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BUSINESS JOURNAL BUDAPEST

VOL. 27. NUMBER 7

APRIL 12 – APRIL 25, 2019

SPECIAL REPORT

Telecoms & ICT SPECIAL REPORT

The Hungarians Facing Brexit in Britain Worries over Britain leaving the EU coupled with reports of an anti-foreigner mood among the host population have provoked wildly different reactions from Hungarian U.K. residents.  6

SOCIALITE

Guitarist who set World on its Ear David Holzer talks to legendary guitarist, bandleader and composer John McLaughlin, ahead of the latter’s Budapest Concert, and finds that what shines through is the musician’s lust for life.  20

Connecting at the Speed of 5G NEWS

Atenor to Start 1st Buda Office Project Belgium-based Atenor has acquired a 5,000 sqm plot for the development of its latest project in District III on Bécsi út in Rózsadomb. It will be the developer’s first office building in Buda.  5

AL R PEC I

EPOR

5G will offer a wide range of possibilities; it will be up to the markets to decide which get developed, György Koller, CTO of Telenor tells the BBJ. Look out for ‘services that don’t even exist yet’, BUSINESS he says. 16

Raiffeisen Closes Solid Year, Predicts Stable GDP Growth Raiffeisen Hungary’s analysts predict stable growth for the Hungarian economy, after the bank closed a strong year with a profit of HUF 23 billion, the company said. The bank expects GDP growth of 3-4% for 2019.  10

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Budapest Business Journal | April 12 – April 25, 2019

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Zsófia Czifra, Kester Eddy, Bence

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The future is bright; we just don’t know what it will look like. But it will be disruptive. And digital, obviously. You won’t have a job. Or, if you do, it won’t look much like what you do today. If the past is a foreign country, then the future certainly is, and it can, if you allow it that power, look like a scary place. But then humans are not terribly good at dealing with change or accepting that things might be done differently (or, perish the thought, that those different things might even be better). Perhaps what makes the future seem so scary now is that we know so little about it, beyond the fact that it will be different. It wasn’t always so. Not so very long ago in our collective comparative human past, things would barely change at all for centuries: Tomorrow would look pretty much the same as today, which was itself remarkably similar to yesterday. The only variety would be brought about by a subtle change in our clothing; perhaps a slightly bigger ruff around the neck this season, or rather less pointy toes to the shoes. In the 21st century, things move at a much more accelerated pace. The way we produce newspapers today has changed completely from what it was when I joined the profession in 1986. Back then we used typewriters and carbon paper, and most phones still featured a dial. One colleague, an early adapter, bought himself what we would laughingly call a laptop. I cannot actually recall if that was the term we used back then (Dictionary.com tells me the first recorded use was 1980-85), but it would not have been particularly apt. It was about the size of a small electric organ and took up the better part of a desk. The internet was still a plaything for academia and the

military, email did not exist and a mobile phone, if you could afford one, had the dimensions (and weight) of a house brick. Beyond the printed newspaper itself, few of the methods we routinely use to communicate with our readers today, be that our website, Facebook and LinkedIn pages, Twitter or Instagram existed even a decade ago, let alone three. However we do get to the future, it will involve a lot of clever people from the information and communications technology business, and doubtless some of our global progress – and let us be generous and assume it is progress – will be shaped right here in Hungary. ICT is the focus of the special report in this issue. As it makes clear, the 5G revolution is just around the corner, and that will surely have a dramatic impact on how we live our lives. I particularly enjoyed the comment from the National Bank of Hungary (MNB) at an ICT conference that banks should “think big” in embracing change. Central banks are not often thought of as radical or cutting edge, but the MNB does have its own FinTech sandpit in which to play and try out new technologies, and the banking profession has barely changed in the past 200 years or so, beyond using machines to help it count faster, so perhaps they are justified in saying so. I don’t know what the future will look like – and as a journalist I am a paid skeptic – but I am broadly optimistic about what it might hold. I am certainly excited about what it will bring for my children. There is not, in any case, much we can do about it, so we might as well enjoy the ride. Robin Marshall Editor-in-chief

Photo: MTI/ Tamás Sóki

Photo: Fortepan.hu/Zsolt Zsanda and Károly Vajszada

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. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

A FUTURE SO BRIGHT WE CANNOT SEE IT

THEN & NOW

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To the right, Japanese cherry trees in full blossom in the public cemetery at Pécs (201 km south of Budapest) signal the arrival of spring on April 9. To the left, in an unusually early color photo from the Fortepan public archive, a cherry tree blossoms alongside a house in an unidentified rual location in the Hungarian countryside in 1959.

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Budapest Business Journal | April 12 – April 25, 2019

News///macroscope

Sharp Rise in Inflation may Trigger Faster Action by MNB

Annual headline inflation accelerated to 3.7% in March, coming in way higher than analysts had expected. The question is, will the central bank also speed up the normalization process it started a few weeks ago?

Numbers to Watch in the Coming Weeks

Inflation in Hungary, 1991-2019 (January-March)

The second estimate of industrial production in February will be released on April 12, following a massive 5.9% year-on-year increase reported in the first estimate on April 5. The Central Statistical Office will publish February construction data on April 15.

Change compared to the same period last year, %

28.2 23.6

22.5

18.3

23 18.8

14.3 9.8

9.2

6.8

3.6 5.3

4.7

6.1

4.9

5.7 1.7

3.9

4.2

3.9 -0.2

2.4

3.2 2.8

0.4 -0.1

Source:

ZSÓFIA CZIFRA

Hungary’s annual headline and core inflation figures reached 3.7% and 3.8%, respectively, in March, which is near the top of the National Bank of Hungary’s 2-4% target range. The unexpected acceleration was mainly caused by a rise in the excise tax on tobacco and higher food prices. Annual headline inflation rate was 3.1% in February. The central bank also said that its measure of core inflation excluding indirect tax effects rose 0.3 of a percentage point to 3.5% in March. Analysts had expected a slightly slower rate of 3.5% in March. Apart from last October’s annual rise of 3.8%, consumer prices have not grown to such an extent year-on-year since January 2013. Core

The International Monetary Fund has raised its projection for Hungary’s GDP growth this year to 3.6% in its fresh “World Economic Outlook”. The projection was raised from 3.3% in its previous forecast, released last October, but is still under the government’s forecast of 3.9%. As for 2020, the IMF expects Hungary’s GDP growth to slow to 2.7%. The IMF also projects that average annual inflation will pick up to 3.2% this year, before edging back to 3.1% in 2020. It sees the unemployment rate dropping to 3.5% in 2019 and to 3.4% in 2020. The current account surplus is set reach 0.5% of GDP in 2019, level with last year, before widening to 0.6% in 2020.

inflation, which strips out seasonally volatile products, increased by an annual 3.8% in March, after 3.5% in February and 3.2% in January. The last time core inflation rate was higher than this was in December 2012, when it stood at 4.9%. Compared to March 2018, last month’s food prices were up by 5.4%, within which the prices of seasonal food items (fresh vegetables and fruit)

rose by

21.1%,

flour by 12.3%, and bread by 6.7%, while the price of eggs fell by 12.5%, milk by 7.2% and sugar by 3.9%. Prices of alcoholic beverages and tobacco rose by 8% on average, within which tobacco prices rose by 10.9%. Consumers paid 3% more for services, while motor fuel became 3.7% more expensive. In January–March 2019, compared to the first three months of last year, consumer prices went up by 3.2% on average. In its quarterly “Inflation Report”, released at the end of last month, the central bank predicted CPI would continue to rise in March before dropping under the 3% mid-term target again in the summer.

Sharp and Fast Rise

Takarékbank analyst Gergely Suppan attributed the higher-than-expected rise in consumer prices to the sharp and fast rise of prices of seasonal food and tobacco products. He also emphasized that inflationary pressure has built up, as shown in the rise of core inflation, followed by the tax-filtered core inflation. If the latter data exceeds the central bank’s expectations, the monetary council is likely to carry on with its normalization

process, the analyst believes. According to him, inflation can come in at

around

in the coming months, basically due to the lower fuel prices we saw this spring. As for average annual inflation rate, Takarékbank analysts raised their projection to 3.4%. K&H Bank head analyst Dávid Németh said that the increasing real wages and the livening domestic consumption caused by those higher wages could pose an inflationary risk. He added that food, tobacco and alcohol prices had also attributed to the acceleration of the March inflation rate. ADVERTISEMENT

According to him, the next few months might bring a slowdown in the rate, with the yearend seeing another acceleration. Core inflation might run an opposite course, as due to consumption and rising wages, it could accelerate in the upcoming months. If the current trends continue, the central bank might react by tightening its monetary conditions, he warned. If tax-filtered core inflation continues to rise in the coming months and remains above 3%, and the inflation forecast also rises, the central bank will deploy further actions to narrow its swap liquidity and it might also raise its one-day interest rate, CIB Bank analyst Sándor Jobbágy told state news agency MTI. The data-based monetary policy, however, will only adjust to the minimally necessary extent, Jobbágy added. Economic research institute Századvég also emphasized that the inflation rate is getting closer to the upper end of the central bank’s inflation target. Gábor Regős, head of the macroeconomics division of Századvég said that if current inflation trends are here to stay, the monetary council will decide on further tightening actions at its June rate-setting meeting. In this case, the annual inflation rate will be slightly above the 3% target. The strengthening of the forint might greatly attribute to the slow-down of inflationary trends, he noted.

4 | 1 News WHO’S NEWS

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Budapest Business Journal | April 12 – April 25, 2019

Do you know someone on the move? /// Send information to news@bbj.hu

Gábor Kóka Leads Deloitte Private in Central Europe

800 last year. She took over the position from Johan Strömsäter at the beginning of February, the university notes.

Gábor Kóka, a leading partner of Deloitte Hungary, took over leadership of Deloitte Private for the entire Central European region from February 1, while remaining a partner of the tax and legal branch of the Hungarian office. Deloitte Private is an international expert group established within the Deloitte network to provide tailor-made advisory services to wealthy individuals and family-run businesses. “Deloitte Private supports business leaders, typically coming from the ownership of privately owned businesses, in special areas,” says the newly appointed Kóka. “Through our cooperation, we have established close and trustful relationships that enable us to clearly see the value and impact of our services. This is another reason why it is an exciting task and also an honor to be entrusted with the region’s leadership. My goal is to get more people to know about our unique services, to support more customers, and to become a market leader in the countries of the region.” Kóka joined Deloitte during his legal studies. Over his professional career, he has gained more than 14 years of experience as a tax advisor in developing Hungarian and international

business solutions, building complex corporate group structures, and tax advice related to transactions. He also has extensive experience in providing personal tax and legal advice to private business owners and their families, as well as in structural planning and protection of private assets, business succession planning, inheritance and settlement of family assets. In addition, he leads the Deloitte Hungarian real estate industry group and is a member of the international tax group.

Ágnes Tóth The new CEO worked as deputy client relations head, head of marketing, and as a strategic advisor in the past. METU says Tóth is personally responsible for several decisions that resulted in a 30% increase in student satisfaction. Tóth will also focus on education strategies reacting to fast-changing job market conditions. The MyBrand education system, which is unique in Hungary, will play a major role in achieving METU’s goals, the institution says. MyBrand’s goal is organizing students’ achieved competences into a portfolio, which gives a realistic picture about the abilities mastered by the student, making them stand out in the job market. “I’m striving to make people look at Budapest Metropolitan University as one of the most innovative higher education facilities, with one of the most progressive approaches not only in Hungary but in the region as well,” says Tóth. “I believe that METU has the capabilities to achieve this.”

The Ritz-Carlton Budapest has announced the appointment of Ekaterina Ulyanova as the hotel’s new director of rooms. Coming directly from Moscow, where she worked with the brand for several years in a variety of positions, Ulyanova has an extensive background in guest services, and training in day-to-day hotel operations, managing teams, and maintaining budgets.

Metropolitan University Appoints CEO Budapest Metropolitan University (METU), an accredited private institute of higher education, has announced the appointment of Ágnes Tóth as its new CEO, effective from February. Tóth, who has been working at METU for a decade, is tasked with enhancing the reputation of the university in the CEE region. The long-term strategy involves increasing the number of international students, which reached

“I am more than pleased to join the Deloitte Legal team,” says Kertész, who has more than 15 years of experience in the field. “I believe that the cooperation of Deloitte Legal Law Firm and Deloitte, one of the leading professional services providers, will enable us to give comprehensive answers to the most complex issues. In questions of labor law, it is an advantage if tax experts, lawyers or, if necessary, payroll experts can closely cooperate.”

Skanska Leasing and Asset Management Director

Ritz-Carlton Names Director of Rooms Gábor Kóka

performance and operations, providing memorable staying experiences, and maintaining service excellence. “I am very happy to join my new family of The Ritz-Carlton, Budapest, and continue my journey with The RitzCarlton Company; I am looking forward to contribute with my passion and knowledge to the success of this beautiful hotel, to be the best luxury hotel in the amazing city of Budapest,” said Ulyanova. The new director of rooms officially joined The Ritz-Carlton, Budapest, in January 2019.

Ekaterina Ulyanova The Russian professional will be responsible for strengthening the services of the hotel’s rooms division, along with leading the related teams, perfecting

Károly Katkó has joined Skanska Hungary, the local branch of one of the world’s largest construction and project development groups, as leasing and asset management director. In his new position, Katkó will be responsible for the development of the company’s leasing strategy for office and commercial space and asset management, as well as for cooperation with tenants and business partners. Prior to joining Skanska, Katkó worked with real estate advisory firm CBRE, where he was head of tenant representation and was responsible for real estate consultancy for the company’s

Márton Kertész Labor law has been the primary focus of Kertész’ professional career, which saw him work at various well-known law firms. According to the press release, his main field of expertise includes major transformations of work organizations and legal support during mass layoff procedures. He also has significant experience in labor lawsuits, collective labor law issues, and labor law support required for M&A transactions. Gábor Erdős, Deloitte Legal’s office managing partner, said of the latest appointment: “Under his leadership, our labor law and compliance practice will be able to rise to our clients’ most serious challenges.”

TriGranit Picks CEO Károly Katkó global corporate accounts in Hungary. He also worked on local tenant representation mandates. Before his time at CBRE, he acted as a landlord representative as a senior consultant at JLL. “Károly brings more than 15 years of experience to our team and, as a senior leader in the real estate industry, has demonstrated a deep understanding of clients and built strong connections,” said Marcin Łapiński, managing director of Skanska Hungary. “I’m proud to be joining a company dedicated to creating future-proof and sustainable workplaces contributing to the well-being of building users, as well as customer profitability,” notes Katkó. “It is a unique opportunity that came at the right time as a next step in my career. It’s exciting to work with a group of like-minded professionals with tremendous experience and a similar long-term vision.”

New Partner Heads Deloitte Legal’s Labor law and Compliance Team Since February, Márton Kertész has been head of the labor law and compliance team at Deloitte Legal Erdős and Partners Law Firm, according to a press release sent to the Budapest Business Journal.

The board of integrated real estate platform TriGranit has announced the appointment of Tom Lisiecki as the firm’s new chief executive officer. Lisiecki arrives from Stockholm, where he served as the chief development officer of CityCon. Prior to this, he spent some 13 years with TriGranit, working as

Tom Lisiecki chief investment officer and country director for Poland in his last years before leaving, having been involved in all of TriGranit’s projects. After serving for 18 years at TriGranit, most recently as CEO, Árpád Török leaves the company to pursue new opportunities outside the corporation. Eric Assimakopoulos, chairman of the board, said he is pleased to welcome Lisiecki.

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Wing Breaks Ground on Evosoft Hungary Headquarters Wing has broken ground on the 21,400 sqm headquarters it is building for evosoft Hungary Kft., one of the largest software houses in Hungary and part of the Siemens Group. GARY J. MORRELL

“When we decided to combine our software development activities at our sites in Budapest in one center, our goal was to make our staff work more efficiently,” said István Petényi, managing director of evosoft Hungary at the ceremony. “The more than 1,600 employees working at our company meet worldclass software development, professional and quality assurance requirements. With our new central office building, we wish to create a world-class and inspiring workplace environment for them. By establishing this headquarters we are increasing the Siemens footprint in Hungary and regard this as a long-term commitment to the country,” he continued. The LEED “Gold” accredited evosoft headquarters forms the second phase of the

New evosoft headquarters by Wing. Hungarian Nobel Prize-winners Research and Development Park on a two-hectare site on the Buda bank of the Danube, close to the Infopark technology park and the Budapest University of Technology and Economics. The first phase of the project, the 24,000 sqm built-to-suit, LEED “Gold” certified Ericsson House was handed over in 2017. The new HQ will include inner green areas, a roof terrace overlooking the Danube and a

700 sqm restaurant.

The development has been designed by Wing’s in-house design studio Aspectus Architect Zrt., led by László Szerdahelyi. “Wing’s goal is to provide a longterm solution to the demand for real

estate from leading large companies active in Hungary as their partner,” commented Noah Steinberg, chairman and CEO of Wing.

Latest Technologies

“With the new office we will create a building that will have the latest technologies and will be environmentally friendly and energy-saving according to LEED ‘Gold’ environmental awareness criteria,” he added. JLL advised evosoft in sourcing the site from a wide range of possible offers

The site is 300 meters from the Új Udvar shopping center and 400 meters from the Kolosy tér market with easy access by public transport and by car to Árpád híd and the M0-M3 motorways and the HÉV suburban railway according to Atenor. The class “A” project will include an underground garage, an internal garden and terraces. An application for a building permit for a minimum buildable area of 15,000 sqm will be filed with the aim of beginning construction in the fourth quarter of 2019. Atenor is also developing the phased, speculative Váci Greens

office project across the river in Pest that will consist

Demand in the Budapest office market is strong, but well located, contiguous development sites are becoming more difficult to source. “Accessibility and public transport and metro connections are still the most important issues regarding the location for tenants and I do not think that this will change in the near future,” Püschl said. “In addition to a road connection, I think that that the area and the building should be livable and contribute to the economy

that were presented to company. While the south Buda area has become the high-tech hub in Budapest, Wing has established itself as a niche developer of built-to-suit high tech office headquarters in recent years. It delivered the 58,000 sqm Magyar Telekom Group headquarters located in District IX last year, for example. “With built-to-suit projects we are able to agree a long-term lease with a major tenant and this puts us in a position to tailor the building to the specific needs of that tenant. At the same time the tenant needs to commit to a long-term lease of more than ten years,” Steinberg explained. “This is in contrast to those buildings which are designed to a more flexible specification to meet the needs of multiple tenants. When we have a major tenant, we coordinate very closely with them in terms of what their needs are within the building, usually when we make an offer and then subsequently when we design the exact specifications. We are one the largest office developers in Hungary and have been doing it for a long time and we therefore have a strong set of skills that allows us to present a credible solution to major international tenants for a headquarters building in Hungary,” he added. The evosoft complex is scheduled for handover in

early

2021.

Wing has meanwhile acquired four buildings in Infopark consisting of more than 100,000 sqm, and has the possibility of a further office development on a site adjacent to the Telekom building.

and therefore we prefer to develop campustype projects. It is not easy to find such spaces but Atenor has bigger challenges in Belgium and Luxembourg and in other parts of Europe, and thus it is easier in Hungary with a better price to value ratio,” she added. Following this new acquisition, the total number of Atenor projects under development has gone

up to

and represents a development potential of around 865,000 sqm. With regard to the CEE region, Atenor has projects in Budapest and Bucharest.

130,000 sqm

of space in six buildings upon completion. In parallel with development of the final phases of the project, the developer has undertaken construction of the speculative, phased, 72,000 sqm Aréna Business Campus in District VIII.

Trinity of Projects

“We are new developing three projects at the same time: the 50,000 sqm Váci Greens E and F, the 25,000 sqm Building A at Aréna Business Campus and the new development in Buda,” said Nikolett Püschl, development and leasing director at Atenor Hungary.

New Atenor project in Buda.

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Budapest Business Journal | April 12 – April 25, 2019

Business

Away From London

The Hungarians Facing Brexit in Britain Worries over Britain leaving the EU coupled with reports of an antiforeigner mood among the host population have provoked wildly different reactions from Hungarian U.K. residents. This, in turn, raises the question: could Britain’s departure from the European Union inspire an expatriate exodus, potentially easing the labor shortages back home? KESTER EDDY

Ágnes Pintér was anxious. Speaking to a BBC domestic radio program on March 12, her Brexit preparations were simple: she was leaving. “The only thing we could think of was to buy a ferry ticket for the latter end of

March, and then to take the youngest three children, myself and the dog to the French grandparents,” she said. Quizzed by a somewhat surprised program host, Pintér, a Hungarian mother of four and U.K. resident with her French husband for two decades replied: “After two-and-a-half years of uncertainty, and having no sense of control over anything, I see a no-deal. And [what with] the surrounding stories about shortages and all that, that was the last straw for us.” Pintér’s concerns were heightened by what she termed “a really marked change in the atmosphere”. “If you try to speak another language with my parents visiting here, you get looks. Our daughter in school was told to go back to Hungary in no uncertain terms by another pupil,” she said. The move was to protect her children from “any kind of upheaval”, she said. “We don’t feel that they deserve this, and this is the only sense of control we can inject into this process.”

Returnee Wave?

The on-going Brexit negotiations means Pintér’s departure for France has likely been delayed. But if her reaction is typical of Magyars in the United Kingdom, could its departure from the European Union trigger a wave of returnee expats, thereby adding to the pool of available labor in Hungary and other countries in the region? The answer: probably not, at least according to a small, unscientific survey of those affected conducted by the Budapest Business Journal. All the people we spoke with requested their full names be withheld from publication. Zsuzsa, 33-year-old Hungarian who has lived in London for five years, says the drawn-out negotiations are “slightly unsettling”, but she is “confident” of her future in Britain. And while many Hungarian friends formerly resident in the United Kingdom had left in recent years, this was not a direct effect of Brexit, she said.

Romanian Expat Cezar: Veni, Vidi, Mansi The United Kingdom has been a preferred destination for more than just Hungarians in the past 15 years, with more than a million Poles and others from the region making Britain their home. Cezar M., 40 and a native of Alexandria, southern Romania, has lived in London for the past 17 years. While he says media reports outlining numerous scenarios have made people “insecure” and in some cases “panicking” he feels confident for a future life in the country. “From the day of the vote until now, I strongly believe that Brexit

is not going to happen. That’s my personal opinion. At this point, it’s not affecting me at all,” he says. However Cezar, who holds a degree in food technology but works as a crane driver, has also applied for British citizenship to ensure his future. That costs about GBP 1,600 per person. “I intend to stay forever. I’ve got three kids, so moving abroad is not the best option,” he says. Cezar makes no mention of any ill feeling towards foreigners that he has detected, and, perhaps surprisingly, says “at work, no one talks about Brexit”. But despite

his optimism, even he harbors lingering doubts. “If things go badly for long period of time, then I might have to think about [leaving].”

Far from the madding U.K. media crowd in Shrewsbury, near the Welsh border, Ádám, a 29-yearold Budapester and digital marketing professional, says it is difficult to “recognize any signs of Brexit”. “It’s a very hot [media] topic […]; however, I still can say that people around me, and in the town, are very calm on this, and until now none of my British colleagues has asked about my thoughts,” he told the BBJ by email. True, he worries somewhat that a no-deal Brexit could hit the economy hard, but for now he is enjoying the remuneration and quality of life in the United Kingdom. “In Hungary, I got an average level salary, with years of experience in my field. It was enough to rent a flat and pay for living alone, and that was with family support, but without any savings,” he says. In the United Kingdom, starting with a degree but only modest English skills, he earns enough to rent a two-bedroom terraced house, pay living expenses, own a car, travel and save. And if there is any animosity to foreigners from locals, he says he has not felt it. “I’ve [only] been here less than 30 months, but I haven’t heard of any change of mood from my brother or friends, who also live in the UK. I don’t think about moving. In Hungary, most people were vexed, stressful and grumpy. Here, I can see more smiling, kind faces around me, and that makes me one of them.”

“My other friends and myself have no plans for leaving. Brexit is a huge annoyance and we have to deal with extra paperwork, but ultimately we don’t think it will have a massive impact on our lives,” she said.

Health and Pensions

Erika, a university researcher originally from Dunaújváros and now settled in the English Midlands, expressed similar thoughts, albeit with concerns about accessing public health insurance and pensions. “I think unless you are a citizen with a British passport, you cannot really feel confident about anything,” she said. Perversely, many of her friends have obtained British passports as a result of Brexit, even if they are planning to leave, in order to ensure an easy return if required. Zsuzsa, too, sees citizenship as the ultimate guarantee. “I’m rushing to get my paperwork done for permanent residency and in a year’s time for citizenship,” she said. “I think I would have done the same without Brexit, but it definitely seems more important and urgent now than it would have been otherwise.”

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Budapest Business Journal | April 12 – April 25, 2019

Company ///news OTP Bank Aims for Top Spot in Albania bank. Csányi said Albania is one of the fastest-growing economies in Europe, but the penetration and scope of banking products is low, creating significant room for growth. Tourism in Albania is expected to boom in the coming years, and OTP wants to play a big role in related financial services, he added. Deputy-CEO László Wolf said OTP OTP Bank wants to be the biggest has not started any new talks on the bank in Albania, chairman-CEO possible acquisition of another bank Sándor Csányi said in Tirana, days in Albania. He declined to reveal the after the lender closed the acquisition purchase price of the SocGen unit, of the local unit of France’s Société citing business confidentiality, but Générale, atv.hu reported. Csányi said OTP would seek to achieve said the amount would be recouped in less than five years. the goal first of all through organic Péter Bese, who will head the growth but would weigh an acquisition supervisory board of OTP Albania, said if a “suitable” target is found. OTP’s management are believers in growth, the newly acquired lender closed 2017 with total assets of EUR 641 million but not at all costs, he added. and after-tax profit of EUR 3.2 mln. The unit, which will be renamed The bank serves 170,000 clients at 36 OTP Albania, has 6% market share, branches, with two more set to open. making it Albania’s fifth-biggest

AerinX Innovation Highlighted in Atlanta A Hungarian startup focusing on aircraft inspection, AerinX, was among industry innovators showcased at Aviation Week MRO Americas, autopro.hu reported. Some 15,000 representatives of 800 companies were participating at the aircraft maintenance, repair and overhaul conference in Atlanta, Georgia, from April 9-11. AerinX signed a HUF 250 million funding agreement with X-Ventures Gamma Venture Capital Fund late last year. It also signed a strategic cooperation agreement with Aeroplex of Central Europe, one of the biggest aircraft maintenance companies in the CEE region, autopro.hu added.

CIB Branches to get EUR 10 mln Upgrade The Hungarian unit of Italy’s Intesa Sanpaolo, CIB Bank, is getting about EUR 10 million from its parent for an upgrade of its network of branches, chairman-CEO Pál Simák said, at the opening of the lender’s first “next-generation” branch in Budapest. Clients will be able to use digital solutions for services at the upgraded branches, Simák said. About one-third of CIB’s 67 branches will get a facelift, he added. CIB has about 450,000 retail clients, including microbusinesses, adozona.hu reported.

Hitelgarancia Takes ’Reverse’ Approach Garantiqa Hitelgarancia Zrt. says it has added HUF 10.6 billion to its surety stock and helped almost 350 SMEs gain access to some HUF 13 bln in credit by going to the borrower, rather than waiting for the borrower to come to it, portfolio.hu reported. In the fourth quarter of last year, Garantiqa assessed the creditworthiness of more than 10,000 Hungarian SMEs using public records. It targeted businesses with at least five

people on payroll, generating a minimum annual revenue of HUF 10 million, and with no existing bank credit. It then approached these companies and offered to provide them with a letter they could present to potential lenders on a Hitelgarancia guarantee, making it easier for them to apply for loan. The measure was implemented following an initiative of the National Bank of Hungary. Garantiqa head Éva Búza added that the goal of the “reverse” approach was to help risky SMEs on the loan market, motivating them to enter into developments, portfolio.hu said.

MNB Fines OTP Group HUF 56 mln The National Bank of Hungary (MNB) said it fined OTP Group HUF 56 million for regulatory shortcomings uncovered in a probe, azenpenzem.hu reported. OTP Bank and a number of its units, including the leasing, factoring, mortgage bank and home savings bank businesses, failed to fully comply with rules on enterprise management, capital adequacy, data provision, IT security, risk evaluation, record-keeping and money laundering prevention. The shortfalls did not present any risk to the group’s dependable operation, the central bank and financial market watchdog said.

Wizz Air Stands by Business Year Guidance Hungarian low-fare airline Wizz Air said it expects to deliver net profit for its business year ended March 31 in the upper half of its guidance range of between EUR 270 million-300 million, portfolio.hu reported. Demand remains “robust” Wizz Air said in an update, noting that March traffic statistics showed load factors were up 2.6 percentage points year-on-year at 94.1%. In January-March, revenue per available seat kilometer was up by 4%. Wizz Air will publish preliminary results for the business year on May 31.

Business

Are you ready to take business trips to a new level? The era of traditional business travel, as we know it, has come to an end. For today’s employees going on a business trip is not less unusual than popping down to the nearest coffee house to grab an espresso that keeps them going for the afternoon. Corporate travellers take more than 480 million business trips each year and this increase is partly due to the recent developments in mobile technology. What are the latest advancements in smartphone technology that make frequent business trips comfortable?

Smartphones are the new All-in-Ones

Smartphones are always designed to meet the requirements of the modernday users. As the number of corporate travellers is rising, mobile technology aims to come up with solutions that ensure that businessmen on international assignments can comfortably and safely take care of their business-related daily tasks solely by using their smartphones. Samsung Galaxy S10, the latest member of the legendary Galaxy series comes with an Infinity-O Display that provides users with a full screen experience in order to make work on-the-go comfortable. The display also includes the first-ever embedded Ultrasonic Fingerprint Scanner that reads the 3D contours of the physical thumbprint of the user and offers a vault-like security to keep the device safe even on the farthest point of the earth.

It is all getting personal Smartphone technology has brought along the era of personalization. Smartphones equipped with Artificial Intelligence and machine-learning-

based software, like the new Samsung Galaxy S10 smartphone, are not only able to offer customized accommodation, car rental and restaurant options for business travellers but they can also fine tune the performance of the device based on the usage patterns of the owner. This can lead to an extended battery life and increased productivity. In short, intelligent performance leveraging AI-capabilities provides users with a 100 percent personalized mobile experience from which they can take full advantage of while they are on a business trip.

5G on the rise

As 5G is becoming a reality, businesses go through a transformation. The extremely high-speed and lowlatency Internet connection will allow businessmen to shift huge volumes of data in minimal time, no matter where they are. This will let them spare time to concentrate on other, more critical tasks that demand human attention. As 5G network is becoming widespread, business trips might even get replaced by virtual, online meetings more often, saving time, effort and money for decision makers who would otherwise be required to go on business travels on a regular basis. 5G will conquer mobile technologies in no time and this will bring new ways of interactions, providing businesses flexibility in location, expenses and time when it comes to work-related travel.

8| 2

Business

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Airport Money Exchange: Risk Free but Poor Rates M LIN E O T T O B E H T Budapest Airport management smiled for the cameras last month and proudly collected a certificate declaring Budapest Ferenc Liszt International the “Best Airport in Eastern Europe 2019”, although the airport, for reasons best known to itself, deftly massaged its press release to read “Best Airport in the Region”. KESTER EDDY

The award, granted by U.K.-based air industry consultancy Skytrax, is the passengers’ choice. As the blurb states: “During the past 12 months, travelers around the globe have participated in the airport passenger satisfaction survey.” Which, on the surface, sounds fair enough. Except Skytrax never asked me. And presumably, they never asked the Hungarian government. If they had, BUD, as Budapest Airport refers to itself, might not have scored quite so well.

Indeed, Hungarian officials have been increasingly scathing of the airport in the past few months, complaining about overcrowding, lack of cleanliness and inadequate facilities. In remarks to Hungarian media on April 4, Gergely Gulyás, the powerful head of the Prime Minister’s Office, implied the airport had failed to invest enough to meet growing passenger flows and denounced conditions in terminals used by budget carriers for failing to meet even “animal health requirements” on hot summer days. Strong words, even from a government which revels in hyperbole. But speaking of hyperbole, the airport does that well

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too, particularly at its exchange bureaus, where arriving passengers are greeted with signage such as: “Get your local currency. 0% commission. Risk free money exchange.” It all sounds reassuring, and the exchange rates are certainly posted for all to see, with no sly footnotes denoting extra fees. But what rates: on April 9, shortly before this paper’s editorial deadline, the Interchange bureaus (the dealer appears to have a monopoly at the airport) were offering HUF 253.51 per euro and HUF 225.09 per U.S. dollar. No risk? Sure, no bureau at the airport will give you worthless old notes, but this was when the mid-rate for the common currency was around the HUF 321 level, and the greenback at HUF 285. This translates into a whopping 21% take, more than one fifth of the value, for the booths on both currencies. No commission? When you get the equivalent of USD 79 for every USD 100 handed over, who needs commission?

McExchange

Of course, the wary frequent flier will usually avoid airport exchange bureau altogether. A YouTube poster has exposed the farcical state at Prague Airport, where McDonald’s food outlets offer by far the best value when exchanging euro for Czech crowns – plus a cheeseburger thrown in. (Do a Google search under “Worst exchange places at Prague airport”. The video was made in 2015, but local informants assure The Bottom Line the situation is essentially unchanged.)

Warsaw Airport failed to respond to a Bottom Line for information. Perhaps surprisingly, given the reputation of the Balkans, Tirana Airport bureaus take only a 3.6% slice from Euro-endowed arrivals, while Belgrade is the traveler’s friend – charging a mere 2% on euro for Serbian dinar before even customs clearance, just one tenth the charge of the Budapest offer. For anyone changing a few hundred euro to finance a holiday on arrival, it could certainly wipe out any savings made on a low-cost carrier. But they can rest assured – there is no commission. Budapest Airport responded to our questions by arguing that “ships, hotels and airports” are traditionally more expensive than city kiosks, and pointing out that the Skytrax award has 39 different evaluation categories. Indeed, the list includes “Bureau de change facilities”. Your correspondent can only assume that survey respondents just never use them. The Bottom Line is a monthly column written by Kester Eddy, a long-standing and well respected Budapest-based business and economic journalist, who has written for the Financial Times and many regional publications. The opinions expressed in the column are not necessarily those of the Budapest Business Journal. To comment on this column, or on anything else in the BBJ, email the editor at robin.marshall@bbj.hu

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Business | 9

Eyewear Entrepreneur Tipton Swimming With Sharks The third episode of the first Hungarian edition of global TV franchise “Shark Tank”, where hungry entrepreneurs pitch to potential investors, featured Zack Tipton, co-founder of Tipton Eyeworks. DAVID HOLZER

Tipton Eyeworks owns the Vinylize brand of glasses and sunglasses, handmade from recycled vinyl in Budapest and sold in eyewear stores worldwide. Among the bestselling Vinylize collections is Back in Black, a canny tie-in with heavy metal titans AC/DC. It is made from vinyl from copies of the album of the same name and features the distinctive AC/DC thunderflash. U.S.-born Tipton, of Hungarian and Scottish ancestry, was looking for funding to give Vinylize a bigger global retail presence in stores and online. He also

Zack Tipton hoped to benefit from guidance and extra brainpower from a seasoned entrepreneur. Now in its tenth series in the United States, “Shark Tank” debuted on RTL Klub in

February

2019.

The sharks were: Anna Apró, one of the owners of healthcare services company COR-A Zrt .; Levente Balogh, president of award-winning mineral water company Szentkirályi-Kékkúti Ásványvíz Kft.; Péter Balogh, MD of start-up incubator Baconsult Ltd. (and formerly co-founder of Hungary’s global navigation company NNG); Gyula Fehér, founder of Ustream, a leading provider of cloud-based, endto-end video solutions that is now an IBM

company; and András Moldován, owner of the Jack’s Burger restaurant chain.

Joint Venture?

Tipton’s original idea was to try an entice an investor into starting a joint venture to distribute Vinylize eyewear. The brand is already sold in stores in Paris, London, Berlin, New York and LA and is available online. But Tipton is naturally keen to grow the company’s presence in a market worth, according to businesswire.com,

USD 167 billion globally

in 2017. Rather than commit to Tipton’s idea, the sharks decided they wanted to buy into the

existing Tipton Eyeworks company. That business, which makes a profit, consists of production facilities, a retail outlet and the brand name Vinylize. After some nail-biting drama, Tipton accepted an offer from Moldovan, owner of Jack’s Burger. “One bid was way too low,” Tipton said. “Another shark believed our profit margin wasn’t high enough – even though profit margins can always be improved. Someone else wasn’t really interested in the product. I accepted the offer from Moldován because he believed in me personally.” Tipton says he thoroughly enjoyed the “Shark Tank” experience. “It was educational to see how TV shows are produced. I met some of the best-known entrepreneurs in Hungary and got some extremely useful feedback. Being on ‘Shark Tank’ was also great marketing for Tipton Eyeworks. We got quite a bit of airtime.” But he wasn’t overawed by the sharks he came up against. “I asked lots of questions to put them on the spot,” he commented. “They’re pretty impressive but I would say they’re also very local in their outlook. My company is international, and I felt the sharks’ lack of experience in this area would be a huge problem. I’m looking for guidance as much as money. This is true for all young Hungarian entrepreneurs. We sorely need role models.”

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Leonardo Exhibit: Please do Touch and Try Leonardo Da Vinci’s arts and science come to life in a uniquely interactive exhibition in the heart of the city where the tech even allows you to closely inspect what was on the menu at the Last Supper. LEVENTE HÖRÖMPÖLI-TÓTH

Zsiros-Varga. “Visitors are free make videos or take selfies of any object in the showroom.” This freedom is taken to new heights when it comes to actually testing some of the inventions on display. There are nearly 60 of them in total, with around half of them ready for trying. Too bad the catapult is among the restricted items.

There’s nothing new about the fact that “Mona Lisa” embodies just a fraction of Leonardo Da Vinci’s legacy. However, it’s truly stunning to face, and hard to grasp, the actual magnitude and significance of his life achievements when it’s presented all at once. That’s the kind of impression you should prepare for before visiting the Hand Crafted exhibition dedicated to the Italian master. “These custom-built wooden models of Leonardo’s original designs were made by “Audiences in 23 countries have already Italian engineers from materials available witnessed this uniquely comprehensive at that time of their design, and they cover exhibition, which is now open to the areas such as hydraulics, flight, mechanics Hungarian public as well,” says marketing and war,” explains Zsiros-Varga. Where manager Kitti Zsiros-Varga. items cannot be tried out, cutting-edge “The main concept is to provide a full digital simulation helps your imagination overview of Da Vinci’s genius, who was out in demonstrating their functionality. artist, inventor, mathematician, anatomy Some of the inventions may not expert, poet and musician all in one.” commonly be associated with Leonardo’s His artistic talents are represented by genius. Yet, he was the one who first replicas of 23 of his art works, including drew sketches of a parachute, not to highlights like “The Last Supper”, “The mention a predecessor of a helicopter, Lady with an Ermine” and, of course, “Mona Lisa”. So why not spare yourself the the air screw. Virtual reality tech is also part of the effort of crisscrossing the continent to deal here. By putting on a headset, get a glimpse at the originals? visitors can “enter” the “Mona Lisa” and “The key buzzword is interactivity, and “Last Supper” paintings, which makes it applies even to the paintings,” adds

you feel like you are next to the figures depicted. Don’t get distracted too much, though, as great anecdotes and fun facts will be shared about these legendary pieces of arts thanks to an audio guide during the experience. Although all age groups will find the exhibition appealing, kids should look forward to a visit in particular since the organizers mean to treat them like VIPs. Playful quizzes help children pick up valuable knowledge along the way and groups of pupils are granted a free guided tour. There is even an opportunity to attend an overnight “pajama party” at the museum with lots of great assignments

lined up, or to sign up for a Leonardothemed summer camp. Would-be visitors have until early September to pop by and join the 100,000-strong crowd that has already enjoyed the Leonardo experience across Europe.

“Leonardo da Vinci: Artist – Inventor – Genius” is at Kiraly utca 8-10, Budapest H-1061 (Central Passage, ground floor), and is accessible from Kiraly utca and Paulay Ede utca.

10 | 2

Business

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

“We have a number of pieces of good news this year, the first of which is that we closed last year with a profit of HUF 23 bln,” said George Zolnai, CEO of Raiffeisen Bank at a press conference in Budapest. The CEO emphasized that the 6% increase of the bank’s operating revenue, to HUF 88.6 bln, is a very good result, especially given the low interest rate environment. Over the course of last year, the bank managed to decrease operating expenses by 2% compared to the previous year, while the ratio of non-performing loans came in below 6% at the end of 2018. While the numbers point to a solid year, net profits were still lower than in 2017, when total profits amounted to HUF 28.5 bln, an alltime record. At HUF 7.8 bln, provisions released in 2018 were also below the HUF 15 bln released a year prior. At the end of last year, Raiffeisen Hungary had total

assets of

HUF 2.41 trillion,

up 11% year-on-year. The CEO stressed that last year saw a significant acquisition for the bank, when Raiffeisen took over the performing mortgage clients of insurance, pensions and asset management company AEGON in October 2018. The acquisition, in combination with a 19% increase in corporate and institutional loans, contributed significantly to the bank’s growth.

Banking Challenges

While the nation-wide launch of the Instant Payment System in July and

the start of PSD2 (Revised Payment Services Directive) in the fall are expected to pose great challenges to the entire banking sector, Raiffeisen says it is on track to keep all deadlines demanded in the law, although compliance will tie down a significant portion of the company’s resources. “In the case of home loans, the volume disbursed increased by two-and-ahalf times last year, and in this area we are planning a considerable increase, exceeding that of the market in 2019,” said Ralf Cymanek, member of the board and retail head at Raiffeisen Bank Hungary. “We granted 70% more personal loans than in the previous year.” More than half of the disbursed home loans were so-called “Consumer Friendly Loans”, while the ratio of loans with fixed interest rates of five or ten years

exceeded

90%

in the fourth quarter. With the number of CSOK (Home Purchase Subsidy Scheme) claimants constantly on the rise, the number of credit requests is increasing as well. Some two-thirds of CSOK claimants have requested credit, with some 86% of requests relating to the purchase of used homes. About 75% of those who requested loans already have at least one child. Cymanek also added that the solvency of customers is growing, as the average amount for home loans exceeded HUF 10 million, while in the case of personal loans, the average came to more than HUF 1.6 mln. Personal loans are mostly used to finance home improvements, but increasingly people also seek them to finance car purchases.

Ferenc Kementzey, deputy CEO and head of corporate, markets and investment banking stressed that the corporate and financial institutional

The corporate and financial institutional sector remains a key area for Raiffeisen Bank. It has achieved “outstanding portfolio growth” of 30% in project finance and syndications. sector remains a key area for Raiffeisen Bank. It has achieved “outstanding portfolio growth” of 30% in project finance and syndications, he said. In terms of net SME loan growth, Raiffeisen outperformed its commitments stated in the National Bank of Hungary’s Market Loan Program.

Significant Growth

The bank said that at 16% it achieved a significantly higher growth rate than the market’s 7% in terms of leasing volumes, and extended its services to the SME sector. Raiffeisen Bank, as one of Hungary’s Export-Import Bank’s largest partners, continues to be the market leader in export financing. The bank says it expects good results from the central bank’s new NHP FIX program.

The bank’s analysts put their expectations for Hungary’s 2019 GDP growth at 3-4%, somewhat lower than the 4.9% growth registered in 2018, but still in line with mainstream predictions. With domestic demand becoming more dominant, consumption and the expansion of developments are expected to be the main drivers of growth. Raiffeisen analysts warn that the underlying inflation processes predict a further rise in core inflation. Henceforth, they expect a tightening monetary policy. This view was justified a few days after the conference, as the Monetary Council of the National Bank of Hungary (MNB) raised the overnight deposit rate by ten basis points, which represented the first tightening measure in years, although the MNB was at pains to insist this did not represent the launch of a new monetary cycle. The exchange rate of the forint is expected to be stable in the

range of

HUF315-325/EUR.

The euro area is expected to have an unchanged interest environment in both this year and the next. Finally, the analysts expect lending to continue expanding, with a 9% increase in the loan portfolio from retail and 12% from the corporate market predicted. Raiffeisen also announced an innovation for 2019, in the form of a mobile application. The new app, expected to be launched early in the summer, promises a number of new convenience features, and clean, easyto-use interface for clients. Pilot testing is already underway, with the help of Raiffeisen Bank International countries and Fintech companies.

www.bbj.hu

Budapest Business Journal | April 12 â&#x20AC;&#x201C; April 25, 2019

PRESENTED CONTENT

Business | 11

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Business

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Budapest Business Journal | April 12 – April 25, 2019

Size of Markets and Trading Volumes Size of Stock Market vs Bond Market in 2017

The previous article in the series gave an overview of the various asset classes, and typical risk/return relationships. In this second column, Les Nemethy and Sergey Glekov compare the liquidity and trading volumes of these asset classes. Why is this important for investors? A basic principle of asset allocation is that you need to have sufficient liquidity, to look after your personal, family and business needs, and possibly take advantage of opportunities that might present themselves (e.g. during a recession). If the asset class you are in is traded in a small market or, for whatever reasons, particularly illiquid, you might need to ride out a recession before you can dispose of your asset. Shares in most private corporations fall into this particularly illiquid category. Few business owners realize that in times of severe recession, EBITDA (Earnings before Interest, Tax and Depreciation) might go down by 50%, and multiples might go down by 50%, meaning that your share price might go down by 50%, meaning some shares in private corporations might only be worth a quarter of what they were worth at the previous market peak. Not to mention that, with all the difficulties related to due diligence, and

Data as of December 31, 2017

14% 27%

39% 38%

was

13%

USD 5.7 tln;

11% 7%

28%

Global Bond Market Outstanding USD 100.1 Trillion US

report, average annual real estate trading volumes (excluding Chinese land) were USD 683 billion between 2008 and 2015, not that much greater than average daily trading volumes of U.S. treasuries, namely USD 505 bln. Overall, average daily trading volumes of U.S. treasuries significantly outperforms other categories of government bonds, and even combined trading volumes of NASDAQ- and NYSE-listed stocks. Just to put a few alternative investment markets into perspective: according to the Bank of International Settlements’ SIFMA Fact Book 2018, the total value of commodity contracts traded in 2017

EU-28

Japan

17%

Global Equity Market Capitalization USD 85.3 Trillion

Other Developed Markets

Emerging Markets

Source: Bank of International Settlement (BIS), World Federation of Exchanges

investor appetite might just disappear altogether. So a diverse portfolio is important. Let’s compare some of the alternative asset classes: Real estate is the world’s most important asset class, with an estimated total

value of

USD 217 trillion

at the end of 2016, according to Savills in “Around the World in Dollars and Cents 2016”. This figure includes only high quality retail property, offices, industrial, hotels, residential, other commercial uses, and agricultural land By comparison, the size of the global bond market as at the end of 2016 was USD 92.2 tln and global equity market capitalization was USD 70.1 tln. In other words, the value of real estate is more than publicly traded stocks and bonds put together. The most important component of global real estate value is residential property. According to a Savills report: “There are approximately 2.5 billion households

on the planet and those in developed economies occupy housing at much higher price points than those in less developed economies. Savills estimate that the median value of the dwellings occupied by all households is USD 43,000.” As at the end of 2018, capitalization of global bond markets outstanding topped USD 100 tln, while global equity markets surpassed USD 85 trillion.

U.S. Dominates

The United States dominates both global bond and equity markets; however, the role of emerging countries has risen dramatically over the past decade: in 2008 emerging markets accounted for only 5% of the global bond market and 20% of the global equity market capitalization, rising to 20% and 27% respectively in 2017, according to the SIFMA Fact Book 2018. Trading volumes (daily average calculated over the course of a year) is an often-used indicator of liquidity. For example, according to the Savills

that same year, the annual turnover of the art market turnover was estimated at USD 63.7 bln, according to Art Basel and UPS in their “Art Market 2018” report, which include auction sales, galleries and dealer sales. Once again, the main takehome message here is the need for diversification, not only in returns, but also as related to liquidity. For example, owning shares in specific private corporations or real estate might offer very high returns, but these are also considered to be very illiquid investments. You need to balance this with liquid investments, including a certain amount of cash and near cash type assets. Choosing your asset classes is perhaps the most important decision you will make in designing your portfolio, and your financial well-being. Disclaimer: This article is intended for informational purposes only, and should not be relied upon for investment advice. It is important to do your own investigation and analysis before making any investments based on your own personal circumstances.

Les Nemethy is CEO of EuroPhoenix (www.europhoenix. com), a Central European corporate finance firm, author of Business Exit Planning (www. businessexitplanningbook. com) and a former president of the American Chamber of Commerce in Hungary.

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Special Report Telecoms & ICT

SMART Conference: Banks Told to ‘Think Big’

The cream of the crop of Hungarian innovators gathered at the annual SMART Conference to gain an overview of the hottest tech, products, business strategies and models. For the first time the event was organized by IVSZ, the Hungarian ICT association, another sign for SMART’s growing significance. LEVENTE HÖRÖMPÖLI-TÓTH

Digital disruption is all around us, and up to 95% of CEOs in a survey presented at the conference consider it as an opportunity; however, only 30% see digital disruption as a new approach, the rest is torn between whether it’s a culture, a methodology or a purely IT-related matter. What every decision maker needs to understand is that it can be an edge for companies ready to reinvent themselves. The findings of the survey cited was just a tiny drop in the flood of

125

presentations

made at this year’s SMART, the ultimate gathering of the Hungarian innovation scene.

The panel for the Open Banking discussion. From left: János Pereczes, managing director (MKB Fintechlab, moderator); Péter Fáykiss, analyst (MNB); András Séra (T-Systems); Szabolcs Tornyos, head of digital channel and service development (NKM/E.On); and Géza Radimeczky, head of financial services (ingatlan.com). Experts on a panel discussing open banking also pointed out the necessity for incumbents to embrace the opportunities presented by digital. Ten years ago big IT firms were sitting on huge piles of data, but they did not know what to do with it. Then big tech came around and taught a thing or two about that to the world. “Banks have a lot of data, yet they can barely use it,” noted Péter Fáykiss, an analyst with the National Bank of Hungary. “They should be brave and think big before fintech competitors figure it out for themselves.”

New Solutions

Banks are not ready to integrate new solutions, either. One current example is that most users of the leading local online property marketplace, ingatlan. com, would consider taking out a loan. Ideally customers should be able to digitally initiate a loan request and get

their score approved in real time. The site already provides a sophisticated loan comparison engine to help decision making, but there is a long way to go until banks sign on for being part of the digital game. Banks have good reason to feel uneasy. Some 80% of all payments made in China have no connection with any banking services. Innovators also have a job to do; namely they need to identify milestones in corporate procedures where they can bring financial efficiency to the fore. And for users, too, it’s time to watch and learn. With instant payment to be introduced in Hungary on

Very few SMEs or even multinational corporations in Hungary have a solid digital strategy that they actually implement, added Major. “There are many aspects at play here: human resources, tech, business, ecosystem; all of them need to be addressed,” he said. The human factor is key to handling the disruptive nature of the digital revolution. Constant pivoting has become commonplace, with companies changing course of development every few months or weeks. If someone spent decades in a given structure, they find this pace of change disturbing.

Independent Rating

“An independent rating system is also established because all players can rate the quality of the tissue: follow-up covers the entire process from raw material to the patient,” said CEO Tamás Czeglédi.

July

and ever more fintech players providing a wide range of cutting-edge services, they have a lots of potential to make their own lives easier and save big bucks while they are at it.

ICT Sector has Mission to Educate Economic Sectors “The ICT profession drives digital innovation, and we have a role to tell other sectors what they should gear up for in terms of digital transformation,” Gábor Major, president of the Hungarian ICT association IVSZ told the Budapest Business Journal, reflecting on why it had acted as the organizer of SMART for the first time. “A dialogue is needed to educate players from all segments of the economy, to make them aware what changes they are about to encounter and how they can prepare for them, how to become pioneers of change.”

Healthcare trading platform Meddictive leads the way in demonstrating how blockchain can be used to tap into the European tissue trade business, a very much unexplored territory. On the B2B level, Meddictive functions as a stock exchange between market players where tissue banks are connected with manufacturers, hospitals and universities. The B2C segment of the operation aims to bring together patients and implantation centers. Blockchain tech provides scientific and clinical data in real time, while a web module serving as a tissue price search engine grants access to it for all players concerned. A dedicated app allows easy admin and payment.

“Corporate culture has strategy for breakfast. No matter how great your digital strategy is, if you don’t prepare the ground beforehand and adapt your corporate culture accordingly, that strategy is most likely to fail,” stressed Major. “Time is on our side: whatever can be automated or digitalized, will be, so ICT professionals will permanently carry the day in the long run. However, all this development is not possible without skilled people, so education must be reformed to suit the needs of this new era.”

Gábor Major Meddictive’s cross-border success will be given a boost by the INPUT Program that, among other things, helps startups to go global. “Meddictive is one of our protégés, and we are giving them a hand with their go-to-market effort,” explained Zsuzsa Szabados, INPUT chief executive. “We are taking them to a key theme-specific industrial gathering, but before that we’ll make sure they’re fully prepared to deliver a killer pitch.” The program provides tailor-made growth support and mentoring from the so-called “ideation” phase to going global by relying on its own mentor network. “It’s all about creating added value, whether it’s design thinking, marketing consulting, or just helping an idea take shape,” Szabados added. “The best part is that services are free of charge thanks to EU funds.”

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Special Report | 15

Despite U.S. Concerns, Huawei Doing Well in Hungary Amid security concerns and increasing controversy between the United States and Chinese tech giant Huawei, the Hungarian branch says misinterpretation of Chinese legislation has led to the current controversy. Speaking to the Budapest Business Journal, Wu Biqiang, CEO of Huawei Technologies Hungary, rejects all allegations of spying as “unfounded and misguided”. CHRISTIAN KESZTHELYI

“There was a big misinterpretation of the 2017 Chinese national security law in the international media, started from the United States,” Wu Biqiang tells the BBJ. “The Chinese national security law does not oblige Chinese companies to transfer information about customers or install any backdoor or carry out spying,” he insists. Huawei, who has emerged as a fierce competitor to Apple and Samsung products and whose telco network equipment is present globally, has been making international headlines over security concerns and alleged spying. The United States has appeared to favor blocking the Chinese giant’s technologies. “The law only applies to China and it requires the telecom service providers to transfer information only following a specific court order. Huawei cannot be forced to spy, we are a vendor,” Wu Biqiang explains. “The U.S. Cloud Act is stricter than the Chinese law. Besides, the U.S. government has not been able to provide any evidence against Huawei to prove we are spying for the Chinese government,” the CEO for the Hungarian business tells the BBJ. “Not only Huawei Hungary, but the whole Huawei Technologies group rejects all allegations of spying and we consider the U.S. allegations unfounded and misguided due to economic interest-driven conflict. Thus, Huawei Technologies sued the U.S. government at a Texas court at the beginning of March to protect our interests,” the CEO adds.

U.S. Lobbying

Despite months of reported lobbying by U.S. diplomats, as outlined in a Politico

Hungary’s Minister of Finance Mihály Varga (on left hand side of the table, second from top of frame), meets with James Li, European region group president of Huawei Technologies (opposite Varga) in Beijing on April 9. Also at the talks was Huawei Technologies Hungary CEO Wu Biqiang (second from top on right hand side of table). report in February, and increased pressure from the Trump administration, European leaders have appeared to be wary of considering a blanket ban on Huawei’s products. Rather, a dialogue has started about how to stay more secure in an increasingly digital world. Boosting cybersecurity measures has climbed higher up the agenda of both EU member states and the European Commission, according to reports. For its, part, Hungary has appeared to adopt a neutral stance. “The Hungarian government made it clear that they do not consider our corporation’s activities as a national security risk at all. They said that the trade conflict between the United States and China does not depend on Hungary,” the CEO says. Huawei Technologies Hungary has been on a rapid growth path in recent years, seeing

USD 280 million revenue

in 2018. The manufacturer’s phones are among the most popular brands in Hungary, with its flagship Mate 20 Pro device being the bestseller in Hungary out of all European countries, relative to the size of the markets, in 2018. “These results make us optimistic, and we are grateful to the Hungarians and the Hungarian business environment,” Wu Biqiang says. Huawei has a wide portfolio of products from fixed optical networks to mobile networks, data centers, and data storages to Hungary. “Last year, Hungarian sales were going extremely well thanks to the consumer business group; we are selling more and more AI-based smartphones and other AI-supported smart accessories year by year. Besides mobile artificial intelligence, the company has also made huge steps forward in the field of foldable smartphones, Huawei’s

first 5G foldable device will soon be available in Hungary,” the CEO says.

Rising Revenue

Huawei’s revenue from all three business domains — carrier, enterprise and consumer business — increased by 40% over the preceding year, according to Huawei’s figures. While the income of the Hungarian company was HUF 57 billion in 2017, it reached nearly HUF 80 bln in 2018, according to non-audited results. Globally, the company spends 11-13% of its annual income on research and development. Huawei has shipped 40,000 5G base stations worldwide and signed more than 35 commercial 5G contracts globally; it also has multiple operational

5G bases

in Hungary. Last year, the Hungarian company says it carried out successful next-generation 5G network tests with Magyar Telekom and Vodafone Magyarország. By the end of last year, more than an estimated three-quarters of Hungarians were users of Huawei equipment in their daily communication; not only through smartphones, but also antennas, base stations, switches, and servers, the company says. The company also launched its Europe operations and maintenance center in Hungary in 2017, which aims to help provide cloud solutions for European operators. “Let’s make it clear. Apart from the United States, no other country has excluded Huawei Technologies from their market,” the CEO says. “Australia decided to exclude us only from the 5G mobile network implementation, but from no other business domain. Every other country remained open; they think cybersecurity is a technical question,” Wu Biqiang adds. The CEO underlines that, for Huawei, Hungary provides an excellent and open business environment.

“There has been no change in the company’s operations, and we will continue to pay a great deal attention to cybersecurity and data protection measures. Huawei Technologies Hungary has been operating in accordance with the legal regulations in force since its appearance in the Hungarian market in 2005, and will continue to closely follow the principle,” Wu Biqiang adds.

Editor’s Note The Budapest Business Journal approached the Hungarian government for comment, but at the time of going to print, the International Communications Office had still not answered. However, news wire Reuters.com carried on report on April 9 which cited the Ministry of Finance as saying Hungary regards Huawei Technologies as a strategic IT partner. The statement was issued after Minister of Finance Mihály Varga met a senior Huawei executive in Beijing; the minister has been in China to discuss the upgrade of the BudapestBelgrade rail link, which is to be largely financed by the Asian giant. Varga was quoted as saying that Huawei would help Hungary develop its broadband internet network and meet its goal of high-speed internet access for 90% of families by 2025, as per an earlier agreement. Huawei employs more than 2,000 people and runs its biggest logistic center outside China in Hungary, Varga noted after his meeting with James Li, regional president of Huawei’s European operations, reuters.com added.

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Robust Mobile Network Anticipates 5G Launch Boasting a mobile network of outstanding quality by European and global comparison, Hungary is at the brink of a huge technological advancement: the introduction of 5G mobile network. CHRISTIAN KESZTHELYI

“The 5G mobile network is an important milestone in the history of mobile technology, both in Hungary and internationally. We believe that this technology offers a broad range of opportunities. It will be up to the market to decide which trends will gain traction,” György Koller, chief technical officer at Telenor, tells the Budapest Business Journal. The 5G network is expected to elevate download/upload rates to the gigabit/ sec range, which would enable virtually immediate uploading and downloading of HD-quality movies, as well as highdefinition video streaming and seamless conference calls. Additionally, this technology could establish extremely low latency connections between end points, enabling virtually real-time communication. Common examples for this include the remote controlling of precision robots, smooth online gaming or the remote management of selfdriving vehicles over the mobile network, Telenor Hungary tells the BBJ. The number of supported devices is also expected to significantly grow compared to previous network standards. In this case, it is the number of connected devices that counts rather than the data usage of individual devices. Furthermore, 5G can set up a mobile network connection capable of providing seamless connections even if traveling at a speed of

up to

500 km/h

while old standards could support only up to 150-200 (350) km/h, Telenor says, therefore the improvement must be robust. “In the long run, the technology benefits of 5G will be used by services that don’t even exist yet. As soon as the technology is adopted, it will open up new opportunities and the number of 5G-based services will burgeon,” Koller adds.

Connection Speeds

After taking broadband internet to 880,000 households as part of its “Superfast Internet Program” by endNovember in 2018, the Hungarian

György Koller government launched the “Superfast Internet Program 2” to improve internet connection speeds, with a special focus on optic upgrades and building up the 5G infrastructure.

“In the long run, the technology benefits of 5G will be used by services that don’t even exist yet. As soon as the technology is adopted, it will open up new opportunities and the number of 5G-based services will burgeon.” Chinese telco Huawei signed a memorandum of understanding in November with the Hungarian government on building up 5G infrastructure. The MoU was inked in Shangai by Minister for Innovation and Technology László Palkovics and Huawei Technologies regional chairman James Li in Shanghai. Huawei vowed to support the government’s goal of bringing 100 mbps-speed

internet to

90% of

Hungarian households by 2025. At the end of March, Hungary’s 5G Coalition, established in 2017 by government institutions, companies, business chambers, universities and

professional and civic organizations to support the development of 5G, produced a draft of a strategy that aims to transform Hungary into a European hub for 5G development. The Innovation and Technology Ministry said consultations on the draft will take place with public sector experts before it is submitted to the government. Hungary’s mobile networks are of outstanding quality both in European and in global terms. According to a survey conducted by independent industry organization Open Signal in October 2018, Hungary has the fastest 4G mobile network in the European Union and it ranks seventh globally in terms of coverage. Based on Open Signal’s measurements, Hungarian mobile networks have the second best mobile video quality in the world. “This gives us a competitive edge that we want to leverage also in 5G development dominating the next phase of digital transformation,” Telenor’s Koller says.

Major Development

“Telenor’s mobile internet network, Hipernet, has also contributed to this achievement. Hipernet is a mobile internet network based on the most state-of-the-art (4G, 4G+) technologies available. Over recent years, Telenor Hungary has completed major development projects in its mobile network so that its customers can enjoy the benefits of Hipernet at the highest possible quality in all parts of Hungary. Thanks to the network’s nationwide outdoor coverage, Telenor’s 4G services are currently available to more than 99% of Hungary’s population,” Koller explains.

At the end of February, Deutsche Telekom, the mother company of Hungary’s Magyar Telekom, announced that as a first stepping stone of its development, it has

installed

150

5G antennas in six countries: Austria, Germany, Greece, Hungary, Poland and the Netherlands. The antennas, based entirely on the future 5G standard 5G New Radio (5G NR), are transmitting data over the 5G network in the first quarter as part of test operations. Magyar Telekom launched its first standard 5G station at the end of January, located at downtown Zalaegerszeg and running on a 3.7 GHz test spectrum. The test gigabit network has been operating under real-life conditions, runs on a standardized 5G system and uses 5G components ready for commercial launch. Magyar Telekom said the purpose of the test operation is to enable the company to learn more about the compatibility challenges associated with running the new technology and the existing networks together, and to prepare for their future integration. “We consider it our mission to support people, communities and the whole country through a state-of-the-art network infrastructure in their endeavors to grow and progress, and thus to contribute to the development of the gigabit society. The first 5G station at Zalaegerszeg is another milestone on the way towards Telekom launching its 5G services as soon as possible,” said Tibor Rékasi, CEO of Magyar Telekom, at the launch of the station.

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

PRESENTED CONTENT

Special Report | 17

From Smart Lamp Poles to new SME Tariffs István Király, director of the Enterprise Business Unit at Vodafone Hungary, talks to the Budapest Business Journal about the IoT and smart cities, helping municipalities and businesses and 5G roll-out. ROBIN MARSHALL

BBJ: For those who may not know, what is your unit responsible for, and how long have you been its head? István Király: I have been heading the Enterprise Business Unit of Vodafone Hungary since 2014. Our division is responsible for selling mobile, voice, data and fixed-line services to business customers, and we also help businesses with various services and digital solutions in becoming more competitive and to reach the results they need to advance further. More specifically, this could take the form of mobile payments or a fleet tracking service. Alternatively, if required, in view of the given business’ level of development, we can help find the most suitable smart solution that supports work processes best. In addition, we also regularly work with municipalities; just recently, we supported them with our latest smart parking solutions. BBJ: What are the most interesting projects you are working on right now? IK: We are continually working on new, innovative ideas, and in this spirit, we are participating in a number of forwardlooking projects running in tandem. Last August, we commissioned Budapest’s first group-connected smart poles used for public illumination, in cooperation with the electricity company ELMŰ-ÉMÁSZ, as a pilot project in front of our head office. We installed five electricity poles with different functions, which are connected to the internet by Vodafone. In addition, a few years ago, we set the target of accelerating the digitalization of SMEs, and we are continually working in this field. Our most recent innovation is a pool of six entirely new business tariffs, which will launch on April 15 and are offered specifically to this sector. BBJ: What were the highlights in Hungary for your unit in 2018? IK: In 2018 we doubled the number of customers using fixed-line internet and VPN services. We shifted our virtual database to a new technical platform, and completed numerous custom-made IoT [Internet of Things] developments for our customers. Another important milestone we reached last year was the implementation of Vodafone’s smart parking system in the inner city of Budapest and in Székesfehérvár. With this, in cooperation with the municipalities, we have taken a huge leap towards the modernization of city parking by improving

István Király its efficiency. Sensors that use NB-IoT technology and are inserted into the ground continually check the occupancy of parking spaces, and the system provides real-time date via an online platform for use by the company running the car park.

in addition to labor shortages. Last year, vast numbers of long-standing and new customers contacted us, asking for help in launching their new business or requesting

BBJ: How close are we now to mainstream 5G rollout? IK: According to the current plans, by 2020 the fifth generation network will be available for commercial use Europewide. It’s important to understand that 5G will not just appear in our lives overnight. It will bring about gradual transformation, leaving room for revolutionary innovation in the field of user experience or in the digital transformation of industries or even cities, and Hungary will be no exception to this trend. Vodafone Group is one of the key players in the development of 5G technology worldwide. As the National Media and Infocommunications Authority (NMHH) was one of the first players in Europe to put this spectrum in use, by obtaining this frequency spectrum Hungary could, in principle, become one of the first markets where Vodafone could introduce its most up-to-date 5G services.

Last August, we commissioned Budapest’s first group-connected smart poles used for public illumination, in cooperation with the electricity company ELMŰ-ÉMÁSZ, as a pilot project in front of our head office. We installed five electricity poles with different functions, which are connected to the internet by Vodafone.

BBJ: How would you describe the Hungarian market, overall? IK: There is a well-developed market with ambitious plans for digitalization. The strengthening of the economy seen in the past few years is also reflected in the workings of the business sector. Our experience shows that businesses, like households, have a higher investment appetite, whether they be one-man-bands or large corporations employing thousands of people. In general terms, it is perhaps digitalization that poses a challenge to us

support for further digital advancement. I expect this enthusiasm to continue and gain further momentum with the launch of the 5G network, as we believe that businesses trust digital devices more and more, and can see their benefits for business. BBJ: What is Vodafone’s share of that market, and how do you hope to grow this? IK: We are very proud that the M2M Hungary research conducted by IDC Hungary shows that with a 37% market share, Vodafone remains the market leader in Hungary in the field of mobile data supply to connected electronic devices.

I’d like to emphasize this result because I believe M2M communication to be one of the most dynamically developing segments of the telco sector. We are, by the way, global market leaders in this field: in its survey looking at managed M2M services, Gartner has named Vodafone as the global leader for the fifth consecutive year running. BBJ: What changes would you like to see to the regulatory framework? IK: In 2016, we acquired frequency usage rights for the 60 MHz spectrum, for a period of 18 years, at a cost of HUF 648.6 million, in a tender invited by the NMHH in the lower, 3400-3600 MHz part of the 3400-3800 MHz spectrum. We trust that when it comes to the sale of the 700 MHz spectrum, the government will choose a solution that will ensure the fast launch of 5G, which, in turn, could be beneficial for operators, consumers, the entire Hungarian market and therefore, ultimately, also for the state. BBJ: How do you cope with the regionwide labor crisis? IK: I believe we are in a lucky position, as we have a strong employer brand that makes us an attractive workplace. Like every other company, we are also trying different platforms and approaches, and what we see is that digital solutions work best in this field too. In our experience, recruitment through employee referrals is still very effective, and we recently introduced a new platform for this, which offers awards in a playful way: points for referrals and, of course, a monetary award for successful placements. In our company, the most sought-after positions are those focusing on the sale of technology, so we are looking for colleagues with solid technological knowledge plus a sales vein.

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

How ICT and AI can Help aid Human Resources How digital technology, artificial intelligence and big data transform the HR toolbox was the main topic of a new monthly forum, MOST, by Magyar Telekom where HR and ICT experts share views and information. ZSÓFIA VÉGH

Is it conceivable that a robot decides on your suitability during a job interview? According to the audience at the Telekom MOST forum, it is. In fact, technology has been supporting HR for quite some time in ways not always known to the public. Take the problem of recruiting engineers or developers – a group most in demand. These people will hardly respond to general job ads and submit CVs, so companies have to make serious efforts to find and reach out to them. They also need to offer conditions enticing enough to grab their attention. HR specialists will tell you that a decent salary and workplace are a must, so companies have to come up with something more. But how are they to know what would attract a certain group of developers? Through technology, of course. Neticle, a Hungarian ICT company specialized in intelligent media monitoring, media analysis and social listening is helping them out. Neticle has developed search solutions that allow for downloading public web content, articles, comments, social media, and posts from a variety of platforms. Based on these, they can get an idea of the preferences of these people and also of their perception of the target company. If the engineers a company is trying to recruit chat on a platforms a lot about

e-sports, say, as well as the benefits of working from home and these topics are recurring, Neticle will bring this information to their client.

Data Decisions

What companies do with that data is entirely up to them, says Péter Szekeres, managing director of Neticle. They may choose to incorporate it in their job ads and, for example, mention, that home-working at their firm is allowed, or they might target this group on e-sports platforms. Using data smartly and getting proper insight from it is a challenge, Szekeres says. There is already vast amounts of data out in the world, but most of it is not used for getting insights. A crucial first step is to decide what you want to use the data for, he adds. HR is a field that has much data generating potential, whether from psychology games, to candidates interview answers, to how a text is structured, and all this can be automatically processed and analyzed to pre-screen candidates.

Skeletons get unearthed soon enough, unnecessary questions can be eliminated saving time for everyone. The question is how to use data to support business decision, Szekeres notes. “[Insight gained from] data is not supposed to replace a business decision, rather to make it more confident and reduce risks by not having to rely on intuition or experience only,” he explains. Hungary’s leading jobsite platform, profession.hu, manages an enormous amount of data, as you would expect. “Data is the basis of everything but what’s even more important is to have structured data and to use it with a purpose,” says Imre Tüzes, head of business development at profession. hu. “For us, success is when supply and demand meet,” he adds.

Too Much Data?

But too much data can create a situation that is disturbing. This is when technology comes into the picture; it is

supposed to serve. The expert cites a new application, Candidate Recommender, the beta version of which is about to finalized: it is an algorithm using artificial intelligence and match-making technology that makes a job search easier for both parties. It does so by understanding written texts, such as a job description, which it analyzes semantically and then decodes who is needed for a job. The skill sets linked to the algorithm create a profile of what a company needs, saving time for recruiters who would otherwise need to run these searches in a huge database. The system screens, selects and ranks potential candidates, also based on how active a candidate is on the job market. This way profession.hu has a better chance of reaching out to them, Tüzes explains. This is a good example of how one can tap into the social footprint of someone and convert it into a product, he adds. But can technology take work over from HR-professionals entirely? Not really. Automation and AI should not work against humans; there are many examples of the cooperation of people and robots, for example, in the industry, Tüzes says. There is even a name coined for this, cobots, that take over boring and repetitive tasks. This approach is trickling down to all sectors, including recruiting. The recruiting process as a whole cannot be automated anytime in the future; there will always be areas where the human factor must be involved, the expert says. There are already automated systems working today that help prescreen and calculate matching scores and forward candidates to a phase where recruiters only need to take a final decision. But taking the final decision is beyond the sophistication of current know how or prognosticated automation systems, he adds.

Special Report | 19

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

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2310 SzigetszentmiklósLakihegy, Komp utca 2. (1) 488-8500 info@hdt.hu

zsolt Wilhelm – Lajos Varga

8900 Zalaegerszeg, Nefeljcs utca 2/A (1) 878-1814 info@netfone.hu

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NETFONEINVEST Kft. (Ÿ), Zsolt Wilhelm (Ÿ) Scanwinavia AB (Ÿ)

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Data center solutions, wifi

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Microwave network

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Individuals (68) ThreeF Kft. (32) –

attila Farmosi, gábor varga Gábor Varga –

1037 Budapest, Zay utca 3. (1) 437-0590 office@ acetelecom.hu

zsombor attila papp Rezső Dunay Csaba Csizmadia

7624 Pécs, Budai Nagy Antal utca 1. (80) 811-118 info@dravanet.hu

andrás beliczay Katalin Urbanics Judit Stark

1117 Budapest, Fehérvári út 50-52. (1) 999-6000 info@opennet.hu

445

6,338

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Pallas Office Kft. (81.42), other (18.58) –

268

6,421

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Virtual subdirectory

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András Beliczay (100) –

NOTES: (1) Data of business year April 1, 2017-March 31, 2018. (2) Data of legal predecessor Invitech Megoldások Zrt. in 2018. The company merged into Invitech ICT Services Kft. on Dec. 30, 2018.

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Socialite John McLaughlin: Guitarist who set World on its Ear Talk to legendary guitarist, bandleader and composer John McLaughlin and what shines through right away is his lust for life. When you’ve had, and are having, a life like his that’s not surprising. DAVID HOLZER

Born in 1942, McLaughlin, who plays Budapest’s MOM Sport venue on April 20, has had a long and remarkable career. Alongside future legends like Led Zeppelin guitarist Jimmy Page, he was a “studio shark” appearing on pop records by 1960s icons including Petula Clark, Tom Jones, Burt Bacharach, French chanteuse Francoise Hardy and even The Rolling Stones. He played with Miles Davis on such milestones of jazz-fusion as “Bitches Brew”, “In a Silent Way”, “Jack Johnson” and the ferocious “Live-Evil”. Hendrix respected him enough to invite him to jam. His own Mahavishnu Orchestra pioneered a singular fusion of jazz, Indian and classical influences and hard rock. And that’s only scratching the surface. It is hard to think of a guitarist more garlanded with praise than McLaughlin. Miles Davis called his playing “far in.” Fellow rapid fire guitar-slinger and contemporary Jeff Beck rates him “the best guitarist alive”. Jazz fusion pianist and keyboard player Chick Corea told Downbeat magazine that “what John McLaughlin did with the electric guitar set the world on its ear.” Incidentally, Corea also plays Budapest on July 1 of this year. I spoke to McLaughlin by phone. He was at his home in Monte Carlo, Monaco. This struck me as a strange place for him to live. But perhaps he needs that city’s peace and quiet to decompress from life on the road, especially considering the intensity he still brings to his playing.

‘Changed my Life’

“My mum was an amateur violinist. There was only classical music in the house when I was young. I discovered the guitar aged 11. My first guitar was only a five-pound piece of junk, but I loved it,” McLaughlin told me. “This was when the blues boom hit the U.K. I had two elder brothers at university and at exactly the time they started bringing records by Mississippi blues players like Muddy Waters, Big Bill

John McLaughlin. Photo by Andrea Palmucci. Broonzy and Leadbelly home with them, the guitar arrived in my hands. It changed my life forever. There have been other powerful musical influences on me, but the blues has stayed with me. But so has classical. I’ve written two pieces for guitar and orchestra.”

Clapton, as well as blues champion Alexis Korner and Georgie Fame. Naturally, he was pally with Clapton. How did he get from pop sessions to playing with Miles Davis? “The session work was deadly, really, but for the first time I had money in my pocket. After 18 months I couldn’t stand it anymore and became poor again. But happy. I moved to New York in January 1969, which was where I met Miles.”

“[…] It [the blues] changed my life forever. There Sweet and Scary have been other powerful I always imagine Miles Davis as a scary guy. Was he really? “He could be. But, to musical influences on me, me, he was one of the sweetest men alive. but the blues has stayed He loved his musicians. Miles always stuffed money in my pocket. ‘Make sure with me. But so has classical. you eat, make sure you pay your rent’, he’d I’ve written two pieces for say. I survived thanks to Miles and I ended up playing the best with him.” guitar and orchestra.” That includes McLaughlin’s work on He first made his reputation as a so-called “studio shark” in London. What exactly did that entail? “It means a session musician who plays on whatever sessions come along. I played on some nice things. Sessions with The Four Tops and Burt Bacharach come to mind.” While he was a guitarist for hire, McLaughlin was also getting to know key figures in the London blues scene. Just to namedrop a tiny bit, he played with bass guitarist Jack Bruce and drummer Ginger Baker, later to form Cream with Eric

Davis’ “Jack Johnson” album. “It sounds pretentious but ‘Jack Johnson’ was started by me. Generally, Mile would come into a session with a brown paper bag holding coffee he’d picked up from a diner on the way in. He’d write chords on this piece of paper and we’d start the session using them, ” the musician told me. “At the beginning of the ‘Jack Johnson’ sessions, he didn’t even have a piece of paper. Nothing. He was with the producer and we musicians were waiting to for him to tell us what to do. After 15 minutes, I got bored and started playing this thing that ultimately became my ‘Dance of Maya’, recorded with Mahavishnu Orchestra.

The other players picked it up and within one minute we hit a groove. The producer started recording. Miles ran into the studio with his trumpet, went in front of the mic and played for 15 minutes straight. It was just marvelous. And he told me and everyone this was the greatest record he ever made.” By this time, I’d been transported back to the halcyon days of the late 1960s jazz scene and was happy to stay there. But McLaughlin announced that he was running out of time. We hadn’t touched on his musical career from the early 1970s onwards. I had time for one last question: What can we expect in Budapest? “You’re going to hear music stretching back at least 47 years and from all the different decades up to now because we have new music as well. The band, the 4th Dimension, is really amazing. I love these guys. They’re such great players and as crazy as me. We have a huge repertoire so we can wing it on stage. We have music that goes from the early ’70s up to today. That’s a lot of years, a lot of music. We’ll wing it, but you’ll enjoy it.”

John McLaughlin plays Budapest MOM Sport (1123 Budapest, Csörsz u. 14-16) on April 20. You can get tickets from getcloserconcerts.com/koncert/ john-mclaughlin-the-4thdimension-2019/#jegyvasarlas

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www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

Young, Fresh Reds From Villány 2017 REDy to Rock The second vintage of Villány’s REDy range of light and fruity reds, from 2017, is soon to hit the shelves and they are precisely the kind of reds that can be enjoyed in the warmer temperatures of the spring and summer. Some of this yearʼs REDy wine makers at the launch of the 2017 vintage wines.

ROBERT SMYTH

The words light and Villány do not often go well together, but these zesty fruit-bombs, which are built on a backbone of the Portugieser grape, offer a nice alternative to the typically

robust, full-bodied, tannic wines that Villány is famous for, or even infamous, depending on taste. Eleven very steady REDy wines were premiered on April 4 at Doblo wine & bar, from: Bíbor, Bock, Csányi, Fontányi, Tamás and Zsolt Gere, Hárságyi, Tamás Lelovits, Róbert

Maczkó, Mokos, Polgár, Tiffán’s, Vinatus, Vineas Tenkes and Vylyan. In all, a total of 20 are expected to be launched on the market in the coming days and weeks. The predominantly tank-made REDy wines are made to appeal to Generation Y, though I’m sure there are many from Generation X and

older who will also appreciate these wines that slip down with ease. Having said that, I still find that many of the American guests who I guide around Villány absolutely lap up the robust Bordeaux-style blends that wine writers like myself tend to bash.

PRESENTED CONTENT

Budapest Marriott Launches Renovated Restaurant and Bar Budapest has not changed position from After eight weeks the restaurant that previously occupied the space, the area the bar now utilizes of renovations, the was used for different aims prior to the ground floor renovation. Budapest Marriott The style of the latter is in line with that Hotel has presented of the lobby and the rest of the ground floor, featuring a lot of marble as well as its renovated DNB paintings by Hungarian artists, depicting themes such as the famous lion sculpture Budapest restaurant at the foot of the Chain Bridge. The bar breakfast and lunch, as well as a with a brand new “farm offers special afternoon unlimited champagne offer and a classy selection of cocktails. to table” concept, as There several bookshelves containing well as a new bar dubbed English-language works in the area as well. the “Liz and Chain”. Iconic Inspiration BENCE GAÁL

“Our two goals with the renovation are increasing the number of guests not from the hotel, and providing a pleasant time to hotel guests,” noted Arne Klehn, general manager of the hotel at the launch event attended by the Budapest Business Journal. “I am proud that, while the transformation was a long process and hard work, we could always count on our chefs, the hotel’s entire staff, and their enthusiasm,” he added. Both the restaurant and bar have a new design; however, while the DNB

The hotel says that Liz and Chain will also host a number of exclusive events including tastings and tea afternoons. With the Budapest Marriott located between the Elizabeth Bridge and the Chain Bridge, the name itself is a nod towards these two iconic elements of the capital’s landscape. The design of the new DNB Budapest restaurant was inspired by the Bauhaus style and cubist art, similarly to the rest of the hotel’s interior, the Marriott told the BBJ. The designers utilized brass, steel, granite, oak, white Carrara marble and leather to create a modern, yet warm atmosphere. The restaurant also offers an impressive view of the Danube, as reflected in the choice of name.

In line with the “farm to table” concept, the restaurant offers Hungarian-style dishes with highquality, locally sourced ingredients, paired with wines from acclaimed domestic wine regions. The menu presented to the press offered some truly local elements while complying with the international trend of focusing on the quality of ingredients, instead of creating overly complex dishes.

The starter was a harmonious cold composition of heritage beetroot, pearl millet, basil pesto, and sultanas, accompanied by an excellent Szekszárd Rosé. As the main course, a grilled fogas (pike-perch) fillet was served with baby fennel, river crayfish, Hungarian white wine sauce and, naturally, a glass of Hungarian white. The new concept was introduced by Roland Varga, who recently joined from Bestia (a steak and craft beer specialty restaurant near the Basilica at Szent István tér) and executive chef Konstantinos Kranakis, a seasoned expert with more than two decades of international experience. DNB Budapest seats 210, and will present a new seasonal menu four times a year.

The interior of DNB Budapest.

www.bbj.hu

Budapest Business Journal | April 12 – April 25, 2019

The REDy wines are blends based on Blaufränkish was crossed with a backbone of the Portugieser grape, Portugieser to create Blauburger and with which is Villány’s early-ripening, highSt. Laurent to bring Zweigelt into existence yielding cash-cow of a grape that – the latter grape being infinitely more allows winemakers to get wines on the successful – supplanting Blaufränkish to market shortly following the vintage. It become Austria’s most planted red wine is typically light in tannins, and quite grape by today. the opposite to the Bordeaux varieties International grapes like Cabernet that make Villány’s full-bodied, mouthFranc, Cabernet Sauvignon and Merlot coating reds. can provide up to According to Austrianwine.com, the Portugieser grape comes from Portugal and is the very same as the Português Azul, of a REDy, and bring a welcome bit of body and was brought to Central Europe, to to the final blend to make it a bit rounder Austria’s Thermenregion, in and more mouth-filling. To earn the right to use the REDy label, wines have to make it past the by the Baron of Fries. Others say it same local tasting panel that also originates somewhere along the Danube adjudges whether a Cabernet Franc wine Valley, perhaps from Germany. can be labelled Villányi Franc. For REDy, the panel gives the wines clearance Grape Proportions if they exude a youthful, spicy, zesty Wherever it originates, a REDy must character with red and black berry fruit be comprised of between 51-66% of the aromas, with at most minimal influence Portugieser grape, while local varieties of oak. The very warm yet consistent (Blauburger, Kadarka, Kékfrankos 2017 vintage is considered to be an and Zweigelt) have to contribute excellent year for Portugieser, which between 20-49%. ripened very nicely and fully. Blauburger and Zweigelt can The bijou Hárságyi winery is making its indeed be considered pretty much REDy debut with its 2017 bottling, which local, as both were parented by the is 55% Portugieser, 35% Kékfrankos and Austro-Hungarian Blaufränkish 10% Merlot. Winemaker Balazs Hárságyi (Kékfrankos) grape and crossed in mentioned that his REDy, with its high Austria in the early 1920s by Professor acidity “is built to handle the fridge” and Fritz Zweigelt at the Teaching and as such is a very refreshing springResearch Center for Viticulture and summer tipple. Horticulture (LFZ) in Klosterneuburg, Hárságyi REDy 2018 has a vibrant close to Vienna. pale ruby meets light purple color and

14%

1770

is very much translucent. The nose and palate are lively and it oozes creamy red fruit with raspberry, sour cherry and strawberry jelly, as well as rosehip tea and eucalyptus. This wine is set to cost around a very reasonable HUF 2,000 (the rest of the REDy wines will be priced similarly) a bottle and a visit to the pint-sized Hárságyi winery in Palkonya is a treat.

Taken Seriously

While many consider Portugieser (formerly known here as Kékoportó) an inferior grape, with some going as far to suggest that Portugiuser should be grubbed up and replaced by more noble grapes in Villány’s prime vineyards, there are those who take it seriously. In fact, Berlin lawyer turned Villány winemaker Horst Hummel, shows that when given some tender loving care, it can make serious wines that can even be aged, though most is drunk up in the year following the vintage. His 2018 Portugieser, which was premiered at the Terroir Club’s spring tasting held at the ultracool Borganika gastro workshop, was spontaneously fermented in tanks. It was fined but left unfiltered and it was bottled with minimal sulphur. It has vibrant and pure sour cherry aromas, with a light but welldefined structure and lots of juicy red fruit on the palate. It is reat

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value at HUF 2,499 from the Mitiszol webshop (mitiszol.hu). At the same tasting, it was great to get another chance to try Frigyes Bott’s Kékfrankos 2017, from the Muszla wine region just across the border in Slovakia, which shone through at the Pannon Wine Guild’s Christmas tasting, and costs HUF 5,599 from mitiszol.hu, or HUF 5,650 from Bortársaság. It was made biodynamically by Bott’s self-titled “Hamburger” method. Of

50 bins

of collected grapes taken to the winery and fermented in a vat, the contents of the first ten containers were trampled by foot, the next 25 bins were placed in full bunches with the carbonic fermentation starting within the grapes, then the final 15 were destemmed and added to the top. This maverick method clearly works and the wine is supremely elegant, varietally pure (with vibrant red and black berry fruit, spices, black pepper and taut acidity), long and complex. This same method is used for all the winery’s reds.

PRESENTED CONTENT

An Artistic Commitment to Quality, Innovation and Diversity CEO Csaba Káel, the CEO of Müpa Budapest, talks exclusively to the Budapest Business Journal about highlights to look out for at this year’s Budapest Spring Festival (where he is also chairman of the executive board), and the trends and traditions of the past four decades. BBJ STAFF

BBJ: Budapest Spring Festival is obviously an important part of the local cultural calendar. What is its international importance? Csaba Káel: I am proud to say that Budapest Spring Festival has become one of Central Europe’s most important celebrations of the arts during the past almost four decades. It is a highly prestigious event series that brings the

Káel Csaba. Photo by Müpa/Csibi Szilvia. best international and Hungarian artists and productions to Budapest, and attracts massive international attention and visitors from all over the world. Actually, the European festival season starts here, followed by Prague and Vienna: tourists – especially from overseas – plan their visits in advance based on the timing of our festival. We are grateful for this interest, and truly believe that we have a huge responsibility as festival organizers: our mission is to show an exciting and outstanding selection of new

productions, Hungarian masterpieces and extraordinary international projects day by day during the festival. BBJ: Müpa Budapest is not just a key location, but the main organizer of Budapest Spring Festival. What are you most looking forward to seeing on your own stage? Cs.K.: It is not easy to choose, as diversity of art forms is a core value of the festival, just like commitment to quality and innovation, so the program

is really colorful this year. The intention to come up with something unique for the opening night inspired us to choose “Khovanshchina”, Mussorgsky’s second and last completed opera, presented in a new form, a reconstruction by musicologist János Bojti, in a version faithful to the composer’s original intentions. It was an amazing success. Connected to the current focus of our festival, we are also thrilled to welcome the superstars of the Russian music scene this year: we are going to have a spectacular closing weekend with maestro Valery Gergiev, the Mariinsky Orchestra and the concert performance of Tchaikovsky’s “Iolanta” on April 20, while Prokofiev’s “Cinderella” is going the be performed twice by the famous Ballet Company of Mariinsky Theater at Erkel Theater on April 22. BBJ: What do you think are the most important trends revealed by the festival over the years? Cs.K.: We are monitoring the most exciting tendencies in the art field, but the combination of preserving our heritage, reflecting on our traditions, while also being opened to new forms of art makes our festival program really special. Just like our vision to create a very unique and complex Budapest-experience for the visitors and locals through the arts. We are aware that we have a powerful expat community with international business leaders here in the city, and we believe that the Budapest Spring Festival, and of course Müpa Budapest, provides them with an extraordinary program selection and real inspiration. The goal is to have more and more “brand ambassadors”: enthusiastic artists and satisfied audience members willing to return to Budapest.

A kép illusztráció.