Budapest Business Journal 20/02 by Business Publishing Services Kft.

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BBJ HUNGARY’S PRACTICAL BUSINESS

VOL. 20, NUMBER 2

I JAN 27, 2012 – FEB 10, 2012

Budapest Business Journal

BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

FOCUS

Doing street math 〉PAGE 7

SPECIAL REPORT

Mass power: Social shopping conquers 〉PAGE 14

SOCIALITE

Budapest's hidden treasures: Libál Optics 〉PAGE 23

2 CONTENTS

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Budapest Business Journal | Jan 27 – feb 10

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NEWS

digest

NEWS

bi-weekly

OPINION

High & Law

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Robin Marshall

Budapest's hidden treasures

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Mobilization: Doing street math

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What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential. The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2011 BUSINESS MEDIA SERVICES LLC with all rights reserved. The Budapest Business Journal’s print run is audited by MATESZ, 1034 Budapest, Bécsi út 122-124, a member of IFABC.

SPECIAL REPORT

Mass power: Social shopping conquers

While Hungary’s retail sales were stagnant in 2011, the e-coupon market produced rapid growth.

SPECIAL REPORT

Virtually being there Virtual training as a substitute for good human interaction will fail. Virtual training as an aid to good human interaction will succeed.

SPECIAL REPORT

Frequent buyers: Hungary, Inc. enters the mobile market

LAUGHING MATTER

Beyond the “Pesti vicc”

Wikipedia is smart and simple. “A joke (or gag) is a phrase or a paragraph with a humorous twist. ... Jokes may have a punch line that will end the sentence to make it humorous.”

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NEWS 3

Budapest Business Journal | Jan 27 – feb 10

digest

The European Parliament is f lexing its muscles over Hungary’s egregious new constitutional arrangements... FINANCIAL TIMES

Crown, and likens Brussels to a ‘new Moscow’.”

THE JERUSALEM POST JANUARY 20, 2012

PM PINATA A day after the European Commission announced the legal action it will take against Hungary if the Fidesz government is not ready to change recently introduced legislation on data protection, the appointment of judges, and also on the Central Bank Act, Prime Minister Viktor Orbán had to appear at the European Parliament and convince the attendees that Hungary has not been off the rails of democracy. Not an easy situation, indeed. Not to risk losing face in front of the Hungarian voters, Orbán kept to his “freedom fight” rhetoric while, in order to avoid default, which Hungary might face if not reaching an agreement on international bailout, he tried to assure the European representatives that Hungary is ready to change the objected regulations.

GAZETA WYBORCZA JANUARY 20, 2012

Poland’s leftist daily Gazeta Wyborcza defines

Polish Prime Minister Donald Tusk’s announcement offering his political support to Hungarian PM Viktor Orbán as a failure. “This step might weaken Poland’s democratic mandate in the support of the Belorussian or the Tunisian democracy,” the daily said. It also pointed out that “attacking Hungary is a convenient solution” for member states opposed to EU expansion.

THE NEW YORK TIMES

[ORBÁN] WAS CUT FROM THE SAME CLOTH AS THE UNSTOPPABLE WINNERS JACQUES CHIRAC, HELMUT KOHL, ANGELA MERKEL, NICOLAS SARKOZY AND GERHARD SCHRÖDER Georg Paul Hefty, Franfurter Allgemeine Zeitung

Herb Keinon, a journalist on Israel’s right-wing daily The Jerusalem Post delves into Hungary’s feelings. “Isolated, feeling misunderstood and misrepresented, Hungary is getting a taste of what Israel goes through,” Keinon said when pointing out the similarities. “It feels like Israel because the EU is unabashedly pontificating about how Hungary should run its affairs.” Also, the international press coverage of Hungary is as negatively biased as that of Israel, the daily said. “It feels like Israel because the international discourse about Hungary is dominated by reports of undemocratic legislation, an extreme right-wing party, attempts to control the press and accusations of efforts to pack the judiciary.” At the same time, the paper admits that Hungary’s “economy is in deep trouble and badly in need of EU economic aid”.

THE WALL STREET JOURNAL, EUROPEAN EDITION

JANUARY 23, 2012 “Though nations must meet specific democracy criteria to join the bloc, once they are members there are relatively few sanctions available to enforce them,” The New York Times’ Stephen Castle said in his deep and circumspect report. The EU’s limited possibilities for constraint is the reason why the Commission’s action against Hungary is based on technical issues, rather than the wider concerns that Orbán’s government is undermining democracy, centralizing power and destroying pluralism, Castle added.

France’s left-liberal Le Monde travels back in time. The daily recalls a few memories from the time when Hungary and Austria were still united until the Treaty of Trianon carved up the Austro-Hungarian Empire. Le Monde finally reaches the conclusion that, in the matter of anti-Semitism and isolation from Western countries, Hungary has slipped back to the level where it was a few years after World War

I. Moving forward in time to remark that Austria’s former Chancellor Wolfgang Schüssel, even at the height of the political crisis evolving from his coalition with Jörg Haider’s far-right Freedom Party, remained a devout European,Le Monde suggested that Hungary’s current leaders are rather stuck in the past, focused on long-gone achievements. “In his [Schüssel’s] office he had a large canvas by painter Max Weiler, who for many years had been rejected as too modern by Austrian public opinion. Whereas Orbán likes to appear before a dense thicket of Hungarian flags, swears by the Holy

FINANCIAL TIMES JANUARY 22, 2012

JANUARY 19, 2012

JANUARY 18, 2012

LE MONDE

promise.” What changed the game was the intense sell-off in Hungarian assets at the start of 2012 when an IMF-EU deal seemed distant, the author pointed out, giving a clear picture of the recent changes in Hungary’s prospects. “As expected, Orbán was subjected to massive criticism. Hungary’s new constitution violates human rights and incites fear in minorities, while the government ignores the norms of EU laws,” the site reported Orbán’s critics as saying. Orbán himself emphasized that his government had made extensive reforms since entering power in 2010. Anyway, “no matter how often the government says that its laws are in order, the baseline for the negotiating partners is the modification of the central bank law. Until that happens, they won’t budge an inch,” the article jumps to its conclusion adding that “the newly found conciliatory tone from Orbán may well be exactly what Hungary needs to kick-start the formal stage of the talks and urgently conclude an agreement.”

“To those who remember Hungarian Prime Minister Viktor Orbán’s last appearance in the European Parliament in 2010, the contrast with his display Wednesday couldn’t have been sharper,” the Budapest correspondent of The Wall Street Journal reported on the premier’s appearance at the European Parliament in a commentary on the website of the European edition of the journal. Back then, when Orbán had to hold his own for introducing Hungary’s controversial media law, “the premier was unabashed in hurling rebuttals at his government’s critics. This time, he seemed ready – eager even – to reach a com-

“The European Parliament is flexing its muscles over Hungary’s egregious new constitutional arrangements,” British daily the Financial Times wrote in its editorial. Suspending Budapest’s voting rights in the European Union, which some in the international community have suggested, has not happened since similar measures were used to protest against the inclusion of Jörg Haider’s far-right Freedom party in Austria’s coalition government in 2000, the paper recalled. However, “in reality, suspension has little chance of happening,” FT said adding that the EU ministers are unlikely to achieve the unanimous agreement that is required to impose such strict measures.

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4 NEWS

Budapest Business Journal | Jan 27 – feb 10

QUOTE OF THE WEEK

bi-weekly

So the Europeans should take into account that he [Orbán] is a clever man as a party leader, but he should take into account that the European leaders are not stupid. EUROPEAN UNION PARLIAMENT SPEAKER MARTIN SCHULZ ABOUT HUNGARIAN PRIME MINISTER VIKTOR ORBÁN

carry out the necessary changes, but noted that this had not happened so far.

EU TO LAUNCH INFRINGEMENT PROCEEDINGS AGAINST HUNGARY

HUNGARY CENTRAL BANK KEEPS RATES ON HOLD IN SURPRISE MOVE

The European Commission has decided to launch three accelerated infringement proceedings against Hungary, Commission President Jose Manuel Barroso said following the weekly EC meeting in Strasbourg on January 17. The proceedings will be launched over Hungary’s new central bank act, the mandatory retire-

The Monetary Council of the National Bank of Hungary (MNB) kept the bank’s key rate on hold at 7% at a meeting on January 24. The market had expected the rate-setters to tighten policy, but was divided over whether they would raise rates by 25bp or 50bp. The Monetary Council raised the central bank’s

Photo: REUTERS/Bernadett Szabó

ECONOMY

Hungarian oil and gas company MOL expects the European Union ban on oil imports from Iran will have minimal impact on the group with regard to its exposure through Italian unit IES, MOL said in a statement on January 24. MOL said IES accounted for less than 15% of the group’s downstream refining capacity and “in the case of an embargo, IES will find other ways to reallocate its oil supply sources from the Mediterranean spot market,” MOL said. ment age for judges and data protection, he told reporters. The Commission also decided to ask for further information from the government regarding issues related to judicial independence. Hungary must address the concerns regarding the independence of the central bank before the Commission will start formal talks on the requested EU/IMF financial assistance, EC VicePresident Olli Rehn, responsible for Economic and Monetary Affairs said. According to Barroso, the Commission was confident that Hungary would

key rate by 50bp at both of its monthly rate-setting meetings in November and December. Speaking at a press conference after the meeting, MNB governor András Simor said two proposals were discussed at the meeting: one to raise the base rate by 50bp, the other to keep it on hold. He added that the final decision was taken by a narrow vote.

CENTRAL GOVT DEFICIT CONFIRMED AT 110% OF MODIFIED TARGET IN 2011 Hungary had a cash flowbased central government deficit, excluding local councils,

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of HUF 1.73 trillion at the end of December or 110% of the modified full-year target, the National Economy Ministry said in a second reading of the data on January 23. The figures were unchanged from the preliminary ones published on January 9. The ministry said that the deficit was about 2.5 times the original target. It noted several one-off items – adding up to HUF 1.11 trillion – that contributed to the overshoot, namely the purchase of shares of Hungarian oil and gas company MOL for HUF 498.6 billion, a preliminary estimated HUF 250 billion in VAT refunds made necessary by a decision of the European Court, a HUF 120 billion capital raise in the state-owned Hungarian Development Bank (MFB), the takeover of HUF 50 billion in debt from state-owned railway company MÁV and the takeover of HUF 196 billion in debt from county councils. Excluding these oneoff items, the deficit would have reached HUF 619.8 billion, under the original target of HUF 687.4 billion.

DEMAND DROPS, YIELDS SLIGHTLY ABOVE BENCHMARK AT THREEMONTH T-BILL AUCTION The Government Debt Management Agency (ÁKK) sold the announced amount of three-month discount T-bills on twofold subscription at an auction on January 24. Yields fell sharply from a week earlier. ÁKK sold HUF 45 billion of the bills, the announced amount. Primary dealers offered to buy HUF 89.5 billion of the bills expiring on May 2. Demand fell sharply from the unusually high level of HUF 173.4 billion one week earlier when ÁKK raised its sales by HUF 10 billion to HUF 55 billion at falling yields. The auction was the first since the end of December with bids below HUF 100 billion. Average yield was 7.65%, 2bp over the secondary market benchmark, calculated on the same bill series, and 19bp under the yield at the previous auction of the bills one week earlier. Yields ranged between 7.45% and 7.73%, as the range dropped and narrowed from between 7.5% and 7.9%% at the previous auction.

HUNGARY GOVT DEBT MANAGER PLANS NET FORINT ISSUES OF HUF 280 BLN IN FEB-APRIL

December, but the outlook for trade and services companies worsened. In the industrial sector, the outlook for production and for stock of orders worsened, but the gauge of inventories and production in the recent period improved. Industrial companies’ assessment of export orders was unchanged. More industrial companies planned to make new hires in January, but the propensity to increase headcount fell in all other sectors. GKI’s consumer confidence index reached -56.6 points in January, just above the -56.9 points in September 2009.

The Government Debt Management Agency (ÁKK) plans net forint issues of HUF 279 billion in February-April, ÁKK’s latest three-month forint issue plan shows. HUF 145 billion of the net issues are planned to come from discount T-bills and HUF 134 billion from bonds. Discount T-bill and bond auctions are planned under the usual schedule, with practically no change in the average volumes on offer. Gross issues are planned at HUF 1.17 trillion in February-April and gross repayments, including no big bond expiry, but large early bond buybacks, at HUF 895 billion in the period.

RYANAIR RELAUNCHES BUDAPEST FLIGHTS

JÁRAI CALLS FOR NEW ECONOMIC POLICY Hungary needs a turnaround in economic policy to recover from the current difficult economic situation, it must fully comply with the European Union regulations, the tax system must be amended and the central bank act must be brought in line with expectations, business daily Világgazdaság said, quoting chairman of the National Bank of Hungary supervisory board Zsigmond Járai. Járai, who has recently stepped down as head of the Fiscal Council, told the paper “the most important task is to carry out a comprehensive turn in economic policy, which I believe has already started”. The facts that Hungary has contacted the IMF for financial assistance and the budget includes a fiscal tightening corresponding to 4-5% of the GDP are signs of this turnaround, Járai added.

BUSINESS GKI-ERSTE CONSUMER, BUSINESS SENTIMENT NEAR ALL-TIME LOW GKI-Erste’s combined consumer and business confidence index slipped to -26.8 points in January from -24.6 points in December, nearing its all-time low of -27.6 points in November 2009. Among businesses, expectations in the industrial and construction sectors were unchanged from

Photo: sxc.hu

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

Irish low-fare airline Ryanair will relaunch Budapest flights from March 12, CEO Michael O’Leary said at a press conference in the capital on January 24. The airline will start flights between Budapest and Birmingham, Bologna, Bristol, Dublin and London, O’Leary said. Ryanair expects passenger numbers on the flights to reach 200,000 this year, he added. Ryanair stopped flying from Budapest in 2010. The relaunch of the flights will create 200 jobs, O’Leary said.

CZECH AIRLINE FILES BUSINESS PLAN FOR MALÉV TAKEOVER Airline company Travel Service, a subsidiary of Czech Unimex, has drawn up its business plan for the takeover of Hungarian carrier Malév and submitted it to the Ministry of National Development, Attila Farkas, a Hungarian representative for the company, told daily Népszabadság. Farkas said it had finalized the plan before the European Commission called on Hungary to recover state aid granted to the national carrier from 2007 to 2010. He declined to disclose any further details on the project. Népszabadság said the company would operate the Boeing fleet, but reckoned with lower operating costs than Malév, with fewer employees and its flight schedule would be less frequent.

STATE, NOT BANKS, TO MANAGE “BABY BONDS” The government is drafting an amendment that would take management of “baby

bonds” from banks and give it to the state. Since 2006, the Hungarian State Treasury has made available a HUF 42,500 “start-of-life subsidy” to all Hungarian born citizens who reside in the country. Parents may contribute to the bond, benchmarked to the five-year government bond, until their children turn 18. So far the state has paid HUF 60 billion for the bonds and parents HUF 15 billion, the paper said.

OTP RAISES CAPITAL AT SLOVAK UNIT OTP Bank has raised the registered capital of its Slovak unit OTP Banka Slovensko by €10,019,496 to €78,507,897.84 based on the share subscription closed on December 16, 2011, OTP Bank announced. It said that its stake in OTP Banka Slovensko grew to 98.94% from 98.82% as a result of the increase in registered capital.

BUSINESSES MUST COMPLEMENT NET WAGES TO GET EU CO-FUNDING Only companies that raise the wages of at least twothirds of their employees to prevent a drop of their net wages will be eligible for Hungarian state co-funding at tenders for European Union funding, the daily Világgazdaság reported, citing National Economy State Secretary Sándor Czomba on January 18. Under legislation passed last year, employers must raise the wages of at least two-thirds of the employees affected to compensate lower earners for tax changes in order to prevent their exclusion from public procurements and government support for a period of two years. The elimination of tax preferences reduces the net wage of workers who earn less than gross HUF 218,000 a month this year. Czomba confirmed to the daily that the two-third rule applies to EU funding if co-funding from the Hungarian central budget or separate state funds complements it. Under regulations in effect, the government gives wage compensation to businesses complementing the net wages of all affected employees, whereby these businesses finance the necessary wage rise up to 5%

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NEWS 5

Budapest Business Journal | Jan 27 – feb 10

and the government pays for any rise necessary over that.

HOCHTIEF WILL NOT SELL STAKE IN BUDAPEST AIRPORT German construction group

reorganized its airport assets into a unit called Hochtief Concessions and had planned to sell it in 2011. China’s Hainan Airlines and France’s construction group Vinci got into

BETA MARKET ATTRACTS HUGE INTEREST

a planned profit, the press reports said.

creasingly on security of food, water and energy supplies.

GOVT LAUNCHES NEW RURALDEVELOPMENT PROGRAM

POLITICS

Prime Minister Viktor Or-

OTHER

the final round of the tender. The seller was hoping to raise €1.5 billion from the transaction, but financing such deals has been made difficult by the euro zone sovereign debt crisis to such an extent that the company could only have been sold well under the targeted price. The plan has therefore been shelved for the meantime, even though this means that Hochtief will post losses of €100 million in the tead of 2011 business year instead

Source: Budapest Stock Exchange

The recently created BETa Market of the Budapest Stock Exchange has attracted a lot of interest from both investors and brokerage firms in the little more than two months since its launch. Despite the short time that has passed since the launch of the market at the end of last year, total turnover has already exceeded HUF 1.6 billion, broken down by listed shares as follows:

Hochtief has decided not to sell its stakes in airport operating companies including Budapest Airport Zrt for the moment. German press reports on January 23 said the company had changed its earlier plans due to the challenging economic situation. Hochtief holds a 49.66% stake in Budapest Airport, and also has holdings in companies operating airports in Athens, Dusseldorf, Hamburg, Sydney and Tirana. The company

bán on January 16 introduced the government’s new ruraldevelopment program called the Darányi Ignác Plan. Orbán urged that Hungary’s land law be amended and that new property protection regulations be adopted. The prime minister said that Hungary should continue to ban GM crops in the country in order to protect its farmland and groundwater. Orbán remarked that the country’s future securityy depends in-

talk of the town PRESIDENT SCHMITT ACCUSED OF PLAGIARIZING HIS THESIS Some 180 out of the 215 pages of President Pál Schmitt’s doctoral thesis, written in 1992 about the modern Olympic Games, was a word for word copy of a work published in 1987 by Bulgarian sports official Nikolai Georgiev, hvg.hu, the online edition of weekly HVG claimed on January 11. Schmitt, a former Olympic fencing champion, has been a member of the International Olympic Committee since 1983 and knew Georgiev, a fellow IOC member, personally. The President’s Office “categorically rejects” the allegations made by hvg.hu. Schmitt’s thesis is a “supplementary work” and its summa cum laude grading “speaks for itself”, it said. Shortly after, Péter Szíjjártó, Spokesman for the Prime Minis-

JOBBIK LEADER CALLS ON GOVT TO QUIT EU

ter, also defended Schmitt, saying that the news was “tabloid gossip” only and its timing of concern. The scandal broke one day after Schmitt met diplomatic leaders and defended Hungarian interests, Szíjjártó pointed out. However, since then it also been alleged that Schmitt, who admitted he had included “some basic data” of Nikolai’s work, also relied on the conclusions of Klaus Heinemann, meaning that Schmitt translated and then copied word for word 17 pages from the German professor’s work without modification. The head of Budapest’s Semmelweis University has now ordered an inquiry into the circumstances under which the President’s doctoral thesis was awarded.

Gábor Vona, leader of the radical nationalist Jobbik party, urged Hungary to quit the European Union at a demonstration in central Budapest on Saturday, January 14. Vona said European Commission President Jose Manuel Barroso’s letter to Hungary had violated the country’s independence. He called for a referendum to be held, enabling Hungarians to decide whether they still want to be part of the EU. The crowd, filling a 100 meter stretch of a 15-meter wide street, chanted, “Let’s Quit” and “Down with Trianon” in response to the party leader’s call. By asking Hungary to amend three of its laws, the EC demonstrated that it expected Hungary to give up its independence, said Vona. At the end of the rally Jobbik deputy leader Előd Novák and Levente Murányi set an EU flag on fire. Budapest Police said on Saturday evening that it would file a report against the flag burners.

LMP HEAD QUITS FLOOR LEADER POST András Schiffer resigned as parliamentary leader of the opposition green party Politics Can Be Different (LMP) on January 14. Confirming a report posted on news website hvg.hu, Schiffer said he had decided to quit the post. Schiffer told LMP’s political council that he would leave all the party’s senior decisionmaking bodies and would not run for any post in the future. For the time being, however, he will keep his parliamentary mandate. Schiffer explained he had felt a lack of support for his position on strategic issues. “Some recent attacks and leaks suggested that the atmosphere of trust has cracked,” he said. Asked about how his resignation may influence LMP’s future, he said, “No party can be a one-man party.”

CULTURE NON-AMBULANT DEPARTMENTS MIGHT LOSE THEIR OPERATING LICENSES A new healthcare regulation that practically restructures the whole system might have “unforeseeable consequences”

on Hungarian healthcare services, business daily Napi Gazdaság said on January 23, citing an unnamed expert. The regulation includes a new professional grading system, which means that all nonambulant departments in the country lose their operating licenses by February and will not have one until meeting the requirements of the new grading system.

GOVT TO LAUNCH NEW STUDENT LOAN PROGRAM The government had decided to launch a new student loan program with separate credit lines for discretionary spending and for educational fees, government spokesman András Giró-Szász said on January 17. Interest on the credit line for educational fees will be a state-subsidized 2%, GiróSzász said. The government aims to create a high-quality and sustainable system of higher education that is generally accessible to all talented young people with a desire to learn, he said. The system must serve the needs of the labor market as well as achieve goals of the national economy, he added. He said one of the most important elements of the restructuring of financing of the system was setting the number of students on full and partial scholarship, at 55,000, and establishing a category for students who must cover the full cost of their education.

CIVIL SECTOR MAY HAVE TO MAKE LAYOFFS DUE TO GOVT WAGE DECREE The government decree obliging employers to compensate low earners who lose out due to tax changes is putting Hungary’s civil sector under enormous pressure, and despite the government’s promise to subsidize a proportion of the wage hike many NGOs say they may have to make layoffs, daily Magyar Nemzet said on January 16. The NGOs have asked the government to exempt them from the decree. Employers are expected to cover a wage increase of up to 5%. Last week, however, the economy ministry proposed a scheme to help employers meet the expectation. Under the ministry’s proposal, the government would grant employers support for wage increases of 2-3% to help them reach the 5% threshold. Melinda Kovács, managing director of an NGO and national association for helping the mentally handicapped, said civil groups had already laid off many employees. She

said any further redundancies would put the very existence of the organizations under threat. Éva Kedves, head of the national association for helping the blind and deaf, insisted that the government’s wage-hike subsidy proposal was not a solution, and only a full subsidy would be satisfactory.

WORLD SEARCH FOR A MISSING HUNGARIAN WOMAN AFTER CRUISE SHIP DISASTER BASED ON A FAKE REPORT The search for a missing Hungarian woman after the Costa Concordia cruise ship disaster in Italy was based on a fake report, the Foreign Ministry said on Monday, January 23. All Hungarians who travelled on the cruise ship that was wrecked near Tuscany on January 13 have been found except one woman, the ministry said. The person who reported the missing Hungarian said she was her mother, yet the mother of the reported person had died three years ago, the ministry added. Press chief József Tóth said the woman who had made the report repeatedly avoided visiting the consular department to check documents. The authorities therefore investigated her identity and concluded that the person she claimed to be had died three years ago, he added. Altogether 11 Hungarians were supposed to have travelled on board the ship. Ten of them were rescued and the body of one man was found last week.

HUNGARIANS KILLED IN ETHIOPIAN TERRORIST ATTACK Two Hungarians were killed in an attack in northern Ethiopia and another Hungarian slightly injured, Interpol’s office in Ethiopia said on Wednesday, January 25. Interpol informed the Hungarian Foreign Ministry that the injured Hungarian had already been moved from the region along with eight other foreign nationals who survived the attack unhurt. According to Interpol two Germans and an Austrian citizen were also killed, and another two Germans and two Ethiopians kidnapped, in the country’s remote Afar region. Hungary’s counter terrorism forces (TEK) said its personnel were on stand-by to depart for Ethiopia within an hour, adding that they were keeping the prime minister informed about developments.

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6 FOCUS

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Budapest Business Journal | Jan 27 – feb 10

Directions The common law of the European Union is codified in EU treaties, directives, and resolutions, as well as in past judgments of the European Court of Justice (ECJ). The basic principle of EU law is that through the implementation of the treaties, directives and resolutions, member states make EU law an integral part of their own national law – and respect them accordingly. As an EU member state, Hungary has implemented the whole body of EU Community law since 2004, making it part of its national law. The European Commission enforces the compliance of national legislation with EU law. The so-called infringement proceedure is one of the main tools at the EC’s disposal to pursue this goal. Article 258 of the Treaty on the Functioning of the European Union (TFEU) calls on the Commission to launch proceedings if a member state fails to comply with its obligations under the Treaty. An infringement proceeding may consist of two stages: a pre-litigation phase and a litigation phase. Starting the pre-litigation phase, the EC sends a ‘letter of formal notice’ to the member state. In this, the Commission officially informs the state that an act of national law (or certain articles of it) violates EU law. The letter refers specifically to the articles of EU law with which the national legislation conflicts, and sets a period (usually two months or less) for the member Sstate to submit its own position on the Commission’s arguments and to offer possible solutions. If the member state fails to give a satisfactory response by the deadline, the non-litigation phase continues with the Commission sending a ‘letter of reasoned opinion’. In this, the EC calls on the member state to comply with community law and sets a deadline, again usually two months or less. If the member state does not eliminate the legal conflict (by amending the problematic national law or articles of contention) by the deadline, the Commission refers the case to the European Court of Justice (ECJ) – starting the litigation phase of the infringement proceeding. In this phase, the ECJ may judge that the national law in

European Commission launches three infringement proceedings against Hungary

ON JANUARY 17, HUNGARY RECEIVED THREE LETTERS OF FORMAL NOTICE FROM THE EC, WHICH IS THE OPENING ACT OF THREE INFRINGEMENT PROCEEDINGS question violates EU law, and calls on the member state to abolish or modify accordingly. The ECJ itself has no right to annul acts of national legislation. Should the member state fail to comply with the judgment, the Commission can bring the case before the Court again (Article 260 of TFEU). This time, the EC will seek a judgment imposing penalty payments on the member state. Upon the second judgment of the ECJ, the member state has to pay a fine and/or a periodic penalty fee for as long as the infringement remains. On January 17, Hungary received three letters of formal notice from the EC, which is the opening act of three infringement proceedings. The proceedings specify provisions of the new Constitution as well as some so-called cardinal laws which are referred to in it, but

do not figure in its text. The Constitution, like the cardinal laws, was adopted (and can be changed) with a two-thirds majority vote of parliament. The first infringement proceeding concerns the cardinal law on the National Bank of Hungary (MNB). The Commission claims the Hungarian bill breaches Article 130 of the TFEU, which stipulates full independence for the European Central Bank and national central banks from governments or other institutions. The breach of Article 130 manifests through a number of provisions contained by the new bill on the National Bank. The government is also thought to have breached Article 127(4) of the TFEU which stipulates that, “The ECB shall be consulted [...] on any draft legislative provision in its field

Jose Manuel Barroso welcomes Viktor Orban before their meeting at the EU Commission headquarters in Brussels Photo: REUTERS/Francois Lenoir

of competence.” By not consulting the ECB before adopting the new law on the MNB, Hungary also breached Article 4 of EU Council decision 98/415/EC. The Commission also claims violation of Article 14.2 of the Statute of the System of European Central Banks and of the ECB. The second proceeding regards the new Constitution’s Article 26 (2) which lowers the mandatory retirement age of judges from 70 to 62, the general retirement age in Hungary, with the exception of the president of the newly established Curia. The Commission found this provision in conflict with EU rules on employment and equal treatment as codified in Directive 2000/78/ EC. This directive prohibits employment discrimination on grounds of age, and is referred to by a precedent-setting judgment of the ECJ. The Commission also expresses concern that some provisions of Hungary’s new constitution and two cardinal laws on the judiciary system may breach the basic principle of independence of the judiciary, and therefore contradicts Article 47 of the Charter of Fundamental Rights of the Union.

The third proceeding refers to Hungary’s cardinal law on rights for data protection and the freedom of information. This cardinal law created a new national data protection authority, and abolished the former Data Protection Commissioner’s Office, terminating its mandate (set between 2008 and 2014) prematurely, without interim provisions. The Commission also heavily criticizes Article 40 (2) of the cardinal law which gives the Prime Minister the right to name the head of the new data protection authority. This provision, as well as the premature termination of the former data commissioner’s mandate, may breach Article 8 of the Charter of Fundamental Rights of the EU, as well as Article 16 of the TFEU. In all three cases, the Commission gave Hungary one month to adopt and present an official position and come up with solutions. The present phase of the process is that of information gathering, and the Hungarian government has shown a willingness to make concessions and modify the laws in question. It is in the government’s interest to reach a settlement, as the Commission has said it considers it a precon-

dition to any financial aid talks. Hungary has been an eminent member of the European Union in terms of conformity with EU rules thus far. Up until 2012, only nine infringement proceedings have been launched against the country (Poland has had 40 cases, the Czech Republic 22, while Austria had racked up 131 by 2010). All the infringement proceedings launched against Hungary formally reached the litigation phase. In five cases, Hungary fulfilled the Commission’s requirements and the ECJ struck the cases from its docket early on. One proceeding ended with the ECJ dismissing the Commission’s action. Two cases are still ongoing. Hungary has lost only one infringement case at the ECJ to date. Precedents for a member state paying a penalty after an ECJ declaration of infringement are rare and recent, because the provision (Article 260 TFEU) allowing this type of sanction was a novelty introduced by the Treaty of Lisbon. However, the Commission might set a precedent with Ireland, which failed to comply with a 2008 ruling of the ECJ in an infringement case. In that case, the EC referred the matter to the ECJ again, seeking a €2.7 million lump sum fine against Ireland as well as a €26,173/ day periodic penalty payment in order to enforce Dublin’s compliance with EU law on an environmental issue. It is important to note that although many (including Members of the European Parliament) have referred to Article 7 of the Treaty on the EU as the legal basis for the present infringement procedures, the Commission itself has not done so in its official statements. Article 7 is applicable in case of a member state constantly violating the basic principles (democracy, human rights, free market capitalism, etc.) and rules of the EU. In principle, an Article 7 procedure could lead to the suspension of certain rights and benefits (voting rights, EU transfers, etc.) of a member state. In fact, the Council of the EU has never applied to any member state the sanctions described under Article 7. See European Commission memo and press release on the infringement proceedings against Hungary. ÁF

Thirty thousand… 100,000… ONE MILLION! Political parties and civilians alike are both mobilizing for the future and claiming unprecedented, unimpeachable and historic success of an idea when they announce the volume of their supporters. Naturally, their opponents do whatever they can to mitigate that. Let’s take one example: recently György Kon-

rád, a widely acknowledged writer, published an op-ed in the New York Times bashing the government and announcing that 100,000 protesters had stood in the icy weather to denounce the new constitution ratified by the government majority in Parliament. Tamás Deutsch, whose career has been retarded from being a minister in the first Orbán administration between 1998-

lic support for Orbán and his much criticized government. Thorpe is wrong. We simply do not know what this number means. In 2002, just before the elections, more than 300,000 gathered on Kossuth Square in front of Parliament. During the pre-election days many more actions took place (and all without the aid of Facebook). Liberals and socialists, then in a political alliance, refused to “do politics on the streets”. In a couple of days Fidesz lost the election and was forced into opposition for eight years. Street math needs massive and careful interpretation. Lib-

eral and left wing political culture is afraid of the crowd. This resentment springs from the dark historical experience of the 20th century, told in fearful family tales and the recent far-right riots in Budapest during the left-wing Gyurcsányadministration between 2006 and 2009. Hungarian trade unions have always been loud, no matter who was in power. But, unlike their colleagues in France, or Italy, or Spain, the street was not a place they made their own. Now, however, so-called sophisticated liberals, leftists

and civil rights’ activists are on the public squares and are demanding rights and freedom. The crowd that Konrád mentioned surely did not reach a six-digit figure. How do we know that? This was the maximum estimation, surely an optimistic one. And they are also slow, inexperienced and waste much of their energies on quarrelling over who should be the lead speaker. That is all irrelevant; 10,000 would also signal a significant change. What we might loosely call “the Left” is back on the street. AR

MAP OF STREET POLITICS. ›

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FOCUS

Doing street math

2002 to a zee-list verbal goon on Twitter, took the opposite view and published that the protest was a “shitty musical”. A few weeks later Zsolt Bayer, publicist and editor of Magyar Hírlap called for a right wing mass protest to demonstrate that the Hungarian government still had the solid support of the majority of citizens. Today both sides of the Hungarian cold war accept that approximately 100,000 protesters turned out for the March for the Peace. Nick Thorpe, of the BBC, commented that this volume represented the unshaken pub-

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Budapest Business Journal | Jan 13 – Jan 27

Károly Eperjes, a respected and steadily-employed actor, has always been proud to express his strong attachment to Fidesz and the values the party represents. Still, his application for the executive chair of a theater in Győr was refused in 2011, which might suggest that being a close friend of the party is not always enough.

“All the things coming to pass now have been imposed on us by the Socialist administration which had immeasurably raised Hungary’s state debt,” said Prime Minister Viktor Orbán, who seems still to be stuck on the idea that it is enough to put the blame on the previous government for all the current difficulties of Hungary. But then, who knows? Although continuously losing support, Orbán’s Fidesz is still, by far, the most popular party.

Speaker of Parliament László Kövér does not consider parliamentary opposition parties LMP and Jobbik “more serious” than the Hungarian Two-Tailed Dog Party, which is a self-declared joke party. Kövér expressed such ideas in a recent TV interview where he, by the way, also called the decision makers at the European Court of Human Rights “some idiots in Strasbourg” for allowing the usage of red star, saying it is part of the right to freedom of thought.

Hungary’s recently passed election law, which enfranchises Hungarians living outside the country’s borders, has increased the value of László Tőkés, Fidesz’s Transylvanian ally. Tőkés, who started his career as a pastor of a Reformed diocese in Romania, even refused to renew his mandate as a vice president of the European Parliament in 2011 in order to fully focus on his political duties as leader of the Transylvanian Hungarian People’s Party.

István Csurka, the head of radical national conservative MIÉP (justice and Life Party), took the floor at a pro-government demonstration two weeks ago. “Hungary is threatened by unprecedented aggression. Some want to take the country away from Hungarians,” he said. MIÉP saw better days between 1998 and 2002 when it had 14 seats in Parliament and so could often support the Fidesz-led governing coalition with its votes.

“Strict and tough budget policy must come,” said WWW.BBJ.HU former Socialist prime minister Ferenc Gyurcsány, Budapest Business Journal | Jan 13 – Jan 27 who is still the most controversial figure on the left of the political spectrum. His newly-established Democratic Coalition is followed by insistent Gyurcsány fans, but without political allies, he has no chance of getting close to power again. All parties seem to have been frightened away by Gyurcsány’s unpopularity thus far, and so refuse to really cooperate with him.

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“The main goal is more important than personal ambitions,” said Gordon Bajnai, the prime minister in 2009-2010, when asked about his potential plans for returning as the head of government after replacing the Fidesz administration. Bajnai’s Patriotism and Progress Public Policy Foundation, supported by US Democrats, is increasingly frequently being reported as having the possibility of becoming a ruling party one day.

José Manuel Barroso’s letter calling on Hungary to change some of its laws is a “declaration of war”, chan said far-right party Jobbik’s president Gábor Vona at a demonstration on January 14. “Why didn’t Barroso write a letter when Hungary was raided Barr through privatization?” Soon after these words, his thro party colleague Előd Novák set fire to the flag of part the EEuropean Union.

Despite the recommendation of a professional committee, Budapest Mayor István Tarlós appointed a frequent speaker at Jobbik events, the selfadmitted national radical actor György Dörner to lead the Új Színház (New Theater) for five years. In his application, which failed to meet both formal and content requirements, Dörner defines the current Hungarian situation as a “sick, liberal hegemony”.

“Freedom for Budaházy” is a frequent slogan at far-right demonstrations. Two years of detention topped by months of home surveillance have made György Budaházy, the head of radical groups Hunnia Movement and The Arrow of the Hungarians, something of a living martyr for the extremists. Budaházy was charged with terrorist activity and the intention of assassinating two people in order to intimidate the then left-wing government and its supporters.

ÁV

10 SPECIAL REPORT [ EXPERT OPINION ]

Inherent rights in the new Labor Code – extended protection or welldisguised restriction? ZSOLT CSELÉDI Oppenheim Law Firm PARTNER

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

We have seen that even the draft of the new Labor Code kicked up the dust and lots of articles tried to pour oil on troubled waters or even to ruffle feathers with respect to the high-interest of potentially sensitive provisions. In this article, we try to present a non-exhaustive list of the key aspects of the revised regulation of inherent rights in the Labor Code. It is laid down in the new Labor Code as a general principle that the inherent rights of employers employees shall be equally respected. With respect to the limitation of these rights, the new rules provide that such inherent rights may be restricted only for reasons directly related to the purpose of the employment relationship, which phrasing may raise concerns by empowering the employer to determine the conditions which may serve as a basis for such distinctions. The above requirement is supplemented by a provision demanding that the restriction shall be strictly necessary and proportionate to the realization of the objective. This may give rise to certain ambiguity and the determination of the content, the exact meaning and especially the limits of such notion will probably be worked out by court practice over the following years. The provision of the new Labor Code, pursuant to which the employee cannot waive its inherent rights (i) generally and (ii) for the future also raises the question of whether such provision would fulfil its intended purpose if the possibility of the waiver of inherent rights is still available generally in respect to the currently possessed rights, or in respect to particular inherent rights in advance. Going into detail, one of the most provocative questions is that the new text does not contain the provision that the employee cannot be obliged to take a pregnancy test or to produce a certificate thereof. However, the deletion of the above provision naturally does not mean that the employer will be entitled to prescribe that the employee take such kind of tests or to collect such data. The new Labor Code, extending the scope of the prohibition specified in the previous Labor Code, lays down two more general principles, pursuant to which an employee shall only be requested to disclose data that does not infringe the employee’s inherent rights and (provided that the previous condition has

been fulfilled) that are relevant in respect of the establishment, performance or termination of the employment relationship on one hand; and an employee shall only be requested to take an aptitude test which is prescribed by any regulation pertaining to labor relations or necessary for the purpose of exercising rights or fulfilling obligations set forth in any regulation pertaining to labor relations on the other hand. Beyond the above, pursuant to some criticism, the scope of the supervising power of the employer became too wide, since the new Labor Code grants power to supervise to the employer with respect of all behavior of the employee relating to the employment relationship, which is not identical with the employee’s behavior in the workplace or during the working hours. It is a general perception that this rule may result in making the employees vulnerable even if the approved text lays down that the personal sphere of the employees may not be inspected. The problem lies again in the determination of the content, the exact meaning and the limits of the definition, and, especially, in delegating this right of qualifying a certain situation to the employer. However, it is also laid down as a general principle that the employer’s inspection and the means of such inspection cannot violate human dignity, which gives a substantial frame to the employer’s supervising power. Allowing for the employer to inspect the employee’s behaviour by using technical means is also an innovation. Moreover, the new regulation does not require the employee’s approval for the use of such technical devices, the previous notification of the employee(s) is sufficient under the new rules. The main argument against the foregoing is that the new regulation grants a more extensive authorization to the employer compared to the current practice and the data protection supervisor’s opinions pursuant to which the inspection of the working place by using technical devices cannot serve exclusively the inspection of the performance of the employee or of the intensity of the work, and such technical devices may only be placed at the workplaces if the life or physical integrity of the employees may be in danger or it is necessary for the purpose of property safety i.e. they cannot be used in resting places, changing rooms, washrooms. The answers to the questions raised above and the actual meaning of the provisions of the new Labor Code in practice will be determined by court practice and the practice of the labour authorities in the following years. In general, it may be established that the new era brings more flexible and more general regulations than previously, however, it shall be emphasized that it does not automatically mean the restriction of the employees’ rights, also assuming a lawful, bona fide attitude on the employer’s side.

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When diplomacy is not enough Barely a year after it received unwanted attention for a new law, the Hungarian government is again in the focus of the European Union. Could the stir have been avoided with good diplomacy? On January 18, the Prime Minister of Hungary had an important appointment scheduled. He was going to meet with the representatives of the peoples, banks and corporations of 27 nationalities. The venue: the European Parliament in Strasbourg. The participants: MEPs from across the EU. This was not their first encounter; roughly a year ago, European politicians rallied to debate about Hungary. The theme was different: then it was questionable elements of the new Hungarian media law, this time it is proposed changes in the banking and judiciary system. Other than that, everything else felt familiar: MEPs of the European left lashing out at the PM; liberals lecturing on the basics of democracy; the European People’s Party pointing out that they had got it all wrong; the attention the media has been paying to the country and whether the government is damaging democracy. In mid-January, European politicians and media stood as one against Hungary in defense of common European values. Never mind that there is no such thing. In fact, the only common value of Europe is its diversity. Whether the Hungarian government has damaged democracy is hard to establish. Each European nation has a different reading of democracy. The findings will be different based on where one stands. Hungary did hurt a number of things, though. It disrupted the general sense of balance. A two-thirds majority is rare and so it tends to make people edgy for fear it is abused. European nations have a natural aversion to sweeping majorities anyway, probably because in the course of history they have all had their fair share of it and not

everything turned out well. The government hurt some sales (for example through the Erzsébet card), it hurt profits (think of the crisis tax) and other business interests. Finally, it hurt the people; austerity always hurts like hell. Any of the above is enough for an apt politician opposing these steps to make his case. Collectively they represent a boiling point for the past year’s happenings: the events in the EP last week are therefore explained. So the question is no longer what brought the country here; instead, it is “could good diplomacy have helped?” Of course, diplomacy sounds like a viable tool. In peacetime, its role is to build ties and cherish existing ones. Chief among its tasks is to inform local parties of what is about to happen in the home country. In order to do that, embassies must be abreast of what is going on in their country and have their set of arguments ready. At the time when the media law and the constitution were passed, the information flow from Budapest to Hungarian embassies was not continuous, the Budapest Business Journal has learned from experts. The government created and passed legislation so fast that diplomats often had trouble keeping up. It has not made it easy, though by now the situation has much improved, they say. The European Commission collects information on Hungary both from the Permanent Representation of Hungary in Brussels and its own outlet in Budapest. “Diplomats can only share information they know about. The way that information is interpreted is up to the European Commission,” says Csaba Törő,

senior research fellow at the Hungarian Institute of International Affairs. Diplomacy had a clear role in clarifying certain information this time, he adds. Diplomats also have to maintain a good working relationship with the local press, explaining, say, the controversial parts of an upcoming law. This way, they can avoid future misunderstandings and help further a sensible debate. It is easier to prepare parties for what’s to come than straightening out the problems later. Not to mention visibility and effect: a report from a local journalist can always count on more readers than a letter from a diplomat. “I have published two letters explaining the Hungarian standpoint in two important newspapers, but locals pay more attention to news created by Norwegians,” Géza Jeszenszky, Hungary’s Ambassador to Norway and Iceland told the BBJ. When it comes to the media, diplomacy’s ability to influence is limited. Its significance lies more in making vague points clear. Representatives of the Hungarian government in major European capitals have been busy briefing the press lately, organizing press events, handing out background information. Even so, the press sometimes uses second-hand or incorrect information or writes articles without double-checking facts. “It is not untypical of the press to report on stuff that others have already covered. It cannot make such a big mistake this way,” says Gergely Kitta, senior researcher of Századvég Intézet. As seen, diplomacy alone is not enough to straighten out problems originating from a different mindset, policy or communication. “It is a useful and necessary tool,” Jeszenszky insists, “but to avoid a situation like this you need to have a wellgoverned country. One with impeccable democracy, a responsible budget. If that is backed by facts, Europe will acknowledge that this system is right.” ZsV

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12 LAUGHING MATTER

Budapest Business Journal | Jan 27 – feb 10

LAUGHING MATTER

Beyond the “Pesti vicc”

Hungarian social and political situation. Which, as many Hungarians believe, is a joke in itself. To understand the peculiarity of the Pesti vicc, we should first try to define it. László Erőss, a noted Hungarian journalist, compiled a book under this very title, A pesti vicc (Gondolat, 1982). Erőss sums up its main characteristics as follows: in terms of style it is biting and critical; in terms of language it is fast and easy to understand; in terms of content it is cheeky, iconoclastic and sharp. Róbert Takács, a historian, in his essay Pest Jokes during Socialism (Kétezer, 2006, Issue 7-8), recounts all the trivialities (Pest jokes breed on the asphalt / in the cafés; it always shows life with a twist; it is quibbling; it’s bourgeois, it’s blithe, it desecrates, etc.) before stressing the point: people are thirsting for laughter to dissolve stress. And stress is often induced by politics. The Pesti vicc, thus, was a form of “jus mor-

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morandi”, the right to grumble, a form of protest against oppression or just the abuse of authority. But what is it that makes the Pesti vicc so special? After all, jokes, along with anecdotes, funny stories and comic tales, have become part of the folklore in almost every country in the world. On the net you can find thousands of joke collections about ethnic groups, professions, animals, family members, etc. – yet, only one which is directly linked to a city. Or more precisely: to a part of the city. Pest had been separated from the country’s capital, Buda, by the river Danube until the first suspension bridge across the river was built in 1849. A flat, provincial town with inhabitants numbering only a few thousand people until the mid-19th century, Pest became

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Kohn and Grün meet in Váci street in 1963. They are both very glad to see the other. “You don’t say, Kohn, you’re alive? The last time I saw you was in 1956...” “I was released just recently.” “Goodness me! What did you do?” “I? I did nothing.” Grün shakes his head. “Don’t try to fool me, Kohn. For nothing, you could have got only three years.” The linguist László Cseresnyési points out another important attribute of the Pest jokes (A thesis about Pest/Jewish humor. Kétezer, 2006, Issue 7-8). In 1910, 23% of the inhabitants of Budapest declared themselves to be followers of Judaism. The Hungarianized Jewry, says Cseresnyési, played a decisive

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an important trading center and soon the engine of Hungary’s modernization only after the unification of three separate small towns, Óbuda, Buda and Pest, in 1873. László Erőss believes the Pest joke is exactly as old as the Hungarian capital itself. He claims the Pesti vicc was born on October 30, 1873 at 11:04, when the document ratifying the merger of the three separate entities was signed to create Hungary’s new capital city. The grandiose event of unification offered an excellent opportunity for newspapers to poke fun at the shallow pompousness and unscrupulous roistering of the celebrations. Joke magazines were full of vitriolic car-

toons and accounts of the rollicking parties, balls and soirées. The jokes, full of scornful mockery, expressed the common man’s disdain for the hideous showing-off of the riches. At the time, Pest’s population was a strange mix. In the early 1800s, Pest had only 35,000 inhabitants. By 1850 this number had grown to 127,000 and soon after the unification, Pest alone had almost 300,000 townspeople. This huge growth was the result of an immense influx of landless villagers looking for jobs on construction sites and in mushrooming factories on the one hand, and various ethnic groups including Germans, Czechs, Serbs, Romanians and Jews, attracted by new business opportunities on the other. This rapid growth also meant that there were relatively few “indigenous” inhabitants in Pest; most of those swarming into the town were strangers to it, sstrangers to each other.

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Unfortunately, this almost inexhaustible fountain of human knowledge does not have an article for a unique form of humor: the “Pesti vicc”, jokes created in the idiopathic social and cultural environment of the Hungarian capital. In this issue, the Budapest Business Journal launches a new series of articles to initiate its readers into the unique world of Pest jokes. We intend to explain the term, introduce its historical, social and cultural background. To make our explanations clear we shall use jokes as illustrations, although we are aware of two insurmountable obstacles: firstly, jokes must be told – it is an oral genre; secondly, to appreciate political jokes one usually needs a profound understanding of the

Wikipedia is smart and simple. “A joke (or gag) is a phrase or a paragraph with a humorous twist. ... Jokes may have a punch line that will end the sentence to make it humorous.”

Pest’s rapid development also meant that, with most of its inhabitants being first-generation country folk, it remained somewhat provincial even by the end of the century. This, as Erőss puts it, made its society “drolly muddled”, particularly in terms of cultural traditions. The freshly arrived urban dwellers looked at each other with curiosity, mixed with suspicion. They observed a grotesque strangeness in the others’ accents, clothes and manners. Ridiculing others strengthened their group identity and made them believe they held the upper hand. This odd social mix, this variety of cultural traditions and psychological effects, all combined, brought about the phenomena of the Pesti vicc – a real urban folklore.

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role in shaping all aspects of urban culture, humor included. The emergence of idiopathic Jewish humor not only coincides with the accelerating assimilation of Jews at the end of the 19th century, but it is explicitly a product of it. The character of assimilated Jews was shaped by the ambivalent experience of social acceptance and exclusion. Humor can work only in an ambiance in which it is evident that everything has its flip side, that values are relative and that human aspects are diverse, concludes Cseresnyés. Behind Jewish jokes there is a peculiar Weltanschauung: twin currents of anxiety and skepticism, wisdom and melancholy. They are full of understatement and self-mockery. Always very critical, expressing a never-abating affection for the freedom of thought. Like Jewish people, Jewish humor is optimistic in the long run, but pessimistic about the present and the immediate future. Erőss also recognizes that the Pest jokes reflect a strong Jewish influence. “There’s no Jewish culture without Jewish jokes and there’s no Pesti vicc without the underlying spiritual ascendancy of Jewish jokes,” he claims. In our next issue: The Protagonists of Pesti Vicc. ASz

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OPINION 13 OPI

Budapest Business Journal | Jan 27 – feb 10

THE IDEA OF SENDING EVEN LIGHT USERS TO PRISON STANDS IN CONTRAST WITH INTERNATIONAL TRENDS

The creators of Hungary’s new National Drug Strategy have not reinvented the wheel: the concept voices the need for a healthier society and would set up stricter requirements for light users wishing to choose drug diversion instead of prison. Will pushing drug users to the margins of society really help people beat their addiction? “Hungary’s previous drug policy has failed,” Kristóf Téglássy, the head of the Youth Department at the Ministry of National Resources said when explaining why the government had decided to junk the country’s 2010-2018 drug strategy. That document was accepted two years ago with the support of the entire addictology profession, as well as human rights activists, and is now set to be replaced with a new one for the 2012-2020 period. Hungary has gone from being a transit country to a target country, the offi-

cial explanation continues. Indeed, according to the latest WHO Cross-National Study of Health Behavior in School-aged Children (HBSC), an increasing number of children of grades 9-11 are trying drugs. The proportion had reached more than 30% by 2010, showing a ten-point rise from 20.3% in 2006. Cannabis tops the list with still-increasing popularity among youngsters, but the prevalence of amphetamines is also on the rise, the study showed. No surprise then that the new National Drug Strategy – which will get on the parliamentary agenda in the very near future – focuses on young Hungarians. It voices the need for a more healthconscious society that should be created through, for example, drug prevention programs at schools. While the efficiency of school drug prevention programs in their current form – which usually means a presentation of a few hours about the risks of drug abuse – is doubted by several professionals, even the financing of these non-interactive programs are questionable. The HUF 2 billion that has been spent annually on drug prevention so far will be cut to HUF 300 million under the government’s budget plan, but looking at the state of the Hungarian economy, an even more drastic cut would not be a surprise. CRIME OR YOUTHFUL INDISCRETION? A ten-member working group, which included Dr József Rácz of the drug-consulting center Kék Pont, who also took part in the development of the former drug strategy, published its first draft in August 2011. This document was objected to by several professional organizations. According to the Hungarian Association of Addictology, for example,

there was no professional reason to introduce a new drug strategy. The Federation of Hungarian Drug Therapeutic Institutes, together with harm reduction organizations ÁSz and the Hungarian Association of Organizations for Drug Prevention and Harm Reduction raised even heavier concerns about the strategy, mentioning numerous shortcomings and defining the entire direction as “wrong”. Hungarian civil liberties organization TASz was the most vociferous in criticizing the new program. A major difference between the old and new strategies, and also its most criticized element, is the approach to the criminalization of drug users. The previous document aimed at widening the circle of users allowed to take part in the so-called drug rehabilitation program as an alternative to the criminal process, and would have extended this option even to those who commit smaller crimes related to their drug consumption. In contrast, the new concept only allows rehabilitation as an alternative if the user (often kids getting high for the first time) cooperate with the authorities and/or reimburses the cost of the criminal process. This is not a good direction, TASz said, pointing out that rehabilitation exempts drug users from the harmful effects of criminalization. The idea of sending even light users to prison stands in contrast with international trends, as well. In several European countries such as Britain, Belgium, Austria, Germany, Finland, Sweden, Italy, or Spain, those who are caught with dope for the first time and agree to go to therapy may well be acquitted of all criminal penalties, or at least have their prison sentence suspended. DREAM ON Another shortcoming of the strategy, according to TASz, is that it totally ignores harm reduction options such as the needle-exchange program, which could minimize the spread of HIV or hepatitis C among intravenous drug users. Dismissing harm reduction runs not only counter to European trends, but also misses an opportunity to bring hard drug users into the health care system. Meeting people distributing new, sterile needles could be users’ first encounter with the state system, as well as with a helpful attitude, which is essential for them to face and fight their addiction. Instead, the new strategy is built on a vision of a drugfree society and declares that “drug abuse should be denied also on moral basis”. While chasing the dream of a mentally healthy society, the nine-year strategy fails to assign any tangible targets to the plans, which means that any success will be immeasurable, while those who are responsible for carrying it out will be unaccountable. ÁV

Mass power 14 SPECIAL REPORT

While Hungary’s retail sales were stagnant in 2011, the e-coupon market produced rapid growth. BBJ PATRICIA FISCHER

There is a certain area within the online market that has been performing particularly well. The online bonus/coupon market, where the first players appeared only in the second half of 2010, has seen rapid growth in 2011. According to estimates by GKIeNET, the total value of the bonus/coupon market in Hungary was HUF 3-3.5 billion in 2011, three-quarters of which was divided among just three players. Despite being a young market, it has matured fast. It seems that operators have already settled into their grooves. There are three big players, and in their wake, several smaller sites have started offering similar services – their number had reached 60 by the end of last year.

A MODEL TO FOLLOW The business model came from overseas: the first site based on a new sales philosophy emerged in the US in 2008, when Groupon, a deal-of-theday website that featured discounted gift certificates usable at local or national companies, was launched (see box on Groupon’s history).

The Groupon business model is often described as a typical win-win-win model, as site operators, consumers and merchants all benefit from it. Coupon firms offer daily deals on their sites gathered from merchants. These deals can be both services and products. If a certain number of people sign up for the offer, then the deal becomes available to all, but if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. Groupon makes money by keeping approximately half the money the customer pays for the coupon. Coupon websites in Hungary kicked off with the same business policy, but there are differences in commission rates. The majority continues to charge 50% of the sales price as a fee, but because competition is fierce, many offer services at lower commission levels. However, the higher the commission is, the more consumers will have access to the deals.

MAINLY MARKETING With e-coupon firms getting a foothold in Hungary, the spectrum of goods and services available for online purchase has been significantly widened. Coupon sites offer bargains in nine categories: beauty care, gastronomy, travel, leisure, experience, wellness, sport, education and health. Except for tourism services, all of these services and

products are newcomers to the world of internet sales – previously, they had been advertised on the net, but not sold. However, the daily deals business model is primarily a marketing tool for merchants. With the big discounts they offer, and after paying commission to the site operator, they rarely make any profit. But the marketing value matters more in this case. That is what Bónusz Brigád was quick to realize. “The advertising market has been in a poor shape, but this model offers a solution to effectively spend shrinking advertising budgets,” Zoltán Kaprinay, co-founder of Bónusz Brigád, told the Budapest Business Journal. Most businesses apply a strategy in which they consider the discounted products or services as a form of advertisement. They lower their prices so much that they do not make a profit or may even lose money, but in return, they receive substantial advertising exposure for the duration of the sale. Traditional advertising would cost them much more.

of Hungarian customers had a negative attitude about coupons (paper-based back then), and marketing professionals also took a cautious approach. This was mainly due to the mentality that perceives cheap or discounted purchases as shameful. Retailers, in many cases, also had a hostile attitude toward coupons, and that didn’t help to improve consumer sentiment towards this form of shopping. This is one reason why Bónusz Brigád uses the word “bonus” instead of “coupon”, Kaprinay noted. But all this has started to change, mainly as a result of the power of the community, which has the ability to create trust in consumers. Site operators also did their best to dismiss such concerns. “When we sign a contract with a new partner, it is stipulated that they cannot treat consumers with bonuses differently from those paying with cash,” Kaprinay said. “Our partners were quick to realize that this is in their interest as well.”

LIKE AND COMMENT But besides receiving an effective advertising tool and a chance to make up for the losses caused by the crisis, merchants see additional benefits from the Groupon model. “We have a team of professional journalists who write descriptions of the products or services offered on our site,” Gábor Heller, the other founder of Bónusz Brigád added. Unlike in a traditional web shop, deals on bonuses or coupons on these sites are only available for a few days. Advertising the actual deal is not enough to maintain consumer interest in the long run; brand marketing and the support of customer communities also play a crucial role. These involve interactive communication through online channels, for which social sites such as Facebook can provide the easiest platform. The possibility of commenting on the deals also works as a quality assurance tool, Kaprinay says. ■

THE ADVERTISING MARKET HAS BEEN IN A POOR SHAPE, BUT THIS MODEL OFFERS A SOLUTION TO EFFECTIVELY SPEND SHRINKING ADVERTISING BUDGETS

THE STRENGTH OF COMMUNITY

Groupon history

Only a year after the first such business was launched in Hungary, already 1.5% of the population between the ages of 14-74 have purchased products or services in this way. This marks a major shift in online consumer sentiment: a study carried out by GKIeNET in 2009 showed that nearly half

The US-based Groupon grew out of the campaign website ThePoint.com in November 2008. The name Groupon blends “group” and “coupon”. The first deal Groupon offered on its site was a half-price offer for pizzas for the restaurant on the first floor of its building in Chicago. As a result of its aggressive expansion policy, Groupon now owns numerous international operations, all of which were originally deal-of-the-day services similar to it, but most of which were subsequently re-branded under the Groupon name after acquisition. In June 2011, Groupon filed with the US Securities and Exchange Commission (SEC) to raise up to $750 million in an initial public offering.

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Social shopping conquers

LONG-TAIL EFFECT SOLD BONUSES/COUPONS AND NUMBER OF DEALS (MAY, 2011)

SOLD BONUSES/COUPONS

NUMBER OF DEALS

20,069 22,366 8,153

58 71 23

BÓNUSZ BRIGÁD KUPON VILÁG NAPI TIPP

Source: GKIeNET - Corvinus University E-business Research Center

SAVINGS AMOUNT AND AVERAGE DISCOUNT RATES (MAY, 2011)

SAVINGS AMOUNT (HUF)

BÓNUSZ BRIGÁD KUPON VILÁG NAPI TIPP

DISCOUNT RATE (%)

143,046,842 216,346,638 201,214,212

56 69 79

Source: GKIeNET - Corvinus University E-business Research Center

MONTHLY TURNOVER (HUF MLN) (LAST AVAILABLE DATA FROM MAY, 2011)

Competition is fierce among the players of the e-coupon market. Since in a survey conducted by GKIeNET and Corvinus University’s BCE E-Business Research Center in 2010, several businesses claimed to be the “market leaders” during interviews, the survey ended up evaluating market players by certain factors, such as the number of advertised deals, the number of coupons/bonuses sold, revenues, the extent of savings, and the number of registered users. The market already have a large number of players; however, it shows evidence of the long-tail effect: a few sites make up 80-90% of the total turnover, while the growth curve of the rest gradually lags behind the market leaders. Some businesses concentrate on specialized product groups, as seen in the development of similar sites in other countries.

Bónusz Brigád Bónusz Brigád, owned by Hungarian entrepreneurs Gábor Heller and Zoltán Kaprinay, was launched in September 2010. In the first six months of operation, the company generated HUF 11.4 million in turnover, and in its first full year in 2011, it reached the HUF 1 billion threshold. The firm started to operate in a small office, but soon moved to a bigger one, and now there are 23 employees working for Bónusz Brigád. With the business going well, the two

Kupon Világ Kupon Világ is the only one of the top three bonus/coupon companies with an international background. It is a member of the German-based Rebate Networks, which operates in 29 countries. Kupon Világ was launched in November 2010, and it offers services and products from companies in Budapest

Napi Tipp Although the website of Napi Tipp was launched in July 2010, the first offers only appeared a few weeks after its main rival Bónusz Brigád kicked off in the fall. However, as managing director Haim Schlesinger says, Napi Tipp was

MAY, 2011

JAN, 2012

185,000

304,700

owners decided to devote all of their time to it and both quit their other businesses. The projection for this year’s turnover is about twice that of 2011. Today, they receive more than 100 inquiries per day from aspiring partners, but, as one of the owners says, they are selective about new partners, and the number of companies turned down exceeds those accepted. “This way, we can maintain the quality of services offered on our site,” they say.

MAY, 2011

JAN, 2012

105,000

146,500

and eight large towns in Hungary. Its main international partners include H&M, McDonald’s, Starbucks Coffee, iTunes and Subway. According to the GKIeNET-Corvinus survey, Kupon Világ was the second largest market player in May 2011, with turnover of more than HUF 99 million.

MAY, 2011

JAN, 2012

54,000

84,700

the first e-coupon site in Hungary promoting fresh deals every day. According to the Napi Tipp site, the total amount saved by the site’s users so far is more than HUF 2 billion, with a discount rate between 50-92%.

Niche market Besides the big market players, there are several smaller ones offering daily deals. Although the majority has a wide range of such deals from nearly all segments, some targets various niches, such as Babakassza, a site for families with children. Another example is Fashiondays.hu, an exclusive online shopping club, that was launched in January 2011, Source: GKIeNET - Corvinus University E-business Research Center

and offers up to 70% discount from top fashion brands to its members. However, not every one follows the Groupon model. Lealkudtuk.hu, a site operated by Allegroup. hu Kft, builds on databases of auctions sites Vatera and TeszVesz, and there is no minimum number of bidders in order to get the deal.

16 SPECIAL REPORT

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Budapest Business Journal | Jan 27 – feb 10

Frequent buyers: Hungary, Inc. enters the mobile market Two strong moves at the beginning of the New Year have made it clear that the state is determined to secure itself a place on the country’s mobile market. But the fact that market experts are hiding in the shadows in order to tell us about their doubts suggests a flawed entrance.

and compatibility would truly be a gain in this game, system development should be forced by competition, market experts note. But this competition is already eyeing other markets. Első Magyar Mobilfizetés Elszámoló (EME) Zrt, the largest player on the market, which managed six million mobile parking transactions alone in the last two years, is planning regional expansion in the near future. When the Budapest Business Journal asked it about the current matter, it merely said it supported all proposals that are in the best interest of the country, its clients and the development of the mobile payment market. Cellum was not available for comment, but previously made the headlines with a HUF 400 million venture capital investment for Cellum Global Zrt, a member of the group. The aim of the capital injection is to finance the international expansion of the company, starting in a couple of months with Cellum Bulgaria.

REUTERS/Stefan Wermuth

AND THE WINNER IS...

On December 23, 2011, the Hungarian parliament voted to create a unified national mobile payment system, giving all rights to operate such a system to a newly established, state-owned company. According to the law, the new company will exclusively collect the fees for mobile parking, motorway use and local government services. Future plans for the expansion of the market also include mobile payment for public transportation on roads, rail and waterways. The law will take effect on October 1, 2012 for parking and motorway tolls and on January 1, 2013 for public transport. The new company will use the existing

business model: it will share the margin with the operators and charge a commodity fee from users. The official reasoning goes thus: the new system will solve compatibility problems and will enable uniform development on a now fragmented market. A single player can be more effective in its operations and state ownership would ensure the transparency of money transfers. If you’re not laughing yet, then you probably haven’t lived long enough in Hungary. For your information, transparency and effectiveness have been everything but the feature of state-owned ventures in this country. While unification

If the above story came as a surprise to the market, it was just the first in a series. On January 2, 2012, the National Media and Telecommunications Authority (NMHH) announced the decision on the registration of applicants for the auction of the 900 MHz frequency band. It turned out that there will only be one new applicant eligible for bidding: a consortium comprising Magyar Posta Zrt, Magyar Villamosművek Zrt and MFB Invest Zrt – all state-owned companies. As regards the other applicants, RCS&RDS S.A. and Viettel Group, the authority had to deny their registration, and the existing three mobile carriers may bid only for the frequency packages reserved for them. The appearance of a new player on such an established segment is keeping the market excited, but as the BBJ learned, also cau-

tious – there seem to be too many question marks. The most argued point is the auction process itself, especially the denial of applications. According to the official announcement, RCS&RDS was rejected because of outstanding market surveillance fees of controlled companies. Viettel of Vietnam (a service provider of 60 million users) said to have presented an application that is “formally invalid on numerous grounds”, with deficiencies that were impossible to supply in time. In lack of further details, both “could have happened, but unlikely”, sources familiar with the applications process said. On top of that, the auction was labeled “clowning” by regulatory experts. The telecommunication expertise of the winner is in dispute, as well as the need to spend nearly HUF 100 billion of taxpayer money just to start building the new network. Not that it doesn’t make sense for the state to be its own mobile service provider, but if that had been done 20 years ago, the investment would have been recovered by nową, sources said, indicating the most likely business model of providing services for state institutions. However, the real question is how much this company can act as a real market player and invigorate competition by successfully targeting other segments. AJM

Crisis tax: last year to charge In October 2010, Prime Minister Viktor Orbán announced the decision to levy a “crisis tax” on telecommunication companies – one of the first conflicts with multinational companies operating in the country. According to the plan, the state would collect HUF 61 billion annually from telco firms between 2010 and 2012, and possibly even keep this tax form beyond that three-year period, should the national economy require it. The first reactions to the new tax from the companies affected included, without exception, comments about necessary budget cuts with regard to new investments. However, there were other necessities at play also, such as the modernization of infrastructure networks. In 2011, all three mobile operators launched investment projects: T-Mobile said it would spend about HUF 30 billion in the next couple of years to upgrade its stations to the latest technology; Telenor launched a €200 million investment and had replaced 2,100 base stations and installed 200 new ones by the end of last year; Vodafone committed to spend some €100 million to put into operation 400 new stations and modernize the rest. Paying the tax, however, pushed Telenor and Vodafone into the red, and Magyar Telekom’s results also suffered from its unscheduled HUF 27 billion payment due in the first year. Meanwhile, the companies turned to the European Commission for a legal remedy to the windfall tax. In September 2011, the Commission called on Hungary to abolish the tax on operators, in the form of a “reasoned opinion” under EU infringement procedures. The Commission said it considers the tax illegal under EU telecom rules because revenue from the taxes is used for the government’s central budget and not for meeting the specific costs of regulating the telecom sector. In its reply sent in late December, the Hungarian government argued that the tax does not fall under the authorization directive and is not illegal. It is still unsure whether the Commission accepted the reply or will take the case to the European Court. Nevertheless, the crisis tax is to be eliminated by the end of this year, an act welcomed by all market players and positive news with regard to further investment in network developments.

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Budapest Business Journal | Jan 27 – feb 10

The BBJ’s Book of Lists contains 100+ sector-specific listings of leading companies. The Book of Lists comes free with a BBJ subscription, or can be ordered separately by e-mailing circulation@bbj.hu

Virtually being there Virtual training as a substitute for good human interaction will fail. Virtual training as an aid to good human interaction will succeed.

Where to study? E-learning offers an increasing number of market-oriented alternatives to both employees and employers. The different courses focus on solutions that the European Union considers especially important, such as the creation and realization of innovation strategies or the implementation of successful application solutions. COURSES

PERIOD

TUITION FEE (HUF)

ADDRESS PHONE EMAIL

The basics of product development management; Innovation management; Marketing, enterprise, image development; Writing and managing tender documentation; The basics of project management; Intellectual property law, industrial legal advice, patents; How to start a business, spin-offs, capital injection, economical analysis of investments

10-hour courses

6000+VAT

1111 Budapest, Egry József utca 1/E (1) 463-2471 info@mti.bme.hu

Labor safety training

1 month

free

3300 Eger, Faiskola út 15. (36) 429-614/116 oktatas@hkik.hu

Bank, investment and product sales training; European Union tender writing training; Procurement referee training; Foreign trade sales representative training; Marketing and advertising administration training; PR administration training; Project manager training

30 days – 3 months, 20 days – 3 month, 38 days – 4 month, 37 days – 4 month, 59 days – 6 month, 40 days – 4 months, 30 days – 3 months

47,920+30,900 exam fee; 47,920; 95,920+34,900 exam fee; 67,920+31,900 exam fee; 63,920+29,900 exam fee; 67,920+29,900 exam fee; 71,920

1114 Budapest, Villányi út 5. (1) 321-9215 info@efeb.hu

English, German language courses

8 weeks

Free

– – –

INNOSTART FOUNDATION, HUNGARIAN INNOVATION ASSOCIATION www.innostart.hu

Innovation manager training

3 month

18,000+VAT

1116 Budapest, Fehérvári út 130. (1) 382-1505 –

IOSZIA TRAINING CENTER ACCREDITED INSTITUTE OF ADULT TRAINING www.ioszia.hu

Multimedia applications developer training; PC, software training, work arrangement; Project management; Form- and visual design; Designer; E-game developer; E-curriculum developer; Multimedia developer; Content manager

–

3200 Gyöngyös, Katona József utca 1. (37) 301-649, (37) 312-724, (37) 312-719 kepzesek@ioszia.hu

English, German language courses

6 months

45,000

1054 Budapest, Alkotmány utca 25. (1) 882-6800 titkarsag@nki.gov.hu

English, German language

–

2100 Gödöllő, Röges u. 66. (30) 629-3576 info@reginakozpont.hu

E-learning material developer

1 year

200,000

1119 Budapest, Mérnök utca 39. (1) 883-3655, (1) 203-0304 info@szamalk.hu

TOP SCHOOL www.topschool.hu

Photo edit, Web edit, Video edit, Multimedia presentation

120 hours

108,000

– – (70) 361-7138 info@topschool.hu

VELOXNET LTD www.veloxnet.hu

Multimedia development; Software development; Portal development; System integration

–

– – (20) 583 9456

English teaching with e-learning solution; Creating e-learning platform; How to manage e-learning programs?

–

COMPANY WEBSITE

BME INSTITUTE OF CONTINUING ENGINEERING EDUCATION www.mti.bme.hu

BBJ ZSÓFIA VÉGH CHAMBER'S EDUCATIONAL WEBSITE www.kop-suli.hu

Réka Fónagy, a master’s student at Corvinus University of Budapest, recently won a two-week scholarship to a summer university in León, Spain. The language of the course was going to be English and interested students could take part in a Spanish language course. Still she did not want to leave unprepared so she decided to see a private teacher. Being short on time and with the classes mainly focusing on grammar, her teacher advised her to try the BBC’s online Spanish course. The BBC’s meticulous approach does not end with news and information. The course it designed and launched is a most enjoyable and motivating one, embodying all the qualities good e-learning has to possess. It literally involves students who become the star of series. The story goes like this: you are visiting a friend in Spain but she cannot meet you, being too tied up. You have to make it alone from the airport to her apartment in a country whose language is hard to understand even for experienced speakers. Fortunately, you have a guidebook with a bilingual guide inside who tells you everything – words, cultural references – that you need to get by. The sense of being there is really strong: (a) because the film is shot with a mobile camcorder from eye-level, (b) you have to talk into a microphone and (c) the responses are not automatic. You pronounce something incorrectly and the taxi driver will miss the address. You tell it right and, voila, you are transported to your destination with no delay. The course is playful in itself, but what gets you is that you memorize things without even noticing. You are so excited about being part of a film and watching the events unfold that you pick up the knowledge subconsciously. You are irreversibly

CORRECTION In the December 16, 2011 issue of the Budapest Business Journal, we incorrectly published the English name of ING Bank N.V. Magyarországi Fióktelepe. The correct translation is ING Bank N.V. Hungary Branch. The BBJ regrets the error.

EFEB TRAINING CENTER www.efeb.hu

EUROEXAM www.elearning.euroexam.org

NATIONAL INSTITUTE OF PUBLIC ADMINISTRATION www.nki.gov.hu

REGINA FOUNDATION www.reginakozpont.hu

SZÁMALK POST-SECONDARY VOCATIONAL SCHOOL www.szamalk-szki.hu

– www.treningkereso.hu

»= would not disclose, NR = not ranked, NA = not applicable

This list was compiled from responses to questionnaires received by Jan 24, 2012 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

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IF YOU ARE LOOKING FOR FIGURES TO How to e-nhance learning virtually SIZE UP THE MARKET, LOOK ELSEWHERE. AS QUANTIFIABLE AS ORGANIZED EDUCATION USUALLY IS, THERE IS NO EXACT DATA ON THE E-LEARNING MARKET OF HUNGARY. THIS IS SURPRISING CONSIDERING THE VAST AMOUNT OF MONEY POURED INTO IT.

Participants: 1. Professor Cervantes 2. Julián Corros, teacher responsible for management of the Aula Virtual de Español (AVE) in Budapest 3. Students of course level A2

step 1

The members of the course are first faced with the intricacies of Spanish past tenses. Professor Cervantes teaches them the basics in the classroom. He incorporates online exercises from AVE, illustrating what blended learning is about.

hooked, like on a gripping online game. Even if the learning process does not end with a pleasant trip to the Mediterranean, e-learning courses are supposed to provide learners with the same experience. Well-thought-out content should be paired with efficient technology and complemented with a desirable platform. On these fronts, we have seen much advancement in the last few years. Compared to, say, eight

years ago, the date from which experts count the appearance of e-learning in Hungary, every element has evolved. Technology-wise, we are on par with international players – also because international players develop together with the target country. Internet penetration may be lower in some parts, but that does not impede e-learning. Often it improves it. There are many small towns in the vicinity of Baja, Szekszárd and Székesfehérvár but

isolated from bigger cities. The locals were mainly unemployed people with changed working ability and also computer illiterate until they were taught. With that knowledge, they could telework. First they wrote formulas and drew pictures in high school math e-training materials. Being online allowed them to see how much time their peers were up on the web. This gave them a push. “Seeing your peer is clocking more hours than you can

be a real motivator,” said József Mlinarics, managing director of the Hungarian Association of the Content Industry. The project finished but participants did not log off, training themselves for the next opportunity. Every year, they throw a party and get together. “They have forged a community.” The idea behind lifelong learning is teaching people how to learn. Unlike traditional educational forums, which enhance knowledge transfer, e-learning places

emphasis on improving individuals’ ability to learn alone. The better the technology, the more need for in-person involvement. That sounds like a neat paradox, but complex programs do require the intelligence of an instructor. It is a point that a lot of e-learning course creators miss. “Many believe that uploading some learning material to an open source constitutes e-learning,” said Ildikó Balassa, director of Számalk Post-secondary Vocational School.

Providing e-training does not stop there: publication channels and management of training is equally important, she noted. This cannot be done successfully without moderating the course and overseeing students’ progress. Teachers and tutors have different roles. Rather than teaching, the latter’s job is to make sure students make good use of the material. They are not there to explain things: answers must be in the material. Instead they guide students through the course. Where can you get such teachers? At Eszterházy Károly Tanárképző Főiskola (EKF), for instance. EKF is one of the few institutes that train teachers not solely for the classroom. The college is ahead of the field: much of its degree courses are available in e-learning format. Sándor Forgó, head of the Education and Communication Technology department, has been promoting the dispersion of e-learning since the 1980s. From creating content through quality control to teaching e-learning skills, he has done everything. “E-learning is part of the knowledge-based industry. There is rising demand that it not be such an enclosed program,” he claims. He would like to see the knowledge of the two sectors intersect more. The college runs several programs, including one for international participants. The Malay Learning Center is a master’s program in business administration and IT in cooperation with the Open University Malaysia (OUM). The course is open for teachers, service providers, for-profit and nonprofit organizations. The market may be lacking in tutor numbers, but there are more than enough qual-

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step 2

step 3

In the meantime, Julián Corros opens a blog on AVE with the topic of childhood. He writes a composition about his childhood and prepares the platform for others to join.

ity materials. One of the major problems is that developments have focused on certain fields of e-learning, not on entire educational systems. “Since there is no common platform where the contents made so far could be uploaded, there is a redundancy,” said Balázs Wagner, head of the e-learning department at the Computer and Automation Research Institute of Hungarian Academy of Sciences (MTA SZTAKI). Preceding governments were busy launching new programs and subsidizing content

Class is over, students do their homework at home. They are advised to visit AVE, where they come across Julián’s composition. They join in and with a variety of tools (blogs, forums, chat) they share their experiences with each other using past tenses a lot.

step 4 Back in the classroom, students who used the web are now more confident using this grammar. Mission accomplished.

NEW DEVELOPMENTS FOR E-LEARNING TECHNOLOGY IN HUNGARY ARE NOW ON HOLD. FIRMS HAVE BETTER WAYS TO SPEND THEIR MONEY (AND FOR THE MOMENT THEY CANNOT EXPECT SUPPORT FROM THE STATE EITHER). BUT TECHNOLOGY WON’T SIT STILL FOR LONG: NEW DEVICES WILL FORCE THE INTRODUCTION OF NEW APPLICATIONS. THAT LEAVES SOME TIME FOR E-LEARNING TUTORING AND MANAGEMENT, THE FIELDS THAT HAVE NOT OT DEVELOPED IN LINE WITH CONTENT AND TECHNOLOGY, TO CATCH UP.

development, but cared little about connecting them up. Neither were they interested in the outcome of the programs. The result: heaps of learning materials, according to Balassa. “Billions of funds have been spent on content, so the only thing that would make sense subsidizing is the management of that content. We have the technology, we have the materials; what we need to improve now is the usefulness of all that,” she said.

[ EXPERT OPINION ]

MIKLÓS BÁN ceo espell translation and localization

The past decades have seen a gradual shift in education paradigms. The interconnectedness of today is greatly contributing to a change in how the concepts of knowledge and skills are perceived and defined – lexical knowledge is considered less and less to be the measure to go by while demand for new skill sets keeps emerging. The versatility of e-Learning renders it suitable for a variety of applications from distance training to highly-specialized proprietary knowledge transfer, yet they may all have the same weak spot in terms of localization.

THE BLACK BOX It is a common mistake to consider localization as an add-on to translation, implying that it does not necessitate close cooperation between those who generate and adapt content. Localization treated as an afterthought often produces poorer quality and suboptimal workflows, resulting in longer timeframes and higher costs. When we consider how greatly educational materials are culturally embedded, the implications of such an approach may be even more severe. TAKING THE HIGH ROAD Although authoring tools specifically designed for e-Learning and supporting the SCORM standard are scarce, a large variety of software for creating educational content is available. While the tool often determines the end-user experience, and recent innovations, such as screencasting, require dedicated software, several general considerations should be examined before content development, regardless of the tool being used. Technical design and content structuring are key elements of internationalization because flexible solutions help streamline the localization process and prevent mistakes from spiralling downstream. Video subtitling, dubbing and image editing are the most time-consuming aspects of localization. However, finalizing video transcripts before recording, using separate audio channels for voice talents and ensuring that text is not hard-coded into an image or video are examples of ways in which a considerable amount of time can be saved and costs reduced. When writing content with localization in mind, it is worth favouring cross-cultural referencing and middle-of-the-road solutions that all potential audi-

ences understand. If content is enrooted deeply in the culture it was influenced by, localization grows more and more complex and may require complete transcreation or rewriting. CREATING EXPERIENCES Nonetheless, adaptation of educational materials is a necessity in most cases, going even beyond the usual scope of localization. Because of different cultural characteristics, the complexity of the task can vary from target audience to target audience. Customarily, substantive adaptation of cultural differences lies at the core of localization. Such elements include using images that are familiar to the targeted culture, adapting to the etiquette of the targeted culture, avoiding taboos, making adjustments for linguistic issues (such as grammatical genders, inflection, etc.), altering document layout, converting units, and so forth. Style guides are often taken as the source for setting out such language-specific rules, but some level of localization can also be achieved by experienced language professionals regardless of the availability of reference materials. Nonetheless, while such guidelines apply to educational content as well, other cultural challenges may also present themselves in the field of education, depending on the subject. Responding to the distinctive pedagogical paradigms in different locales requires a deeper understanding of the targeted audience. Different cultures rely on distinctive approaches, and the success of courses heavily depends on the appropriate methodology. When it comes to creating experiences that harmonize with cultural characteristics, content has to be evaluated from a pedagogical point of view.

As opposed to errorless learning, learning through experience means that candidates make mistakes but the penalties are either low or non-existent. While the latter can be perfectly suited to Western audiences, such an approach may not lead to the best results for Eastern Asian learners. A related issue is that errorless learning prompts the teacher to be didactic and less focused on being facilitative, which needs to be taken into account when adapting educational materials. Partly because of its technological background, e-Learning has evolved to favor independent learning. However, there has been a major advancement in this field. It is becoming common knowledge that cooperation, learner involvement and group motivation are perceived rather differently between cultures, and, while not necessarily inaccessible to each other, it can be worthwhile taking the initiative and tailoring educational content to learners’ needs, enabling them to digest information faster and easier. Learners will certainly appreciate it. DOWN THE RABBIT HOLE In the future, e-Learning will most likely incorporate recent advancements in psychology and methods devised for mining the social web. By plugging in meta-content and real time communication dynamics as well as analyzing underlying patterns, we will be able to take another step towards disenthralling ourselves from isolated education and localization methods, and advance towards more personalized learning.

www.espell.com

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY

Educated internationalization: putting e-learning to the test

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20 SPECIAL REPORT

Budapest Business Journal | Jan 27 – feb 10

Internet penetration

Mobile momentum

Bouncing back

The number of elderly internet users has grown dynamically.

Mobile internet continues to boom in Hungary.

After a year of decline, active subscriptions are rising again.

10%

monthly basis.

The development of internet networks and services is measured in many ways. Not long ago, Pando Networks sampled the speed of data traffic in 224 countries and came to the conclusion that the most developed regions may have the highest internet penetration rates, but smaller and less wealthy countries could also boast advanced technologies and higher speed. South Korea, leading the pack, may be an exception falling into both categories. However, Central and Eastern European countries have already passed the US (4.92 Mbps, 26th on the global top list). Romania is the second fastest with 15.27 Mbps rocket-speedy internet and Bulgaria, Lithuania and Latvia follow not far behind. So how does Hungary fare in this comparison? We do not really know. The lack of reliable data about the overall performance of the internet is alarming, but the situation is not bad at all. Service providers and the National Media and Infocommunication Authority (NMHH) publish data relating to various aspects of internet use, and hopefully they will deliver an overall analysis soon. But until then... Internet penetration stands at 60%, which puts the country 46th in a world ranking. Budapest offers dozens of public Wi-Fi hotspots. Almost all of the cafés and restaurants invest in Wi-Fi routers and you hear guests asking about the free wireless services before they even take their coats off. On January 3, T-Mobile launched the first 4G/ Long Term Evolution (LTE) service. LTE guarantees superfast data traffic and T-Mobile promises that by 2013 its 21 Mbps serThree providers are competing vice will cover the whole on the mobile market until a country. fourth receives authorization to Until then, let’s just cellaunch commercial operations. Telenor, Vodafone and T-Mobile ebrate the unstoppable have all benefited from mobile boom of pre-4G mobile internet subscriptions, but rapid internet. According to growth has not brought a visible NMHH data, the number change in their market shares. of mobile internet subscriptions has reached 2.155 million, which represents growth of 65% y/y. Source: Eurostat

Source: Eurostat

According to a recent survey conducted by market researcher NRC, 61% of Hungarians in the 15-69 age group use the internet at least on a monthly basis, which translates into nearly 4.5 million internet users above the age of 15 in Hungary. In line with the growing number of internet users, the intensity of usage has also increased. The number of those using the net on a daily basis had grown to three million by the end of last year. One of the reasons behind this is the fact that an increasing number of net citizens, 93% according to figures from the end of 2011, are now able to go online in their homes. At workplaces and schools, the share of internet users is 27% and 10%, respectively. In a breakdown by various age groups, the survey reveals that the 50-69 year olds carry the largest potential: here the number of net users grew by 50% in the last three years – altogether, one-third of them surf the net regularly. As for younger age groups, already nine out of ten of those between 15 and 24 are regular net users, thus this group is unlikely to produce a further boom in the future. Among internet users, 97% surf the net at least once a week. Of them, 11% have a mobile broadband internet connection. The number of people surfing the net on their mobile phones has been on the rise, too. One-fifth of weekly internet users, mostly young men, now use their mobile phones to explore the web. Altogether, 33% of all internet users have some sort of mobile internet connection. In a European Union context, available statistics In just 11 years, the number show that nearly 23% of Hungarian net citizens has of the entire population sextupled. In 2000, only 10% of the EU were internet of Hungary’s population in the 15-69 age group used the net on users in 2000, which has a regular basis; today, it is more grown to 67.6% by 2010. than 60%. Back then, as well as It is worth noting, howin 2011, the younger generation ever, that 12 new member was the most eager internet user, states have joined the EU with nearly one-third of the 15-24 since 2000. age group surfing the net on a

2.155 mln

117.3

THE NUMBER OF SUBSCRIPTIONS PER 100 PEOPLE

Despite the overall bad state of the economy, the December shopping frenzy did turn the trend again and produced a positive change in the number of mobile service subscriptions. According to the latest flash report of the National Media and Infocommunications Authority, the total number of active SIM cards with the three operators reached almost 11.69 million at the end of the year, 47,000 more than in November. Among these, 11.1 million (112,000 more) cards generated traffic in the last three months. The 117.3 subscriptions per 100 inhabitants represents a 0.42% rise compared to the previous month, but is still 2.68% below the level of the same month of the previous year. The total number of active pre-paid cards has been steadily declining for the last two years, from 61.2% of total subscribers in Q4 2008 to the current 49.6%. This trend can be explained by the fact that new phones are offered cheaper or even free with a monthly subscription, an incentive that seems to be working in the crisis-hit country. The market shares of the three operators have changed very little over the last year. Telenor proved to be a net loser from February 2011 on, now having only a 31.98% share of SIM cards actually generating traffic, down from 32.43% in December 2010. Vodafone also dropped from 22.75% in December 2010 to 22.62% in December 2011. In line with international trends, smartphones are increasingly popular. According to official data from T-Mobile, almost 70% of all phones sold in the holiday period were smartphones, while the figure rises to 80% among clients with monthly plans. Although the market is 2010 was a good year for the dominated by Apple mobile operators: they could products, currently with a increase their subscriber base by 200,000, constantly growing 36.46% share according to from August on and totaling gemiusTraffic, more users 12.02 million subscriptions are picking handsets runoverall. According to the ning the Android operatnumber of subscriptions actually ing system. From a Janugenerating traffic, Vodafone ary dead heat at 0.15% controlled 22.75%, Telenor 32.43% and T-Mobile 44.82% of each, Android was able to the market. pass iOS to reach 0.75% in November. AJM Source: Eurostat

60%

61%

Y/Y GROWTH RATE OF MOBILE INTERNET SUBSCRIPTIONS

120.2

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SOCIALITE 21

Budapest Business Journal | Jan 27 – feb 10

[ BETTER KNOW A CEO ]

JASON (JIANSHENG) DING CHAIRMAN & CEO

BorsodChem Zrt

Jiansheng Ding is the Chief Executive Officer of Wanhua Industrial Group Co. Ltd, and has served as chairman of the board of directors of Yantai Wanhua Polyurethanes Co. Ltd. (Yantai Wanhua) since it was founded in 1998. Ding embarked on his career as a chemical engineer in a small plant belonging to the Yantai Wanhua Synthetic Leather Group. After the stateowned group was restructured, he was in 1998 appointed Chief Executive Officer of Yantai Wanhua Polyurethanes Co. Ltd. Under Ding’s leadership, the company survived bankruptcy, was listed on the Shanghai Stock Exchange, and has developed into one of the leading chemical companies in China. Yantai Wanhua grew from a workshop for MDI (a type of raw material used in manufacturing polyurethane products) with less than $15 million in net assets, to a blue chip company with an average market capitalization of more than €4 billion. Sales revenue and net profit growth rates have exceeded 50% for a decade and it has held the largest share of the Chinese MDI market for eight years. Being not only an entrepreneur but also a scholar of chemical engineering, Ding is an honorary professor and Ph.D. supervisor of Tianjin University and Dalian University of Technology. Ding was given the title of Mount Tai Scholar in recognition of his academic achievements. He is also a recipient of the Chinese government1s National Science and Technology Award.

What is your motto? Continuous self-improvement, persistence, pragmatism!

What is your favorite chemical substance? Isocyanates, I have been working with isocyanates for more than 30 years.

Which talent would you most like to have? The ability to speak Hungarian.

What is your favorite Hungarian dish? Goose liver, though I try to eat it moderately.

What is the trait you most disapprove in others? Conventionalism, impracticality.

What is your favorite Hungarian word? Köszönöm.

Which historical person do you most identify with? Deng Xiaoping for his pragmatism and Mao Tse-tung for his strategic thinking. What kind of job did you dream of when you were a child? I never had thoughts of my future career when I was a child. As a child, I only spent my time playing.

What is the weirdest thing you have experienced in Hungary? When I travel in the country I see a lot of uncultivated land. What activities help you to cope with stress? Swimming, hill walking. Which Hungarian habit did you get accustomed to most easily? Hungarian hospitality.

What is your greatest regret? I do not have any.

Which word do you tend to overuse? Brainstorming.

What is your greatest fear? I do not like spiders.

What is your favorite gadget? iPhone.

What makes you sad? Low work efficiency.

What is it your dream to live to see? For Wanhua to become the Chinese BASF.

When and where were you the happiest? The day when I was accepted into university. (It was only after the Cultural Revolution that university education resumed in China.)

What three things would you take with you to a deserted island? A tool to collect water; fishing equipment (if you can catch fish, you will not die of hunger); and a blanket to protect myself from the cold and wind.

What was your favorite game when you were a child? I used to go swimming in a reservoir. What is the one thing without which you cannot imagine your life in Hungary? The local Hungarian team at BorsodChem.

What is your favorite holiday destination? Heidelberg. What would you do with €1 million? I would use it to travel across Europe to get to know European culture.

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

Name Miklós Novák Current company/position Xerox Magyarország Kft/ managing director Previous company/position -/-

Name Dániel Sermer Current company/position IVG Hungary/senior leasing manager Previous company/position Jones Lang LaSalle/senior consultant – tenant representation

Name David McGowan Current company/position Invitel Zrt/CEO Previous company/position -/-

Appointed in January, Novák will be responsible for the Hungarian, Slovenian and Croatian operations of Xerox. Novák started his professional career in 1997 at Konica Minolta where he held the position of commercial director. In 2006, he joined Xerox Magyarország as director of the office technology division. A year later, he was named managing director of Xerox Slovenia. In 2010 and 2011, he worked at Xerox Adria.

Sermer joined the leasing team of the German real estate developer IVG Hungary at the beginning of January 2012. His main role is to strengthen the office leasing of IVG’s 15 buildings portfolio in Budapest. Sermer arrived at IVG from Jones Lang LaSalle where he worked from 2005 until 2011. He started with landlord representation and then moved to tenant representation as senior consultant in 2007 and offered strategic consultancy services to international clients.

McGowan took over as chief executive of telecommunications and info-communications service provider Invitel on January 9 from Martin Lea. Lea had served as CEO since 2004. McGowan has been in the telecom industry since 1999, serving in senior management positions at leading cable operators including Cablecom in Switzerland and Unity Media in Germany.

Name Tamás Csongovai Current company/position Co-op Hungary Zrt/deputy commercial director Previous company/position -/-

Before taking over as deputy commercial director at Co-op Hungary, Csongovai worked at Univer Coop Zrt as deputy CEO. Previous to that, he spent nearly a decade with SPAR Magyarország Kft, holding various top management positions. He studied at the College of Finance and Accounting, and also holds a degree in economics from the University of Economics in Budapest.

Facskó succeeds Dae Hyun Kim, who continues his career as head of European sales and marketing at Samsung Visual Display. Facskó has been vice president of the Hungarian subsidiary of Samsung and has played an active role in the sales and marketing activities of the company. He joined Samsung 20 years ago. Name István Facskó Current company/position Samsung Electronics Magyar Zrt/president Previous company/position -/-

Name Sándor Baja Current company/position Randstad Hungary Kft/ managing director Previous company/position -/-

Baja succeeds Ilona Jankovich at Randstad. Before joining the company, Baja was regional operative director of LG Electronics. He has also gained experience in the FMCG sector where he worked, among others, at Eckes-Granini France as marketing director and at Borsodi Breweries as commercial director.

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22 SOCIALITE

Budapest Business Journal | Jan 27 – feb 10

What do they expect? In 2012, even the traditionally strong economies – in the EU and globally – are likely to slow down or even fall into recession. A small country with an open economy that itself is not in the best shape, to say the least, Hungary is more relied on external trade relations than ever. In 2011, Hungary’s economic growth was powered by its export activity. But how do the heads of foreign chambers operating in Hungary see the coming year when it comes to trade relations?

WHAT ARE YOUR EXPECTATIONS FOR TRADING RELATIONS BETWEEN THE HOME COUNTRY OF YOUR CHAMBER AND YOUR HUNGARIAN HOSTS IN 2012? ELY MIKOLA GERGRM AN

CHAI r of Commerce British Chambe in Hungary is relation is The future of th items. It is s of rie se a to wn do international exposed to UK which, besides , gy te trade stra portance of im e declaring th ing BRIC nc Europe, is enha untry co ng pi lo ve de and When it comes relationships. CEE, economic d to Europe an predictability and legislative ral will play a ne ge in st tru and and beyond a in g in Be . key role legislation, w ne of long series heavily e ar some of which wngradings do e re th , ed ciz criti edia m l na io at rn and inte say t no d ul turmoil, I wo would be a predictability t for Hungary. strong argumen ledgement ow kn ac e th Besides nce of, and the of the importa predictability e stabilizing of, th nd essential fi d ul wo I t, en elem series of a – t or pp su – and defining, es iv at iti in strategic depicting d an elaborating on selling ue Hungary’s uniq d personally, an propositions. I ppy to be ha e ar , CH BC we as the initiative. part of any such

HAVAS ISTVÁN IDENT

PRES ber of American Cham gary Hun Commerce in

STEVEN SEFER

arian-US I expect Hung ns will tio la re ng tradi may even or le ab remain st as the US , tly develop sligh s signs of ow sh y om on ec ever, in certain recovery. How innovative, e th . .g fields (e nsive te in knowledge e recent th s), rie st du in slation will changes in legi back. Also aw dr a t represen ty to provide Hungary’s abili sectors such al services in glob . clinical .g (e re ca th al as he nerally to testing) and ge ments is at vest attract new in predictable un risk due to the onomic and ec e th of re tu na ronment. vi en ry to regula

PRESIDENT German-Hunga rian Chamber of Industry an d Commerce Although the ex pa G Germany’s econ nsion of omy will likely sl slow down in 20 12, its imports may still grow by 6-8%, after 14% in 2011. Th is provides a ssolid basis fo r Hu exports as well. ngarian

AS SARVARI NICHIDOLEN T PRES ber of Canadian Cham gary un H in ce er m Com

EERIIC LAVOST

P E PR ESIDENT Freench-Hunga F ria off Commerce an n Chamber d Industry In an ideal case : stagnation. In a worst case scen ar worsening rela io, a tionship due to the aim of the government to reinstate state ownershi p in various strategi c industries, e.g. energy, water supply.

, an point of view From a Canadi in the European st we do see intere d with a pending an Union countries ent to be ratified em free trade agre pean dian and Euro this year, Cana e fantastic new se companies will to trade. In this ntly opportunities litical risks curre regards, the po is country th e ak m y ar seen in Hung l tract a potentia less likely to at y ar ng Hu , da partner. In Cana be a good, stable to should appear ed th an experienc environment wi od strategic go labor force and to provide access pe location in Euro arket. But so m to the larger EU in the news for y is long as Hungar , demonstrations, ns political concer , a favorable ts rif ic om on ec and to tion isn’t going currency situa are not we , on as re is cut it. For th in significant rise ful anticipating a pe ho n ai m re we trade, although portunities op be ill w e er that th l and Canadian to partner loca ild longer-term bu companies to relationships.

PAUL STOLK

CHAIRMAN German-Hun gari Chamber of In an du and Commerce stry We see that ther e companies, es are still pecially in the SME sect or, interested to se e if they can produce in Hu The big compa ngary. nies are usually alread y here, and they are m ostly waiting to see what the political and ec on developments omic are. I expect that in 2012 imports to Hung ar decrease and ex y will ports from Hungary will grow slightly.

JAN 31

FEB 5

FEB 8

FEB 9

CCIFH Business Lunch: Hungary’s economic situation and its outlooks LOCATION Novotel Budapest Centrum Palace Restaurant, 1088 Budapest, Rákóczi út 43-45 TIME noon – 2:30 p.m. FEE members: HUF 8,00 + VAT; non-members: HUF 12,000 + VAT ORGANIZER Hungarian-French Chamber of Commerce and Industry CONTACT www.ccifh.hu

AmCham-T.G.I. Friday’s Super Bowl XLVI Party LOCATION T.G.I. Friday, Fashion Street, 1052 Budapest, Deák Ferenc tér 3 TIME 11 p.m. – 4 a.m. FEE AmCham Members: HUF 6 500 incl. VAT; non-members: HUF 8 000 incl. VAT ORGANIZER AmCham, T.G.I. Friday’s CONTACT Anita Árvai, anita.arvai@amcham.hu, +36 1 428-2086

DUIHK – Jour Fixe LOCATION Buena Vista Restaurant, 1061 Budapest, Liszt Ferenc tér 4-5 TIME 6 p.m. ORGANIZER German-Hungarian Chamber of Industry and Commerce CONTACT Marietta Németh; nemeth@ahkungarn.hu

NHCA’s Annual General Members’ Meeting 2012 LOCATION InterContinental Budapest Apáczai Csere J. u. 12-14. TIME 5 p.m. – 9 p.m. ORGANIZER Netherlands-Hungarian Chamber of Commerce CONTACT info@netherlandschamber.hu

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Budapest Business Journal | Jan 27 – feb 10

Budapest’s hidden treasures: Libál Optics The 95-year-old owner of the Libál optical store in downtown Budapest has served her customers for more than seven decades. BBJ GABRIELLA LOVAS

I was told that I had to wear glasses when I was seven. I was devastated. My grandmother took me to the nearest optician in Veres Pálné utca to buy my first pair of glasses. The little shop, with its unique green front and the big old-fashioned yellow sign with the name of the founder, Lajos Libál, on it, was completely different from all the other shops in the area. Inside, the first thing I noticed was the sweet smell of the spirit lamp used for warming up the frames. The next thing was an old sign that read, “If you are happy with the service, tell everyone; if not, tell me.” It was the most charming little shop I had ever seen, with a wiry old lady, Emi néni, standing behind the worn pale-green wooden counter. While I still hated the idea of having to wear glasses, I enjoyed every minute we spent there. And now, several years later, I am here again – a little stroll down memory lane. She looks almost the same, maybe a little more fragile. She does not trust me at first, but she opens up when I visit her for the second time. I could listen to her stories for hours.

SECRETS OF A LONG-TERM BUSINESS MODEL The 95-year old Emi néni, more officially optician Józsefné Brassai, has worked in the Libál optical shop for 74 years. “You have to be there every single day,” she says when asked about the secret to having a successful business for such a long time. Another secret she reveals is that she keeps herself up-todate with the latest in eyewear fashion by watching television and movies and reading magazines to see what kind of glasses trendy people wear. “I come in at around ten o’clock, open the shop at 11, and I stay here until about five,” she explains. Asked how she manages to work such long hours, she says that she simply cannot be bothered by health issues. “At this age,

oculars, as well as glass eyes in various colors and sizes all the way from Schwarzwald, the Black Forest. At the time, there was big demand for glass eyes due to accidents suffered by manual workers, such as lumberjacks, as well as from those injured by wartime scatter bombs. Emi néni worked her way up to be an optician and later a co-owner of the shop. During World War II, Emi néni was badly wounded after three stories worth of debris collapsed on top of her in a bomb shelter. Her hearing was seriously damaged and she had to learn to walk and talk again. The store was practically destroyed during the bombings. In 1952, the shop, along with its entire stock of glass eyes and various tools and instruments, was nationalized. All Emi néni could keep were her license and some parts and components.

your entire body is worn out. You have to come to terms with it. But you can see, I am still here.” She is, indeed. There is a lot to learn from Emi néni in terms of customer service, too. She knows everything about her regulars, from family affairs to the well being of the grandchildren. “They are not customers, they belong here.” She always asks potential buyers how much money they have first, and then recommends a frame within their price range. “Some customers are looking for a specific design they saw on someone else, regardless of their own skullbone structure,” she says with an exasperated sigh. Others completely trust Emi néni’s taste and ask her to pick the right pair of glasses for them. The business is going through hard times, with competition fierce in addition to the effects of the economic crisis. “Nowadays, customers want to pay five forints for 25 forint value,” complains Emi néni. She stresses that there is no haggling in her shop. “The business survives today, but what tomorrow brings is tomorrow’s problem,” she notes. Emi néni has already buried three of her employees. One of them had looked after his sick wife for years, but “the heart of this strong man finally gave out under the strain”, as she puts it. The wife is still alive, Emi néni notes. Another employee died young after being exposed to the effects of the Chernobyl disaster.

THE LIBÁL FAMILY

AT THIS AGE, YOUR ENTIRE BODY IS WORN OUT. YOU HAVE TO COME TO TERMS WITH IT. BUT YOU CAN SEE, I AM STILL HERE. Succession planning is already in place. Emi néni used to be a 100% owner of the business, but now she has a partner who will inherit the shop “I am at an advanced age

and I do not want the shop to close,” she says. The partner is a fellow optician, but not a relative. “Doing business with a stranger is often much easier than with a relative.”

FROM TRAINEE TO OWNER Emi néni was born the fifth and youngest child of her schoolmaster father and housewife mother in

1916. After World War I, the malnourished little girl was transferred to the house of a rich grain merchant in Belgium and later to the care of a widow in Switzerland through a relief organization. When one evening she mentioned that she missed her family, the widow invited her siblings over for the last three months of her stay. On her return to Hungary four and a half years later, she spoke Hungarian with a strong accent. The young girl gave up her dream of becoming an artist in order to start making money as soon as possible. She began working in Libál’s as a trainee in 1937, when she was only 21. Back then the shop sold compasses, barometers and bin-

Compass maker Antony Libál, the so-called ‘Circle Meister’, moved to Budapest from what is now the Czech Republic three years after the great flood of 1841, allegedly at the invitation of the Hungarian statesman Ferenc Deák. Famous architects, such as Miklós Ybl and Ödön Lechner, used his compasses when they designed their beautiful palaces. His first shop was located somewhere near the famous Hungarian restaurant Mátyás Pince at the foot of the Elizabeth Bridge. Libál moved to a new location in Veres Pálné utca in the 1850s. The shop, which was registered at the court in 1877, was visited by various celebrities of the day, such as Ferenc Deák, playwright Imre Madách, poets Sándor Petőfi and János Arany, and well-known Hungarian doctors including Ignác Hirschler, Gáspár Lippai and Ignác Semmelweis, the ‘savior of mothers’. Libál had five children: Lajos, Erzsébet, Imre, Rózsi and Ilonka. Three became opticians. The Libál family had altogether seven shops in Budapest. When Lajos Libál died in around 1930, his sisters, Rózsi and Ilona, and his brother Imre inherited the shop.