick start its pipeline of public sector deals. Usually, preparing an IPO can take from six months to a year. Therefore, it is vital that work begin as soon as possible, for maximum benefits,” she added.

The offerings were launched after a strong third quarter in which the European capital markets gained buoyancy.

According to a report by professional services firm PwC, there were 52 IPOs which raised EUR 3 billion in Europe in the third quarter, which was almost ten times the sum raised during the same period of last year.

Nuclear breaks the ice The government raised EUR 70.2 million this September from the IPO in Nuclearelectrica, the state-owned nuclear power producer. The listing involved a 10 percent increase in the firm’s share capital.

Angela Manolache, director, advisory at the professional services firm KPMG, reckons that Nuclearelectrica’s success was tempered by the environmental concerns surrounding nuclear energy.

Nuclearelectrica’s listing came six years after the IPO in state-owned Transgaz, the gas transmission company, and was oversubscribed, especially in the retail tranche.

Shares in Nuclearelectrica closed 0.94 percent down on the first trading

Angela Manolache, director, advisory, KPMG

Dumitru Beze, chairman, AIPC

day, November 4, at RON 11.53. The loss had been recovered by last week.

According to Constantin Nita, the delegate energy minister, around 30 percent of the demand for shares in the nuclear company came from US investors. The company currently covers 20 percent of Romania’s power consumption and it operates two nuclear reactors with a combined capacity of 1,413MW. The government is currently discussing with foreign investors the options for building two new nuclear reactors, at a cost of around EUR 6 billion.

This year policymakers met with Chinese companies that have the financial clout and knowhow to build such large-scale projects.

The company came back into

the black this year, posting a ninemonth profit of EUR 74.5 million against a loss of EUR 7.6 million in the same period of last year. The turnover added 19.2 percent to EUR 314 million.

Nuclearelectrica at a glance Market cap: EUR 719 million (November 20) Nine-month profit: EUR 74.5 million Main shareholders: Ministry of Economy, 81 percent; others,18.7 percent

Source: BSE

Madalina Rachieru, counsel, capital markets, Clifford Chance Badea

Shares in the company closed 3.7 percent down on the first trading day at RON 34.5, and were trading at roughly this price by the middle of last week.

Martin Hinteregger, head of Group Equity Capital Markets at Erste Group Bank, said Romgaz was the first IPO that Romgaz champions IPO race fully met international standards in The Bucharest Stock Exchange (BSE) documentation and execution, claimreached a milestone this month, follow- ing this was a turning point for Romaing the biggest listing, that of state- nia’s privatization program.

“This enabled a lot of new internaowned gas producer Romgaz. The offering raised EUR 390 million and in- tional institutional investors to buy into volved the sale of a 15 percent stake, the company, which puts Romania as a comprising shares in Bucharest and whole on their radar screens,” Hinteregglobal depositary receipts (GDR) in Lon- ger told BR. Erste was part of the consortium that worked on the Romgaz don.

“The Romgaz success put Romania listing.

Manolache of KPMG says the real on foreign investors’ map. This is a significant step forward in the develop- success of these privatizations will be ment of the Romanian capital market. measured in the years to come, because However, I would not call it historic. listed companies need to enforce strict The experience with the listing of the transparency and control standards.

Property Fund shows us that the devel- The management will come under inopment of the capital market cannot be creased pressure from shareholders and done only in jumps; I believe it requires investors to improve performance.

Commentators have noted that in serious daily work to achieve results,” Dumitru Beze, chairman of the Associ- recent years state-controlled companies ation of Capital Market Investors (AIPC), have been used as cash cows by shady individuals with political backing who told BR. As Romgaz shares debuted on the have secured contracts with disastrous BSE on November 12, Lucian Angel, outcomes for the companies. The govpresident of the administration board at ernment has stated its intention to the BSE, noted this listing would “con- change this practice, at least for the tribute to the capital market upgrade large energy companies, and let more private players in to increase their overfrom frontier to emerging market.”

www.business-review.ro Business Review | November 25 - December 1, 2013

Romgaz at a glance Market cap: EUR 2.9 billion (November 20) Nine-month profit: EUR 179 million Main shareholders: Ministry of Economy, 70 percent; Property Fund, 15 percent

Source: BSE

all efficiency.

The share offering in Romgaz accounted for 64 percent, while GDR (global depositary receipts) made up the rest. Most of the institutional investors that submitted offers were based in Romania, followed by those in the UK, US and Poland. Large investors flocked to acquire shares as the oversubscription rate edged up to five times the available amount.

Claudiu Cazacu, chief analyst at brokerage XTB Romania, commented that the purchase of a 1.9 percent stake in Romgaz by the European Bank for Reconstruction and Development (EBRD) enhances global investors’ trust in the company.

Romgaz is the largest gas producer in Romania, controlling more than half of the local market. The company’s annual production reached 5.6 billion cbm last year and experts say it will be one of the biggest beneficiaries of the deregulation of gas prices for households and industry.

The KPMG director notes investors had bought into the Romgaz IPO story because of its level of gas reserves and low production costs.

“Romgaz has calibrated its value as a big company in the market. It has different image than the others because its value was tested,” Radu Gheorghe, director of the company’s business development department, told BR. Romgaz is also an active player in the exploration segment, teaming up with foreign oil giants such as Russia’s Lukoil and Austria’s OMV Petrom for offshore gas explorations. “The Black Sea region is a strong point in Romgaz’s strategy,” said Gheorghe.

The company is also the largest player in the gas deposit business. The company saw its profits decrease 18.5 percent to EUR 179 million in the first nine months while turnover shrank by 10 percent to EUR 584 million against the same period of last year.

GDRs play key role in IPOs The Romgaz offering was the first to include GDRs, which allow a foreign company’s shares to be traded on major stock exchanges outside the US. The size of the offering was the main reason why the gas producer issued GDRs. Ludwik Sobolewski, CEO of the BSE, suggested investors that acquired GDRs should be convinced to convert them into shares. The CEO wants to boost liq-

uidity on the local market, which currently hovers around EUR 29 million, as part of a strategy to expand the BSE into a regional player.

The Department of Energy said that the coming IPOs in Hidroelectrica, the state-owned hydropower producer, Electrica, the state-controlled electricity supplier, and distributor Oltenia Energy Holding would follow the Romgaz model.

“From an issuer’s point of view, GDRs are easier to place on an international market than shares, due to lower procedural hurdles and associated costs,” Manolache of KPMG told BR. Analysts say that GDRs should be

“International investors are now waiting to invest in additional local IPOs prepared to the same international standards in order to build up a Romanian portfolio. So from our point of view the way to success is paved for Hidroelectrica and Electrica," Martin Hinteregger, head of Group Equity Capital Markets at Erste Group Bank. used only for the biggest listings, to meet demand for shares from foreign investors.

“In my view, the GDR component may still be needed for the success of IPOs coming out of Romania in the near future, until most of the large international investors are set up to trade on the domestic stock exchange,” said Rachieru of Clifford Chance Badea, who worked on the Romgaz IPO. The recent IPOs were good news for the Property Fund (FP), which is administered by Franklin Templeton. More than half of the EUR 3.4 billion closedend fund comprises unlisted equities.

Greg Konieczny, the FP’s fund manager, said it was crucial the momentum created by the Romgaz deal be supported by the upcoming IPOs next year.

“International investors are now waiting to invest in additional local IPOs prepared to the same international standards in order to build up a Romanian portfolio. So from our point of view the way to success is paved for Hidroelectrica and Electrica,” said Hinteregger of Erste Group Bank. ovidiu.posirca@business-review.ro

MONEY 9

www.business-review.eu Business Review | November 25 - December 1, 2013

10 LINKS

Local retailers buckle up for Black Friday Domo, eMAG.ro, evoMAG, Flanco, F64, PC Garage.ro, Koyos.ro, QuickMobile.ro, MarketOnline.ro, Azerty.ro, Fashion Days and Carrefour were just a few of the retailers preparing to take part in last week’s local version of Black Friday, the shopping event of the season. BR gives a roundup of the marketing strategies, allocated resources and preparation efforts that Romanian firms put into protecting this year’s shopping spree from the same glitches as in the past. ∫ OTILIA HARAGA While in its country of origin, the United States, Black Friday will take place on November 29, most Romanian companies opted for an earlier date and decided to hold it on November 22. Retailers such as evoMAG, eMAG and Flanco championed the idea, while others were quick to jump on the bandwagon.

A survey carried out by Daedalus Millward Brown found that approximately 7.4 million Romanians are aware of what Black Friday is about, while about 4.2 million said they would actually buy something, up from 2.4 million in 2012. The intention to shop hiked by 75 percent this year compared to the last.

The survey, which was carried out between November 8 and 13 on 2,000 respondents between 18 and 50 years old, with mobile phone access, also showed that the youngest consumers, aged 18-24, are most open to discounts, with 60.9 percent of these respondents having heard of Black Friday, followed by 25- to 34-year olds, of whom 58.5 percent have heard of the event.

“Youngsters are more and more connected to information, they are dynamic and set the pace online, spreading information at the same time,” said Daniela Lazar, general manager of Daedalus Millward Brown.

Men were the most eager buyers, with about 17 percent of male respondents saying they would definitely shop on Black Friday, with only 10 percent of women saying the same.

The top five items on women’s shopping lists were small electronic home appliances (45.3 percent), clothes (27.5 percent), TV sets (14 percent), footwear (12.8 percent) and laptops (8.8 percent).

Men favored electronic products and car accessories (26.1 percent), TV sets (23.2 percent), clothes (17.3 percent), mobile phones (14.3 percent) and laptops (14.1 percent). Traditionally, more online retailers have jumped at the opportunity to have their products showcased at a discount, most likely since more resources need to be deployed in the conventional retail sector.

Online payment processor PayU Romania predicted that this year more than 400,000 Romanians would take advantage of the discounts offered by e-stores on November 22. The company estimated the value of the purchases would exceed EUR 40 million.

However, in previous years not

Consumer crush: retailers extended working hours to give more shoppers access to the Black Friday discounts enough resources were allocated by retailers to prevent websites from collapsing under the weight of the demand.

For November 22, PayU doubled the number of people in its anti-fraud and consumer support departments.

“This year, we started preparations for Black Friday as early as spring. After discussions with large retailers, we optimized the platform for processing online payments to meet the large processing volume estimated for the early hours of the morning, but especially to fit to the commercial strategy of each of them,” said Daniel Nicolescu, general manager of PayU Romania.

According to PayU, IT and electronic online stores receive the bulk of orders, with their number soaring by 300 percent. A significant evolution of up to 40 percent is also expected in the fashion, toys and books segments.

Since products bought on Black Friday exceed the usual average value, PayU also forecast a growth in the number of card transactions with payment in installments. Nearly all online stores offer this option at the moment.

“Acquisitions made during events such as Black Friday have a massive emotional significance for shoppers.

Online stores have taken advantage of this benefit as clients, apart from the shopping they do, also get strongly attached to the store brand in question

and promote it enthusiastically to their friends,” said Nicolescu.

In 2012, Black Friday sales in Romania totaled EUR 60 million. This year, Iulian Stanciu, general manager of eMAG, estimates total sales will stand at about EUR 100 million overall.

“We want to shatter the myth that Black Friday is just an occasion for selling off old stock. At least three quarters of the products that eMAG is showcasing at a discount were launched in 2013,” said Stanciu. eMAG invested EUR 500,000 in servers and its online platform, to cope with the orders for the 250,000 products it has in storage, including IT, photo, personal care, cosmetics, books, toys, pet, and home & garden products.

The company estimated peak sales of EUR 22 million on Black Friday, which is double the value in 2012. It expected to receive 200,000 orders and over 4 million visits to its website. eMAG increased its storage capacity by 50 percent, and a dedicated 4,000 sqm warehouse and a 210-strong logistics staff to work around the clock.

IT&C retailer Flanco met Black Friday with two new outlets in Galati and Deva, which took its total store count to 82. The two branches were opened following a total investment of approximately EUR 787,000 (RON 3.5 million), which added 1,400 sqm more sale space to its network.

“We expect to have 1 million visitors and sales of RON 85 million (approximately EUR 19 million) on Black Friday weekend,” said Violeta Luca, CEO of Flanco.

Over the previous six months, the retailer had made efforts to optimize its infrastructure and improve operations across its outlets. The working day became four hours longer, there were 30 percent more sales consultants on location, and 50 percent more cash registers were set up. The company also simplified billing procedures to last on average two minutes. Last but not least, the IT support and logistics departments worked around the clock to meet demand.

Compared to last year, Flanco increased its total level of stocks by 80 percent, and included four times more tablets and mobile phones and three times more smart TVs in its range.

Flanco was not the only retailer to offer Black Friday discounts for the entire weekend. Photo equipment and accessories retailer F64 slashed its prices for three days, including Sunday, November 24.

Customers who had subscribed to the company’s newsletter received the list of discounted products a few hours before the start of the campaign.

While last year, F64 received 5,700 orders over the Black Friday period, this year it was making twice as many

www.business-review.ro Business Review | November 25 - December 1, 2013

Romanians’ Black Friday shopping list* Product

Percentage of consumers planning to buy it

Small appliances Clothes TV sets Mobile phones Footwear Laptops Refrigerators Tablets Washing machines Cameras Personal care Cosmetics

39.8 22.9 15.3 10.6 10.2 10.1 5.5 5.2 5.1 4 4 3.9

* Source: Daedalus Millward Brown offers and estimated the number of sales would double, Marian Alecsiu, cofounder of F64, told BR. “Making a profit is not the issue. If we only thought about profit, we would not do Black Friday. However, during this time we aim to increase our market share and the number of new customers,” said Alecsiu.

The company has boosted its website infrastructure to face the growing demand. “We have allocated both technical and human resources to the Black Night. And we are not talking merely about the IT department but also about the store and call center departments, where the numbers will be three times as big during this time. (…) Deliveries are the least of the problems. We have already talked to our collaborators to prepare cars that will collect product packages every two hours,” he said.

IT&C online retailer PC Garage.ro also announced it would stick to short deadlines for delivery.

“In all our statements, we assured customers that we would meet orders within 48 hours at most, which is a very important factor when making the shopping decision. Given that this year, the last Friday of the year is very close to Romania’s National Day, a public holiday that would have influenced the delivery of the orders, we made the decision to stage Black Friday a week earlier,” entrepreneur Marius Ghenea, owner of PC Garage.ro, told BR. The company estimated it would register 20,000 orders, and sell 5,000 tablets, 5,000 smartphones, 3,000 laptops, and IT components worth EUR 1 million. It expected Black Friday sales to be at the level of the firm’s typical monthly sales.

“Black Friday 2013 brings discounts for the new brands in the PCGarage range. The store signed special partnerships as early as September with its suppliers to ensure larger stocks,” said Ghenea.

The retailer updated its website architecture to meet growing demand from shoppers. “The PC Garage website is available and served via three separate internet connections with balancing and failover roles,” Ghenea told BR. While most online stores focused on

retail clients, Azerty.ro marketed itself as the first e-store to have a Black Friday for companies, with prices on the business segment being cut by up to 50 percent.

Products from the firm’s range of video projectors, PC systems, servers, surveillance systems and network equipment were all reduced in price.

“Starting from the idea that over the past few months companies have faced a difficult economic context due to growing taxes, we thought we could approach Black Friday this year as an event to support them. So we launched the Black Friday concept for companies, so that they could acquire business products at discounts of up to 50 percent,” said Ana Mihailescu, marketing manager at Azerty.ro. “This year, Azerty.ro will definitely see a significant growth in the average order value on last year, when the products sold on Black Friday targeted only consumers.

Therefore, we expect sales of more than RON 8 million (EUR 1.8 million) from this campaign.”

Retailer Domo, which has a network of 97 outlets in Romania, structured its offer around a survey carried out on 4,642 people which found that consumers intended to buy mostly tablets (26.4 percent), TV sets (24.4 percent), mobile phones (21 percent) and laptops (18.3 percent).

The results found most respondents planned to make purchases of less than RON 1,000, with 32.6 percent intending to spend between RON 500 and RON 1,000 and 27 percent below RON 500.

About 19.5 percent of consumers were thinking of spending between RON 1,500 and RON 2,000. Only 9 percent planned to splash out more than RON 2,000. Most respondents (63 percent) said they preferred to do their shopping online while 37 percent opted to go to traditional stores. Domo signed partnerships with premium delivery companies to distribute online orders.

In its stores, it increased the size of its shop-floor staff by 50 percent and reduced the time spent at the cash register by the same proportion. otilia.haraga@business-review.ro

LINKS 11

www.business-review.eu Business Review | November 25 - December 1, 2013

12 MANAGEMENT

OPINION Valeriu Nistor, President of the Board of Directors, AmCham Romania

Why it’s good to have a common goal A few days ago I saw a video clip from the 1980s in which a government representative was addressing the nation, one of today’s EU member states. Two things caught my attention: the frequency with which this was happening in that country (very rarely) and the confidence with which the speech was delivered, despite the fact that the news transmitted was, in the most part, a description of a very difficult economic situation.

After outlining the problem, in a way that even a stranger would say reflected reality and made no attempt to play down the gravity of the situation, what the speaker proposed was even more interesting. The proposal was not a legislative one, a government reshuffle or similar, to show that the situation was understood and that we should immediately act to remedy it, in an attempt to improve the tactics and deal with the problem without understanding the causes.

He proposed the construction of a

common goal, a national one, to which all those interested may contribute.

This proposal had a double meaning.

The first one was a public acknowledgment that those who were in charge had no solutions to the problems in hand, a very clear "we do not know" which paradoxically increased the robustness of the speech, and secondly, an admission that no single part of society, not even the government, is the depository of all knowledge required to find a common national objective behind which people rally.

Of course, I did what we often do when seeing something we would like to happen in our country, namely compare and then wonder why it is not possible for us, in the same way that it seems to be possible for others. Why are other countries magnanimous enough to recognize and describe their situation clearly and simply, without fearing that they are making things worse for themselves? And why does this boost both their internal and

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international position?

What is preventing us from building a new national goal? One idea or aim – whatever we call it – around which everyone living in our country can coalesce, creating new perspectives and hope for us all. After the milestones of 2004 – NATO entry – and 2007 – EU accession – it seems that we have overlooked, in all the short-term words and deeds, the subject of what kind of country we want. Although we are part of major economic, political and military alliances, we need to go our own way. Inside these alliances, we must decide what kind of country we want; we must choose our path.

This can be done only if we recognize that Romania’s recent history is different from that of most European countries, that the first universities in the Romanian Principalities were founded in the 19th century, several hundred years later than in countries such as Poland and the Czech Republic, that we will celebrate 100 years as a country in its current form in 2018, and although we measure the economic gap between us and the European average and try to reduce it, we will never become a country like France or Germany for one simple reason: for hundreds of years we did not go the same way.

At the same time, it is essential for our future to build and earn a national reputation, to reassure others that it

is safe to invest – both emotionally and financially – in this country. For years after 1989, the main source of foreign direct investments in Romania was compatriots, who have chosen to live and work in other countries, and who send home substantial sums each year. Today this money has decreased from a few billion euros a year, to several hundred million, perhaps 10 times lower. One reason is economic: after 2008 their income fell. The other reason is emotional – they are beginning to lose their belief that our country offers a good enough future for their children.

That should give us pause to reflect.

How is it possible that during a period of peace – in which Romania has been part of the biggest political and economic alliances, and part of the biggest military alliance on the planet, treaties that give us hope that we are on the winners’ boat – some of us are beginning not to believe in ourselves?

It is the responsibility of all of us to admit that, despite the favorable conditions, we do not seem to have found the formula that makes us glad that we live in our country, our home.

Maybe until we get a better and more complete idea, we can all rally behind the desire to regain individual and collective dignity. Some worthy and proud people, serious and competent, can perhaps rebuild our national prestige without additional material resources.

www.business-review.eu Business Review | November 25 - December 1, 2013

FILM REVIEW

The Counselor

A raft of acting talent is squandered in this tawdry, tedious Tex-Mex “thriller”

DEBBIE STOWE Director: Ridley Scott Starring: Michael Fassbender, Penelope Cruz, Cameron Diaz, Javier Bardem, Brad Pitt On at: Cinema City Cotroceni, Cinema City Sun Plaza, Glendale Studio, Grand Cinema Digiplex, Hollywood Multiplex, Movieplex, The Light With a Pulitzer-winning screenwriter, an Oscar-nominated director and five great actors – okay, four great actors and Brad Pitt – The Counselor could have been a star-studded, top-quality thriller.

Instead, it’s a nasty, twisted freak show, which somehow contrives to be simultaneously confusing and predictable, graphic and boring. The one redeeming feature is Cameron Diaz, who is given a juicy part to get her chops into, even if her most memorable scene involves her having sex with a car. Yep, that’s with, not in.

Diaz plays the amoral Malkina, a narcotics kingpin who has cheetah print tattoos over her back, wears a cheetah print mini-dress and keeps cheetahs as pets. She likes cheetahs.

Her partner in crime and car sex is the volatile villain Reiner (Javier Bardem, whose flamboyant turn recalls his recent Bond outing). As their co-conspirator Westray, Brad Pitt dons a Stetson, which is the only apparent difference between his role here and almost every other part he’s played, the wryly amused smart alec.

Sucked into their operation running drugs across the Texas-Mexico border is the unnamed counselor (Michael Fassbender), whom we’re expected to believe is a loving, decent man whose head has been turned by the others’ bling-bling lifestyle. (It’s not exactly clear how he’s involved in the deal, but then a lot of things about this movie are

not clear, such as how on earth Oscar winners and other big-name actors were persuaded to appear in it and how acclaimed writer Cormac McCarthy came up with such a mind-numbing script.) The counselor has just got engaged to a sweet law-abiding type called Laura (Penelope Cruz). She’s kind, religious and trusting, so things are probably not going to end very well for her.

Cue all kinds of extreme and tasteless violence, frequent misogyny and weirdly unpleasant and overly intimate sex scenes. While skimping on the actual plot to such an extent that it is not until about two thirds of the way through that it becomes vaguely apparent what’s going on, the movie lingers on tedious soliloquies and the car sex scene, despite the latter being a flashback of no consequence to the narrative.

And while bloodshed is to be expected in a film about Mexican drug trafficking, The Counselor seems to revel in the brutal way it dispatches its victims.

However, what is even worse is the screenplay, which is packed with dreary existentialist discourses by drug dealers – not a group known for their eloquence and insight – who bang on and on about death, greed, grief, choice and sundry other Big Themes on which they have nothing of interest to contribute whatsoever.

In the interests of balance, Diaz is great in her role. The cinematography and locations are striking, and there’s an atmosphere of menace. If you consider Texan pool parties attended by tame cheetahs and bikini-clad women mingling with moguls to be stylish, then The Counselor has a certain tawdry style. But the main point of interest is how so much talent could create such an unpleasant end product. debbie.stowe@business-review.ro

CITY 13

www.business-review.eu Business Review | November 25 - December 1, 2013

14 CITY INTERVIEW

Writing the times: Alfredo Sanzol on the art of theater Spanish playwright Alfredo Sanzol was in Bucharest to attend two performances of his play La Luna: one at the Cervantes Institute, which was responsible for bringing him to Romania, and the other at the National University of Theater and Film. BR caught up with Sanzol to hear more about his craft, the role of the playwright in modern society and his views on literary movements. ∫ ANCA IONITA

Do you think of yourself more as a director, a playwright or an actor?

I think I am somebody who writes shows. When I write I’m thinking that what I write will be on a stage. I never think that these works will stay on paper. I finish giving the meaning to what I write in my work as a director.

I like to say that I am a director that writes, not a writer that directs.

Photo: David Ruano

Where do you place yourself among other contemporary Spanish writers? Do you belong to a movement in Spanish writing?

No. When I was studying and people explained movements to me, like surrealism, after I read about and saw each artist, I always saw more differences than similarities. It’s what I was saying before. People always try to look for similarities because we can’t control the differences. And the reality is movements don’t exist. You only have people, who, at many points of their lives, get friends. But the movements finished when people in the movements started arguing. It’s like couples. Movements are an invention of critics; it’s not something that is part of reality. When you spend a lot of time with somebody you laugh at the same things, you love to go to the same places, and you end up doing similar things. And now, in our society, there are more artists than before and cities are bigger than before, so they aren’t always in the same café. In Madrid you don’t have four cafes like before. There are a lot of Madrids. It’s a city of 6 million people. So we are going to write differently.

What is the function of a director that writes in society? Do we need one?

Yes, we need somebody who tells stories. I don’t know why human beings need stories but it’s a basic necessity. It’s like food; it’s essential. We need stories.

We need to listen to stories and see them. We need others to tell us what they have done throughout the day. We need stories because without them it is impossible to understand our lives. Stories, the theater, novels, the cinema are the ways we have to understand our lives.

It’s the main way. Of course, we have other ways, like philosophy, or whatever you want. But the main way is stories.

How do you see the role of humor?

Humor for me is a way to get to know

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reality a bit. It’s like a hammer that I have to penetrate reality.

You were saying in an interview that human beings are attracted to the literal.

Can you elaborate on this?

I think that I have to be very clear when I write. The public must understand everything that’s happened. But, within these exercise of being very clear, I have to show the contradictions and the paradoxes. I must show the things that I feel, and this is when the literal disappears because you are saying something that you are supposed to make understood but you are saying something that you don’t understand.

When you work as a director on a text that is not yours, what is your approach?

I don’t have a problem directing someone else’s text because I’ve been in the same position. At the beginning, when I start directing my play, I read it like a new text. When I am writing I know that a lot of things I write about I am not conscious of. So directing is a way of being conscious about what I write. It’s the same thing that I do with a text that is not mine.

This particular play [e.n. La Luna] started with very funny parts and ended in a very serious way…

It’s something that Pirandello [e.n. Italian dramatist Luigi Pirandello] calls ‘l’umorismo’. He talks about precisely that and he explains perfectly the difference between comedy and humor. And that difference is essentially that, with humor you are affected by the problems of the character, you are not looking at the character indifferently. When you are doing humor you always think you could be that character.

So through l’umorismo you identify yourself with the character, while with comedy and the comic there’s a distance between you and the character.

anca.ionita@business-review.ro Cover photo of Alfredo Sanzol

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Who are your favorite playwrights?

I have a lot of them. [Samuel] Beckett’s Waiting for Godot is a play I always have close to me when I write, the script itself.

When I get stuck I look at Waiting for Godot and then the problem disappears.

For me Beckett is very important. It is very funny and deep. And this is my dream: to be funny and deep.

I need to be interested in what I write.

At the end of the day, when I read what I have written, if I’m not interested, I don’t think it’s going to be very good.