Budapest Business Journal 2802

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BBJ.HU

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 2

JANUARY 31 – FEBRUARY 13, 2020

SPECIAL REPORT

Office Equipment

SPECIAL REPORT

Get Ready to say Goodbye to the Open Plan Office This decade, offices are expected to transform drastically. It is not only the changing generations that are driving this rejuvenation.

Forget open plan formats and cubicles, and get ready for home-like community offices arranged around function.  15 SPECIAL REPORT

Seating: The Office Wellness Trend Sitting is the new smoking. This mantra was either coined or popularized by Dr. James Levin of the Mayo Clinic-Arizona State University Obesity Solutions Initiative around 2014. As we head into 2020, this might be a good time to think about how you sit at work.  16

SOCIALITE

Valentine’s Day in Budapest: An Insider’s Guide David Holzer and his Hungarian partner met in Budapest, and spent their first freezing Valentine’s Day together here, and wandered Budapest from Heroes Square to the Danube, from morning to midnight.

Here are a few insider tips.  22

Widening the net, Spreading the Success NEWS

MNB Holds to its Currency Course Although the forint hit all-time lows in the past few weeks, the MNB has not intervened in order to strengthen the currency, and such a move is not expected anytime soon.

Although the exchange rate could temporarily climb above 350, it is more likely that it will remain in the 335-345 band throughout the year, analysts say.  3

N ES BUSI

S

The Hungarian Investment Promotion Agency enters the decade aiming to diversify the number of key investing nations, the sectors in which investments are made, and their geographical spread across the country, even as FDI falls globaly, CEO Róbert Ésik tells us.8 BUSINESS

Hotel Market Seen as a Mainstream Investment Option Developers, investors and operators see huge potential for hotel projects both in Budapest and the wider country, as the Budapest Business Journal discovered at the recent HOTCO conference.  7

News

2|1 BBJ

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Budapest Business Journal | January 31 – February 13, 2020

THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL STAFF: Balázs Barabás, Zsófia Czifra,

Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Robert Smyth, Zsófia Végh.

LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:

Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu

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What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential.

The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress.

Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.

BBJ-PARTNERS

Assuming you are reading this on publication day (Friday, January 31), we are still gearing up for the BBJ Expat CEO of the Year awards gala tonight.

Our annual celebration of all that is good about the impact expat CEOs have on Hungary’s economy is being staged for the sixth time, as once again we return to the fantastic venue that is the Grand Ballroom of the Corinthia Hotel Budapest.

At the time of writing, I genuinely have no idea who the winner will be. That decision will only be taken by our professional awards jury in the minutes running up to the start of the gala itself. I don’t sit on the jury, and will be busy with the usual last minute preparations for my duties as MC for the evening. The chances are I still won’t know who the winner is until the name is revealed later tonight.

One thing I do know, however; we will make history on this evening. The short-list of candidates was announced back in October and is: Romke Noordhuis, managing director of ExxonMobil Hungary; Melanie Seymour, head of Blackrock Budapest from 2017-2019, and now Head of Global Client Services; and Charles Wassen, general manager and country lead of Dana Hungary.

In the five years since the launch of the award, we have had three German winners (or two German winners and one Brazilian-German winner, if you want to be hyper accurate), a Spaniard and a Finn (Julia Lammi, last year, who was also the first woman to win the title). But we have never had a Dutchman (Noordhuis), a Brit (Seymour) or a Frenchman (Wassen).

The gala and the award are, of course, a celebration of the candidates and most especially the winner, the expat CEO who is deemed to have done most

for this country’s development and international recognition through his or her professionalism and outstanding achievements.

But it is also a celebration of the multi-layered community they are drawn from, including their CEO peers, but also their partners (without whom no business person can successfully manage life and work), their diplomatic representatives, the chambers of commerce and the Hungarian Investment Promotion Agency. Now, that is a community worth celebrating. ********* Today is not just significant for the Budapest Business Journal and the winner of the Expat CEO of the Year award; it also marks the moment, at precisely 11 p.m., when the United Kingdom officially leaves the European Union. Brexit, finally, is done.

Except it isn’t of course, at least not entirely. British Prime Minister Boris Johnson will have delivered on his promise to take the country out, but he still faces one more ticking clock.

There will be an 11-month transition period in which the two sides try to negotiate their future trading relationship. For now, everyone seems to be saying the timeline is tight, but the will to get a deal done is there, but fail to reach agreement and it is still possible the United Kingdom could exit under basic World Trade Organization rules if nothing else is in place. There is still plenty of tough talking to come, from both sides.

Robin Marshall Editor-in-chief

Photo: MTI/Balázs Mohai

Photo: fortepan.hu/Tamás Urbán

VISIT US ONLINE: WWW.BBJ.HU

CELEBRATING THE EXPAT CEO COMMUNITY

THEN & NOW

Rock and Roll is life, as the saying goes. Rock fans, clearly, have changed considerably in the past half a century. The black and white picture (left) shows rock fans relaxing during a concert at the old DVTK football stadium at Miskolc in 1970. The color photo, which won the “Art” category of the Hungarian Photo Competition, shows rock and punk enthusiasts dancing the pogo.

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News///macroscope

Central Bank Holds to its Currency Course

ZSÓFIA CZIFRA

Despite a steady weakening of the forint against the euro, the Monetary Council of the National Bank of Hungary (MNB) left the base rate unchanged at its latest rate-setting meeting on January 28. Higher-than-usual expectations have surrounded the council’s January decision; however, the key rate remained at 0.9% and the overnight deposit rate still stands at -0.5%.

Inflation in EU Member States (December 2019)

December 2018-December 2019, 12-month change in consumer prices

Portugal Italy Cyprus Denmark Spain Belgium Finland Greece Ireland Euro zone Croatia Malta Great Britain Germany EU 28 France Sweden Estonia Luxemburg Austria Slovenia Latvia Lithuania The Netherlands Poland Bulgaria Czech Republic Slovakia Romania Hungary

Although the forint hit all-time lows in the past few weeks, the central bank has not intervened in order to strengthen the currency, and such a move is not expected anytime soon. In an extreme case, the exchange rate could temporarily climb above 350, but it is more likely that it will remain in the 335-345 band throughout the year, analysts say.

Source:

That said, at the FX-swap auctions of January 20 and 27, the MNB narrowed the forint supply, which market participants considered to be a response to the depreciation of the Hungarian currency.

This decision was made following a 4% consumer price index in December, which is at the top end of the MNB’s target inflation band.

In its January statement, the MNB once again repeated that “…risks to the outlook for domestic inflation became balanced again”, and it also added that as the euro area recession concerns were somewhat eased in the past few months, domestic inflation risks have become symmetrical again.

As for the near future, it seems that the MNB is still not pre-committed to any future interest rate path. The statement, as usual, says “In its monetary policy decisions, the Monetary Council applies a cautious

The Worst Kid on the Currency Block The forint weakened to a historic low of 338.74 on January 27. While it clawed back some gains later and returned to around 337, the Hungarian currency had once again climbed back to 338.65 the next day, all but matching the previous record low. Although there is no fundamental reason for it, the forint has been the worstperforming currency in the region since the year started, falling by more than 1.6% since January 1,

and by nearly 5.5% from a year ago.

Analysts unanimously say that the exchange rate could surpass 340 this year, however, this is most likely to be only temporary.

Some analysts say that in extreme cases the EUR/HUF exchange rate can even reach 350 mark this year, but that could only happen if central banks globally started a sudden tightening cycle and the MNB failed to follow suit quickly enough.

approach, relying mainly on the incoming data and the projections in the quarterly published Inflation Report. The necessity of further measures will be determined by the persistent change in the outlook for inflation, which will be monitored closely by the Monetary Council.”

Neither the weakening forint, nor the accelerating inflation rate made the central bank change its stance, noted K&H Bank head analyst Dávid Németh. He thinks that, even if the MNB considered tightening monetary conditions, it would certainly not happen before spring.

“Markets have watched closely the current decision of the bank, as the forint hit an all-time low against the euro and stood even at 338, and the inflation showed a notable acceleration in the past months,” he emphasized. However, it is an important factor that the international environment supports the loose monetary conditions, he noted.

“For the time being, we are expecting only fine tuning, which, in practice, means that the Hungarian currency can be strengthened by narrowing the forint liquidity,” Németh assumes.

Slow Normalization

The council might decide on changing the current monetary conditions in light of the quarterly inflation report, opined Gergely Suppan. The Takarékbank head analyst thinks that normalization will be slow and gradual, because inflation so far seems to be under control, and because of the loosening external monetary conditions.

Maintaining the current domestic monetary conditions, then gradually

tightening them in the medium term might be sufficient for the forint to gain strength, which thus can help the economy reach the inflation target, he said. Suppan does not expect a raise in the base rate before the fourth quarter of 2021.

The MNB statement did not mention the forint exchange rate specifically. CIB Banks believes this confirms that, as long as the weakening of the forint does not show any further acceleration, and the transmission to prices does not intensify significantly, the central bank will not change interest rates purely because of the exchange rate, intervening only through FX-swaps to adjust liquidity conditions, analyst Sándor Jobbágy said in a press release following the Monetary Council’s meeting.

So, there are clear signs that the MNB is still devoted to maintain loose monetary conditions in Hungary, exploiting the existing room to maneuver.

“This confirms our previous expectations: there is slim chance for the Hungarian currency to correct anytime soon, we even count on a higher-thanexpected EUR/HUF exchange rate in the coming months,” CIB Bank said.

It seems the inflation outlook has climbed higher; while in its December statement the MNB expected that the inflation would fall back to near the 3% mid-term target by the second half of the forecast horizon, the January statement now says that CPI will return to the target band (the top of the band is 4%) by the end of the year, explained Zoltán Varga, Equilor’s senior analyst.

All in all, the statement has a dovish tone, signaling that even in case of higher inflation rates, the MNB will not interfere, Varga said. However, if the pace of the weakening of the forint becomes intense, symbolic steps could be expected, he added.

Numbers to Watch in the Coming Weeks The macroeconomic calendar will be quite crowded in the first half of February. It will start with the retail trade data for December on February 5, followed by the first estimate of the December performance of the Hungarian industry a day later. A second release will come out on February 12. The next day, the Central Statistical Office will publish data for how construction performed in December, and it will also shed light on the full year performance of the sector.

Also on February 13, January CPI data will be released. On February 14, the much awaited Q4 data of the Hungarian GDP will come out. Will we love those figures? Perhaps St. Valentine knows.

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News

WHO’S NEWS

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

Opus Global Appoints Energy Division Head Holding company Opus Global has announced the appointment of Gábor Králik as the head of its energy division.

Until this latest appointment, Gábor Králik acted as CEO of gas trade company Magyar Földgázkereskedő.

The holder of a degree in economics, he has been working in the energy industry for more than 12 years.

Over the course of his career, he has also worked at companies such as MET Group and MVM. In 2015, he became the managing director of Főgáz, playing an important role in creating the state-run utility model of public utilities company Első Nemzeti Közműszolgáltató.

“The sector has serious growth potential, hence my goal is strengthening the market position and operational efficiency of subsidiaries of the portfolio, while also looking out for opportunities to grow,” says Králik.

“We are delighted to welcome Réka into our partnership. Since joining HP Legal in 2015, Réka has proved to be a real asset to the firm,” comments László Hajdu, managing partner of HP Legal. “She is an excellent lawyer with in-depth knowledge of the legal aspects of various types of business transactions.”

“Her commitment, enthusiasm and hard-working approach has been instrumental to the continued success of HP Legal. I am convinced that Réka’s promotion will allow us to maintain the excellent reputation of HP Legal built up over the past 11 years in Hungary,” he argues.

Gábor Horváth He assisted natural gas and electricity distribution and trading companies with advice and management support, provided legal advice to corporate bodies, participated in the preparation of decisions and the monitoring of their implementation.

In his last position, at ENGIE (GDF Suez) Hungary from 2012 until 2019, he was responsible for the legal background of natural gas and electricity contracts, business codes and general terms and conditions.

His work also extended to the area of M&A, corporate governance, corporate law, and labor law.

Horváth graduated from the University of Pécs with a degree in law and economics.

HP Legal Names Partner

Gábor Králik “I consider the energy portfolio a division that produces strong revenue, which will be able to maximally match the needs of its partners and clients and support the development of the region, besides creating shareholder value,” he adds.

Budapest based finance and corporate law firm HP Legal announced the promotion of Réka Versics to partner, effective from January 1.

Versics has been with the firm for more than four years. She specializes in banking and finance transactions as well as M&A and corporate transactions. She also has significant experience in competition law and real estate matters, according to the press release.

Energy and M&A Senior Lawyer Joins Kapolyi Law Firm

Kapolyi Law Firm has announced the strengthening of its legal team with the appointment of Gábor Horváth, a senior lawyer who has 25 years of experience.

Horváth will focus on energy, corporate and M&A related legal tasks.

During his 25 year career, he has gained experience at companies such as the predecessor to Magyar Telekom (1994-1997), E.ON DélDunántúli Gázszolgáltató (1997-2000), Oppenheim & Partners Law Firm ( 2000-2002) and White & Case Law Firm (2011-2013).

During his years at the E.ON Hungary Group (2005-2009), he became a specialist in energy law.

Réka Versics

mostly in the FMCG sector, also working at international media agency TEN.media.

He returned to the real estate sector at the beginning of this year and worked for CE LAND Holding before joining TriGranit. Dömötör has graduated at the International Business School, following his studies in Toronto, Canada.

Schoenherr Picks Head of Real Estate Practice

László Krüpl, senior attorney-at-law, has been appointed as the new head of real estate practice in Schoenherr’s Budapest office.

Krüpl is known among peers and clients as a dynamic lawyer successfully advising Makk Becomes both local and international clients for Leasing Manager at more than a decade.

Millenium Gardens He was praised in legal directories for Károly Dömötör Makk was appointed delivering an “excellent performance” and leasing manager at TriGranit’s Millennium referred to as a hands-on advisor who Gardens development. “gets the job done”.

His main field of practice is real estate transactions. He also regularly supports clients in greenfield investments into Hungary, from the location selection, through the due diligence process, land acquisition as well as in the construction phase.

“Expanding our real estate team with a designated head with international expertise is the next step in the process of further strengthening our Hungarian practice,” said Michael Lagler, managing partner of Schoenherr. “We are excited to have László on board.”

Krüpl graduated from ELTE Law School, Budapest and undertook LL.M studies at the Georg-August-University, Göttingen.

He started his career at the real estate practice of a leading international law firm in Hungary, continuing his specialization in the Budapest outsets of other international firms.

In his last position, he was responsible Károly Dömötör Makk to introduce the real estate “one-stopshop” services to clients, thus gaining practical expertise also of the tax and The project, which is located in the financial aspects of the real estate market. immediate vicinity of Müpa Budapest (formerly known as Palace of Arts), is currently under construction with completion expected in Q2 2021.

The Class-”A” office development, designed by Finta Studio, offers a GLA of 37,000 sqm. It will be the final element of the Millennium City Center in Budapest, TriGranit says.

“Returning to the real estate sector where I started my career to support the success of such a prestigious and unique development is a great honor, and at the same time a pleasure for me,” says Makk. “Millennium Gardens will be the final element of an almost 20-year-old urban development project with a spectacular panorama that even attracts tenants in the construction phase, supporting green aspects and the employees’ comfort.”

During his professional career, spanning more than 14 years, Makk László Krüpl has worked in the field of investment at companies, such as A1 Immobillien AG and DTZ in investment adviser positions. He gained experience and The expert also taught real estate law a vast network of clients during the at ELTE István Bibó College of Law in years he spent in the media sector Budapest (2010-2016). László’s working working in the field of direct sales, languages are English and German.

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News | 5

Erste Completes Purchase of Advance Tower mix and high technical quality.

The agreement is the next milestone in an outstanding business relationship that further strengthens our solid commercial real estate portfolio,” commented Balázs Pázmány, chairman of the managing board at Erste Asset Management.

Total investment volume for 2019 came to EUR 1.72 billion, according to CBRE. This represented

Erste Real Estate Fund has closed the acquisition of the second 8,000 sqm phase of the 20,000 sqm Advance Tower on Váci út. This is the first transaction in the Hungarian market of a WELL pre-qualified office building according to the vendor, Futureal.

GARY J. MORRELL

The transaction represents a follow through from the purchase of the first phase. The deal reflects the current strong demand for high-end office assets, the dominance of Hungarian capital in the Hungary investment market and the ability of local funds to direct deals through their established contacts in the market.

Local investors have developed longterm relationships with developers and are in a position to utilize these relationships and react quickly when an asset is potentially available.

“The current transaction is one of the highlights of our successful long-

55

registered

Advance Tower by Futureal. term cooperation with the Erste Asset Management. We are proud of that two of our office developments including Vision Towers and Advance Tower have already been purchased by the fund,” said Tibor Tatár, CEO of commercial and retail development at Futureal.

Three players (OTP RE Fund, Erste RE Fund and Diófa RE Fund) are dominant in the investment market, in addition to other local funds who have become active on the market, notably at the top end of the office sector, hotel and retail.

Office was the leading investment sector in 2019

with

49%

or EUR 834 million of the total, according to CBRE, followed by retail

with 28% (EUR 428 mln), hotel with 15% (EUR 260 mln) and industrial at 8% (EUR 144 mln).

The rise in hotel investment activity is significant and has been expected for some time and is seen as likely to extend into this year.

Significant Step

“With the acquisition of the second phase of the Advance Tower, the Erste Real Estate Fund has taken another significant step towards creating a portfolio of office buildings with excellent international tenant

transactions with an average ticket size of EUR 31 mln.

“Hungarian investors remained by far the most active on the market, accounting for 90% of the investment volume in the first quarter and 74% throughout the year,” said CBRE. Prime yields are put at 5.25% for office, 5.5% for shopping center and high street retail as well as hotel, and industrial at 7%.

“New product coming to market further into 2020 may once again put downward pressure on office and hotel yields but generally the current levels form a viable benchmark for the months to come.

As the current loose monetary policy cycle carries on globally and economic sentiment shows signs of resilience, a reversal of yield remains unlikely in the near term,” said CBRE on forecast yields for the year.

In general, investment volumes in the Hungarian market are expected to be at similar levels for the year.

“CBRE are of the view that a similar volume to the past three years can be reached in 2020 as well, based on the continuously supportive monetary environment, robust investor sentiment as well as considerable new stock coming to market that is available to trade,” CBRE concluded.

Atenor Tops out Latest Office Project Atenor and its contractor, Péter Építő have topped out Aréna Business Campus Building “A”. The first eight level phase of the complex will provide 20,000 sqm of space, due to be handed over in the second quarter.

GARY J. MORRELL

The deep construction works of the second phase has already started, with a further 15,000 sqm of office space due to be delivered in mid-2021. The construction of buildings “C” and “D” are planned to be completed in two-to-three years and will deliver a total of 72,00 sqm of office and retail. As much as 40% of the first phase is preleased.

The development of such a large-scale speculative project reflects both the positive indicators in the Budapest office market and the long-term

confidence of Atenor in its ability to let and sell a project onto investors.

Atenor has experience in developing large-scale office and residential projects in Belgium, France, Germany, Hungary, Luxembourg, Poland, Portugal and Romania.

The most recent Budapest office delivery was the

16,000 sqm

Balance Hall by CPI Group, the latest edition to the Balance office park in the Váci office corridor. Total modern office stock in Budapest now stands at

about 3.7 million sqm, of which around 3 million sqm is speculative class “A” and “B” space, according to the Budapest Research Forum (comprising CBRE, Colliers International, Cushman & Wakefield, Eston International, JLL, and Robertson Hungary).

Record Low

The overall vacancy rate has fallen to a new record low of 5.6%, albeit representing only a slight quarter-on-quarter reduction.

Total leasing demand for 2019

amounted to

637,00 sqm,

which is the highest annual volume on record according to the BRF. The largest prelease on record was the 27,300 sqm letting of the whole of Pillar office development, under construction

by GTC in Váci út.

A functioning speculative office market is also finally showing signs of developing outside of Budapest as Garda Ingatlan Fejlesztő Befektetési Alap has signed a 2,000 sqm letting with EPAM Systems at

the 22,000 sqm, LEED “Gold” accredited Forest Offices in Debrecen.

“Securing the first tenant in a newly developed office building is always a pleasure. Not many multinational companies choose countryside locations in Hungary, so this transaction is outstanding for more reasons. We are happy that we were able offer a suitable option to satisfy EPAM’s expansion and relocation needs within the same city,” commented Krisztina Enzsöl, senior office negotiator at Cushman & Wakefield, who worked on the transaction.

Aréna Business Campus by Atenor.

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Budapest Business Journal | January 31 – February 13, 2020

Tata Intent on Upskilling and Empowering its Growth The latest expansion

by Tata Consultancy Services in Budapest, the opening of its Digital Services Center, is further proof of the success of Hungary’s “Eastern Opening” policy, Minister of Foreign Affairs and Trade Péter Szijjártó said on January 24.

ROBIN MARSHALL

“The past 10 years have proven that the Eastern Opening policy launched by the government in 2010 was a successful decision,” the minister insisted. Some 500 new workplaces are being created at TCS’s new office in Budapest, to supplement the existing staff of 2,700.

Szijjártó told guests at the official inauguration of the center that India is one of the determining countries of the global information technology revolution, and one of the most important target countries of the Eastern Opening policy.

“Hungarian-Indian economic relations are active, the 40 major Indian enterprises currently operating in Hungary employ over

10,000 people,

and during the first 10 months of last year bilateral trade flow exceeded USD 600 million,” he added.

The minister pointed out that the investment by TCS is contributing to the success of the dimensional transition of the Hungarian economy, and is providing opportunities for highly trained young Hungarians to achieve a dependable career.

TCS is part of the Tata Group, which employs more than 700,000 people worldwide, and has an average turnover exceeding USD 100 billion.

“Tata Consultancy Services is India’s largest IT company, employing 450,000 people in 50 countries around the world, and is Asia’s leading software development company and service provider. In Hungary, 2,500 young people work for Tata Consultancy Services in Budapest, and their performance has also contributed to the company’s directors having chosen the Budapest subsidiary as the site for their latest service center,” Szijjártó said.

Expanding Activities

N. Ganapathy Subramaniam, COO and executive director of TCS, highlighted the fact that the company’s activities are

From left: István Simicskó, KDNP (Christian Democrat) MP for District XI; Péter Szijjártó, Minister of Foreign Affairs and Trade; Prabal Datta, general manager of Tata Consultancy Services Hungary; and N. Ganapathy Subramaniam, TCS COO and executive director at the inauguration of the new digital services center in Budapest on January 24. MTI/Lajos Soós. expanding in Budapest with the opening of the new digital service center, and the company’s efforts are reinforcing its role within the fields of artificial intelligence and automation.

“Europe as a market is important for us; we have a good customer base and our business in Europe is growing between 15% and 20% year-on-year.

Europe contributes roughly about onethird of our revenues as well. In that context, the European development center in Hungary is very important for us,” Subramaniam told the Budapest Business Journal in an exclusive interview after the inauguration.

He recalled that, initially, Budapest had been targeted by TCS because of the language skills on offer here.

“Very soon, we realized that, more than the language capability, the engineering mindset and the mathematical skills that the people of Hungary have is very apt for providing technology services as well,” he said.

“The European operations are very important, and the Budapest operations are very important for the European business.” Recently TCS has re-orientated its strategy to follow a three-pronged business model in Budapest.

“Number one is Budapest for our European customers. That is the first and most important strategy.

The second pillar is Budapest for our international customers, which means U.S. customers who have operations in Eastern European countries they would like to be serviced. The third part is Budapest for Hungary; we have to grow in Hungary, we have to service Hungarian customers as well,” Subramaniam said.

The size of the company’s operations has already doubled over the past three years, but the COO thinks “the potential is there to grow further”, he said, possibly even to double again.

“Europe as a market is important for us; we have a good customer base and our business in Europe is growing between 15% and 20% year-onyear. Europe contributes roughly about one-third of our revenues as well. In that context, the European development center in Hungary is very important for us.”

“Of course, it is contingent on the competencies and capabilities that we are able to build, plus our ability to convince our customers to come here.

The future looks positive. I think the next milestone we are looking at is that, with these 500 people, we will cross the 3,000 mark, and then we are looking at the milestone of 5,000.”

Given the labor crisis, is he happy that Prabal Datta, the general manager of TCS Hungary, will be able to find the quality of the people needed?

Good Foundation

“The basic skills we are getting out of the universities here are good. That is a good foundation. Once we hire them, we put them through our training programs, and upskill them to the extent that we require.

What I understand is there are about

68,000 graduates

coming out of Hungarian universities every year, but the demand is also quite high. But I think with our brand, the quality of work that we are offering, we believe that we will be able to get the number that we need,” Subramaniam told the BBJ. “Those graduates, if I can teach them advanced skills of algorithmic thinking, advanced skills of artificial intelligence, and machine learning, then they will become a lot more relevant for us.”

He says upskilling and empowering are an important part of what Tata does with its staff. “We will teach you to automate the repetitive part of your work, so that you can be a lot more creative.[…] Our approach to this whole thing is empower people with the tools by which they can distinguish what they are doing and give them ownership of their own automation, that is the journey that we are taking.

In the process we are impressing upon them that design and empathy are for the humans, the rest can be done by algorithms,” Subramaniam said.

“I am very confident of the future.

I think it is our ability to motivate the people here, motivate the workforce of Hungary to learn new technologies, being agile, being able to automate, being able to understand cloud technologies and being more relevant to our business operations in Europe that matters.”

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Budapest Business Journal | January 31 – February 13, 2020

Business

Hotel Market Increasingly Seen as a Mainstream Investment Option

Developers, investors and operators see huge potential for hotel projects both in Budapest and the wider country, as the Budapest Business Journal discovered at the recent HOTCO conference.

GARY J. MORRELL

Last year was a record for tourist visits again and the demand absorbed the 1,200 new hotel rooms delivered in Budapest; the current pipeline stands at 3-4,000 rooms according to Attila Radvánszki, director of the hotel, tourism and leisure consultants, Horwath HTL Hungary.

However, due to the complex development process and labor issues, delivery dates are difficult to estimate as many completions are slipping. Supply is seen as very much demand driven in Budapest.

With a current hotel stock of about 20,000 rooms in the city, Budapest still lags behind Prague, which boasts more than

33,000 rooms

while offering a very similar product, hence the need for new development.

Ibis Styles Budapest Airport Hotel by Wing.

The new supply will bring a much welcomed sophistication to hotel products from hybrid-hotels to five-star luxury properties and everything in-between, increasing the attractiveness of the destination in the process.

The wider CEE region is also attracting an increasing number of development projects, as evidenced by the annual HOTCO Hotel Investment Platform CEE & Caucasus which ran at the Kempinski Hotel Corvinus Budapest from January 20-21.

Established European investors such as Deka and Invesco have become increasingly active in the hotel sector against a background of growing tourism visits, concerns about the retail sector and the limited availability of investment grade assets. In Budapest the Hungarian investor, Indotek Group,

has purchased the Gellért Hotel and the Sofitel Budapest Chain Bridge.

HOTCO 2020 was attended by more than 350 developers, investors, brand managers, financers, hotel managers, architects, and specialist hotel industry journalists, consultants, and researchers from almost 40 countries, the organizers say.

Growing Interest

More than 60 speakers examined the process of hotel development: From site assessment, feasibility through concept design, branding, financing, construction, staffing, operation and eventual exit.

Marius Gomola, managing director of Horwath HTL Hungary and founder of HOTCO, came up with the concept of the event as he saw a growing interest in hotel development and investment in CEE and the need for informed information regarding the hotel sector as it is seen as a mainstream rather than niche investment option.

With regard to the investment model, Arik Ramot, lawyer and investment banker at Ramot & Co Investment House, sees hotel development debt finance as more difficult to source the further a developer is from the management of a project.

He presented an examination of financing issues in a discussion with Bálint Erdei, founder and CEO of Redwood Holding, an office and residential developer who has moved into the hotel market, and László Hirt, head of department at OTP Bank, who is providing finance for the EUR 50 million,

140 key

Hilton Garden Inn interior.

Hard Rock Hotel Budapest in Nagymező utca in District VI that Redwood Holding is developing.

The project is due to be completed in spring. The 4-5 star “life-style” hotel and Hard Rock Café, located in a party hub in Budapest, reflects the growing sophistication of the hotel market and the need for different models of development.

“Hotel operation is a completely different skill to office operation and, therefore, we are developing the project and, upon completion, the hotel will be operated by Hard Rock International,” commented Erdei.

Key Driver

Such “life-style” approaches are seen as increasingly central for a successful hotel development project. Tim Mutton, founder of the food and beverage consultants and designers, Blacksheep, sees a high quality and well-conceived F&B offering as a key driver for the success of a development.

This can also attract customers to a city center hotel in the quiet period between breakfast and dinner. The restaurant/bar is thus seen as central to increasing the value of a hotel. One challenge related to this is that F&B requirements are changing very quickly and, therefore, continued capital investment and long-term planning is required.

From a wider design and property management perspective, hotel owners and operators are showing a growing concern about sustainability issues such as the use of plastics. For now, however, accreditation to third party sustainability organizations such as LEED or BREEAM is still not the norm for new-built hotels, unlike, for example, the office market sector.

As a sign of the increasing attractiveness of the hotel sector in Hungary, Wing, which is active in all commercial development markets has three ongoing hotel projects.

This follows the company’s successful delivery of the 145-room Ibis Styles Budapest Airport Hotel

in

2017,

the only hotel with direct access at Ferenc Liszt International Airport.

“Over the 20 years of its operation, Wing has gained extensive experience in all areas of property development, created world-class buildings for international companies and proved particularly successful in meeting special requirements.

Building on our existing expertise, we have launched our hotel business to leverage the significant dynamic growth potential of the segment,” commented Noah Steinberg, chairman & CEO of Wing.

“As a leading Hungarian property developer, we are committed to further cementing our position in every segment of property development, becoming a key professional player also in the hotel market and strengthening our ties with major international hotel actors,” he explained.

“In this spirit, approval is pending for a hotel next to MÜPA [formerly known as the Palace of Arts] with 179 rooms and a panoramic view of the Danube, and another hotel only minutes away from the Ferenc Liszt Airport with 187 rooms, and preparations for a 300room hotel are also underway. Wing will also continue to be on the lookout for potential projects and partners,” Steinberg added.

8|2

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Budapest Business Journal | January 31 – February 13, 2020

PRESENTED CONTENT

HIPA: Spreading the Investment Success Even as it completed yet another record breaking year, the Hungarian Investment Promotion Agency enters a new decade working to diversify the number of key investing nations, the sectors in which investments are made, and their geographical spread across the country, against a backdrop of falling global investment, HIPA’s CEO tell the Budapest Business Journal.

ROBIN MARSHALL

2019 was a successful year for HIPA by almost any measure. “We have been able to conclude a record high of 101 projects worth EUR 5.35 bln; that’s up 24% compared to last year. These will result in the creation of nearly 13,500 jobs: Hungary continues to be a very attractive investment destination,” Róbert Ésik tells the BBJ in an exclusive interview.

Róbert Ésik, CEO of HIPA. Those investments projects came from 21 different countries, and covered 20 different sectors. The top eight countries are responsible for about 80% of the volume, and thus HIPA focuses on those in particular.

The impressive numbers have led to international recognition. Back in May 2019, the U.S.-based Site Selection magazine put Hungary in the top 10 worldwide as an investment destination. In September 2019, the IBM Global Location Trends report ranked

Hungary

16th

in the world in terms of job creation via foreign direct investment projects.

Top 3 Foreign Investor Countries in 2019 Relation

Volume (EUR)

South Korea

2.557 bln

Germany

808.33 mln

Japan

526.71 mln

“I think that is a very good result from a county which ranks number 92 in terms of population. Moreover, based on the value add of the projects and the jobs that have been created, we have been ranked number 11 in the world,” Ésik comments.

“Looking ahead for 2020, I think we can say Hungary continues to be very interesting for foreign investors, because right now we have 137 investment projects that we are in discussions about with investors, representing more than EUR 8.5 bln of investment and more than 25,000 new jobs, so the momentum is still there.”

Although the traditionally strong investor countries of Germany and the United States continued to be active in 2019, the year saw a “significant increase” in investment from Asian states, Ésik says in identifying one of the key trends from last year.

“Specifically, South Korea was ranked as number one, giving close to 50% of all capital expenditure. Combined with Japanese and Chinese ones, we can say that the countries of the “Eastern Opening” [Hungary’s very deliberate foreign policy pivot towards the East, launched in 2010] represent 38% of new jobs in relation to FDI.”

E-mobility Trend

Source: HIPA

The second key trend is the number of investments linked to e-mobility. “Given the fact that we are a country that has a relatively high exposure to the automotive industry, meaning this a sector that gives 20% of all manufactured exports, I think this is an important achievement.”

The battery sector alone is represented by eight companies with an investment value of more than EUR 2.8 bln, but there have also been “numerous” investments targeting the electrical powertrain, such as Audi’s e-transformation project in Győr, Schaeffler’s greenfield investment in

Szombathely, and Infineon’s investment in Cegléd, the CEO notes These are important because it goes some way toward futureproofing the industry.

“If we were to calculate together all the e-mobility projects, then these would give 60% of the investment value and 40% of the jobs,” Ésik says.

“Looking ahead for 2020, I think we can say Hungary continues to be very interesting for foreign investors, because right now we have 137 investment projects that we are in discussions about with investors, representing more than EUR 8.5 bln of investment and more than 25,000 new jobs, so the momentum is still there.”

The third key trend from 2019 is the continued focus on high value add service projects.

“We have been very successful last year in the business services center sector, where

14

investments

were managed by HIPA, creating close to 2,500 jobs; this is the highest number we have had so far in business services.”

Budapest and its agglomeration continues to be a major draw for

2

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Budapest Business Journal | January 31 – February 13, 2020

Business | 9

HIPA Results 2015-2019 2015 Number of projects Investment volume (EUR) Number of new jobs created

2016

2017

2018

2019

67

71

96

98

101

1.404 bln

3.243 bln

3.512 bln

4.311 bln

5.350 bln

12,995

17,647

17,021

17,024

13,493 Source: HIPA

investors, but those 101 projects have been spread around the country.

“We have managed to bring at least one investment project to every single county,” Ésik notes. “In addition to Budapest and Pest County, the most successful county was Komárom-Esztergom, which gave one-third of investment volume and onequarter of all jobs from last year’s projects.”

More of the Same

Given the successes of recent years, HIPA’s priorities for 2020 are largely a continuation of those from 2019, notably a focus on the quality of jobs rather than quantity and spreading the investment wealth around the country, especially to the provincial university cities. The agency also has to keep an eye on geo-political trends in order to be in the best position to respond to them.

“Of course, international trends are important, and in order to counterbalance any decrease in FDI flows – internationally speaking, FDI volumes have been decreasing in the last few years – we have to make sure that we remain diversified as much as possible,” Ésik says.

“This, for us, means that we remain open to the investments coming from the East; we now have, for example, a relatively high share of projects under discussion where the country of origin is China. So diversification in terms of geographies as far as country of origin is concerned, but

diversification also within the country itself. This year we have a plan to continue to help those regions of Hungary that have been underrepresented.”

That includes offering workshops and training for SMEs, so they are in a better position to work for multinationals and rise up the value chain, and also an element of matchmaking between integrators and Hungarian businesses.

Policy advocacy will continue to be an important area, working with partners like the American and German chambers of commerce. “I believe it is part of our role as an economic development organization to try and come up with ideas on how to further improve the business environment and thus contribute to the fact that we are able to maintain the country’s competitiveness and attractiveness.”

There is one last thing to reflect on

transformation is just one additional step: now we really are a firm, and not a governmental body. That is our only change. We haven’t changed our logo, our corporate design, our way of working; we have just changed our legal status.”

The new legal form has much to build upon: In the six years since HIPA was formed, it has now managed 493 projects (the landmark 500th project will surely come early this year), worth a cumulative EUR 19.5 bln.

FDI in 2019 From

21 companies, covering 20 sectors

60% of value from e-mobility, 40% of jobs from e-mobility

14 BSC projects, 2,500 BSC jobs.

from

2019,

and that is the organizational change HIPA went through. Perhaps the only obvious clue to that is the change in Ésik’s title from president to CEO. “It has absolutely no impact on our services and the way we deal with our clients and stakeholders. I have always said that HIPA is ultimately a management consulting company focused on the area of investments and on delivering information and advice to its clients. I think our legal

Source: HIPA

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Hainan Launches Direct Flight Between Budapest and Chongqing Budapest Airport and Hainan Airlines, the largest civilianrun and majority state-owned air transport company, celebrated the establishment of a direct flight connection between the Hungarian capital and Chongqing, China, with Hainan’s Boeing 787-9 Dreamliner planes flying twice a week between the cities.

BENCE GAÁL

The celebration was held at the Terminal 1 Airport Event Center. Budapest Airport chief commercial officer Kam Jandu highlighted the developments the airport has made to accommodate Chinese tourists, such as the introduction

New Step

Duan Jielong, Ambassador of the People’s Republic of China to Hungary, hailed the re-entry of Hainan to Hungary as a “new step in relations between the countries”, strengthening the friendship between the two nations. He also noted that the positive relations were underpinned

by Hungary’s membership in China’s so-called “Belt and Road Initiative” for binging good to Europe.

Minister of Foreign Affairs and Trade Péter Szijjártó called the cooperation between the two countries a success story, noting that there are “no open questions in the Hungarian-Chinese cooperation”, adding that the government’s decisions in the relationship were made to serve Hungarian interests.

“Thanks to this, high-value investments have come to Hungary, trade values are breaking records, and Hungary was the first EU member state to join China’s ‘Belt and Road Initiative.’ The results are good: By the end of November last year,

262,000 Chinese

From left: Duan Jielong, Péter Szijjártó, Kam Jandu and Min Zhang. of signs in Chinese, as well as the accommodation of Chinese payment systems such as UnionPay, Alipay, and WeChat.

The number of passengers on Chinese routes have been increasing at a rate of 18% year-on-year, he said.

The connection between Budapest and Chongqing also marks the return of Hainan Airlines to Budapest, after the airline left in 2011, just before the collapse of Malév Hungarian Airlines, Hungary’s state-owned national carrier, the following year.

“Hainan Airlines is the third airline to launch direct flights between the two countries, raising the number of

flights to

13,

the most in the Central Eastern European region. This is an outstanding achievement, as five years ago there were no direct routes to China,” Jandu said.

Min Zhang, general manager for Hainan Airlines in Hungary, praised relations between the two countries, adding that an increasing number of people are coming to Hungary from China.

tourists had traveled to Hungary and had spent 429,000 overnight stays; both statistics are from the 11th month, yet they are still higher than the entire 2018 traffic.”

The minister added that China is the largest source of tourists around the globe, with 150 million Chinese traveling abroad every year, accounting for some 20% of the money spent by tourists globally. He added that Hungary has created 14 Visa centers in China, where accepted visa applications are issued within 48 hours.

“None of the capitals in the CEE region have such good connections with China.

Some 31 million people live in Chongqing and its region; it is home to 27 major automotive companies and produces 10% of China’s automotive production.

Chongqing has become the engine of economic development in western China, so the direct relationship will boost the Hungarian economy,” Szijjártó added.

OXO Technologies Holding to go Public in 2021 OXO Group has announced the creation of CEE tech investment firm OXO Technologies Holding, bringing all of its investments under one roof, with the plan to launch the holding firm on the Budapest Stock Exchange in 2021.

BENCE GAÁL

Over more than five years of operations, OXO Group says it has built an investment portfolio of more than 30 startups. The portfolio encompasses early-stage startups and dynamically growing businesses and, in some cases, the group has begun its exit process.

Since the beginning of operations, the group says it has invested approximately HUF 1 billion. At the end of 2019, the value of its portfolio reached HUF 2.8 bln.

“Whether talking about early or mature phase investments, our portfolio shows an excellent yield potential,” said Dávid Pongrácz, investment director at OXO Ventures.

“Up to 2020, we have found more than 15 angel and institutional investors, investigated

900 startups,

and made 35 investments.”

He added that the group’s strong deal flow is a guarantee of quality in case of future investments, especially since its scope of interest is not limited to Hungary, but includes the entire CEE region. The buildup of regional investments will continue this year, Pongrácz noted.

Szabolcs Botond, angel investor at OXO Group, added, “OXO Group’s extended network of angel investors in itself adds

great value to the management of the portfolio. This is complemented by a team of professionals with unparalleled experience in company building, international expansion, and business development, providing us with an outstanding competitive advantage under current market conditions.”

Dynamic Increases

According to the expert, thanks to the inexhaustible source of resources in recent years, asset prices have been dynamically increasing in almost every market.

However, the yield potential of venture and private equity stays higher than even other alternative asset classes, although there is increasing uncertainty about valuations and asset prices, he warned.

In his opinion, an investment that only sounds good or has a high PR value has little value in the eyes of serious investors. On the other hand, the valuation of the entire portfolio says much more, especially in terms of forecasting yield potential.

OXO group’s owner and founder is Péter Oszkó, a former Minister of Finance (April

16, 2009-May 29, 2010) in the socialistbacked technocrat government of Gordon Bajnai and prior to that was country managing partner of Deloitte.

“With the transformation we are planning to make the entire portfolio publicly accessible in the

first half of

2021,

meaning that the holding’s shares will be listed on the Budapest Stock Exchange,” Oszkó explained at a press conference called to announce the move.

He added, “The created investment construction will naturalize an AngloSaxon market practice, which, in the future, will allow us to address a much wider range of investors than before.”

Oszkó argued that private and institutional investors who, due to longer investment periods of up to 10 years and the continued high risks associated with low liquidity, have so far failed to enjoy the growth and yield potential of the sector, would now be able to enter the technology innovation investment market.

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Chemical Engineering or Media Studies? Would be Students, Please Note: Any University Degree Worth its Salt Will Test You For the past 18 months, your correspondent has been “lecturing” at a local, private university, seeking to pass on to a new generation at least some of any knowledge I might have garnered in the past four decades working in and with a variety of media.

KESTER EDDY

So it was that, once a week and for 80 minutes, throughout three-month semesters, I’ve been meeting young, budding scribes from as far afield as China, Namibia, Nigeria, Georgia and Brazil (and yes, with a couple of Magyars also in the mix) all assembled for classes on “writing articles”.

We’ve had some fun, and heartaches. I must confess that what precisely they took on board is open to question: for example, despite my attempts to drive home the need to write for their target audience, final coursework results for some were decidedly patchy on this point.

But for sure, I learned a lot.

I suppose it is a symptom of the world of social media, but I was in shock that one or two students interpreted journalism

as meaning they could write what they wanted, mix fact and opinion, and even offer the latter without justification. (Note the use of past tense here; my students were swiftly disabused of such notions.)

Much to my surprise, and in complete contrast to my own student days, almost no one took notes – or only occasionally at best.

Now it was true that my “lectures” were really nothing of the sort. Shunning the classical academic approach, this professor rarely wrote on the whiteboard, for those assembled to promptly copy.

Our classes typically consisted of the introduction and discussion of a feature or news story, followed by individual student analysis, peer evaluation, and feedback.

(Nonetheless, I thought some of my spoken pearls of wisdom might have

justified the odd notebook jotting for future contemplation. Alas, seemingly not for the current youth.)

The ever-present theme was: does the chosen story fulfill its goals, if not, why not and if yes, how does it do it?

To learn by doing, and to evaluate a story, questioning its content in detail and from various angles, proved challenging. Worse still, to occasional groans and grimaces, I set, marked and graded follow-up coursework every week.

Tough Course

“Your course was tough,” one of the first intake recounted some months after graduation. “I was just thankful to pass.”

(She got a grade three from me, equivalent to a lower second.)

On the positive side, more or less every student put something of a shift in, and the best were a genuine delight to teach.

As one student involuntarily sighed, after being asked to justify her injection of a certain argument in a story: “Oh, journalism is difficult.” Too right.

More or less like anything worth doing properly.

More difficult was the fact that most were enrolled in some kind of general “media and communications” undergraduate course: relatively

Business | 11

few had determined to forge a career in journalism.

All of which meant some students had a somewhat cursory, tick-the-box approach to tasks, rather than seeking to master the essence of an issue, which, of course, frustrates real learning to any depth.

Indeed, as one of the more dedicated students later confided, in her experience too many enter university with little idea of what they really want to study, primarily at the behest of – and supported by - doting parents.

In such an uncertain state of mind, nobody will choose, say, chemical engineering or nuclear physics, subjects that sound far too much like hard work.

But media and communications?

That has a softer, more rounded appeal.

It thus becomes a default choice for many, who are, alas, largely unaware of the need to apply themselves when confronted with the practical reality of the challenges involved.

As one student involuntarily sighed, after being asked to justify her injection of a certain argument in a story: “Oh, journalism is difficult.”

Too right. More or less like anything worth doing properly.

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

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Factoring Alternatives for SMEs In our regular Corporate Finance column, Les Nemethy and El Mehdi Hosni look into the pros and cons of factoring as a source of funding for SMEs. Factoring is a financing method in which a business owner sells accounts receivable at a discount to a third-party funding source, in order to raise capital, as described by Factoring by Enterpreneur.com. In other words, factoring involves selling unpaid customer invoices to raise capital quickly.

It allows business owners that experience slow-paying customers or occasional cash flow squeeze to generate cash flows almost instantly to run their businesses.

My first exposure to factoring was over a decade ago, when we were attempting to raise bank financing for a newly incorporated U.S. subsidiary of a European client. I was astonished to learn that without a few years of operating track record in the United States, no corporate guarantee from a prosperous European parent company, nor anything else, could help to persuade U.S. banks to lend.

Although the subsidiary had no credit record to speak of, its clients had an excellent record. Hence the receivables could be sold at a relatively minor discount. The cost of factoring was only a few percentage points more than bank financing.

Factoring is one of the oldest forms of business financing; it is common in some industries particularly where long receivables are part of the business cycle.

Factoring is commonly perceived as the most expensive way to raise cash – a last-ditch effort by companies about to go under. While it is true that factoring is typically more expensive than bank financing, this perception deserves qualification since factoring is a shortterm solution commonly used to provide companies with necessary cash flows to

Global Factoring Volume Distribution in 2018 Western Europe Asia Pacific CEE South America North America Africa MENA

0.7% 3.3% 0.5% 4.5% 6.7% 60.7% 25.6%

Factoring Volume in Visegrád Countries for 2012-2018, million EUR 60 000 50 000 40 000 30 000 20 000 10 000 0 2012

2013 Poland

2014

2015

Czech Republic

2016

2017

Hungary

2018 Slovakia

Source: FCI Annual report – The Global Association for the Open Account Receivables Finance Industry

raise working capital in order to drive business growth.

In a typical factoring arrangement, the company makes a sale or provides a service and generates an invoice. The factor buys the right to collect on that invoice by agreeing to pay (usually within 24 to 48 hours) the invoice’s face value less a discount. The factor usually pays 75-80% of the face value immediately and forwards the remainder (less the discount) when the invoice is fully paid.

Factoring companies apply a discount to the invoice’s face value, a factoring fee that typically range from 1- 5% of the invoice amount, depending on several elements: • The monthly volume of invoices to factor • The average amount of each invoice • The industry • Length of time for payment • Customers’ creditworthiness

Factoring is a well-established way to raise capital in mature economies: Western Europe alone accounts for more than 60% of the global invoice factoring industry: The global factoring market was worth EUR 2.767 trillion in 2018, according to the Annual report of FCI (Factors Chain International, the Dutch-based global representative body for the industry).

The factoring industry has been experiencing a significant increase in emerging markets, particularly Asia and Eastern Europe, where SME and entrepreneurial sectors are growing rapidly.

Within the Visegrád countries, the factoring industry is much larger in Poland than the other three countries and also growing faster.

Factoring is expanding rapidly in Central Europe for two main reasons: • CEE is one of the world’s fastest growing areas with a 4.01% average GDP growth

for the 2015-2018 period, according to World Bank data.

• Former socialist countries have evolved into market economies over the past three decades. Hence they have experienced intense growth, with great need for capital, and a need to tap into every source of capital available.

Companies that would not normally be eligible for bank debt, due to lack of collateral, poor personal or corporate credit history, or limited operating history, may have relatively quick access to factoring since factors look only at the creditworthiness of customers.

Factoring may also allow SMEs to effectively outsource their credit and collection functions to their factor, as argued by Leora Klapper in “The Role of Factoring for Financing Small and Medium Enterprises”. Moreover, invoice factoring is considered as an off-balance sheet financing method, since no debt or equity is created; hence liabilities do not have to be reported.

As mentioned, factoring fees are on average more expensive than conventional lenders; there may also be hidden fees, such as application, servicing or processing fees.

Factoring entails the loss of direct control on invoice collection. Clients may react adversely if they experience collection pressures from a factor. One should ensure the factor chosen is fair and ethical so as not to undermine your company’s reputation or client relationship.

Most factors will also specify that in the event a company’s client does not pay within a predefined time period, the factor will look for recourse to the company.

In summary, given the choice between a bank loan and factoring, most companies will prefer a bank loan. Nevertheless, where a company has limited access to conventional financing, and can generate higher returns on capital than the cost of factoring, this alternative remains a desirable option.

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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R&D in Automotive Technology: Huge Potential for Hungary Western European automakers, facing major challenges in R&D, can improve competitiveness in Central and Eastern Europe, according to the latest study by McKinsey & Company, presented in Budapest on January 23. This could also be a big opportunity for Hungary.

6%

year on year. Acquiring and retaining talent in these fields and high costs are all posing structural challenges for the European automotive industry and have a major impact on its competitiveness.

The consulting firm is convinced, however, that Western European automakers do not have far to go to solve these problems, just “next door” in Central and Eastern Europe.

Estonia

2.0

Latvia

1.5 Lithuania Germany 2.0

Czech Republic

Poland

2.3 Slovakia

1.0

Romania

Hungary Slovenia

4.6

2.5 1.4

7.3 0

0.8

Serbia

Bulgaria Very high

High

Medium

Low

Very low

Source: Eurostat’s data on NACE job categorization; UNESCO Institute for Statistics

The deployment of R&D activities in the Eastern European region is an aspect that automotive manufacturers cannot ignore.

For a start, there is room to breathe; R&D capacities are around seven times lower in CEE than in Germany.

There are 6.6 million skilled employees in the sector in the countries of the region, and since their wages are 60% lower than in more developed countries, it is affordable for manufacturers to outsource.

Above all, this region is also an attractive option because of tax incentives for manufacturers and direct state subsidies.

And even if that were not enough, the states of the region have an advanced infrastructure in terms of real estate, internet and terms of delivery.

Virtuous Circle

skilled labor is available than in Germany (6.6 million vs. 8 million), but labor market competition is much smaller, as global technology and computing firms are less present.

2. Competitive wages. Labor costs in the R&D sector are about 60% lower in Central and Eastern Europe than in the West.

3. Existing automotive capacities and R&D maturity. Many manufacturers are already present in the region, but its research and design capacity utilization rate is far from high, with R&D activity representing only 1.5% of value-added.

4. Advanced infrastructure. The CEE region has fast access to airports, modern highways and railways, and advanced digital infrastructure.

5. Government support. The countries of Central and Eastern Europe encourage technology investments in many ways, including tax breaks, investment grants, simplified review processes or support for training cooperation.

Shift in Global R&D Strategy

Croatia

by

10-15% less

1.4

GERGELY HERPAI

The European automotive industry has been a real success story, but is now facing huge challenges. Competition is increasingly coming from Asia, while it is simultaneously tackling a number of megatrends such as self-driving, e-mobility, connectivity and car-sharing, all of which require significant R&D investment.

In its report “Rethinking European Automotive Competitiveness: The R&D CEE Opportunity” consulting firm McKinsey concludes that Europe’s leading automotive position may be under threat. Compared to how the industry has evolved in the past, recent changes in the sector are more specific, because they are simultaneously faster, more complex and more disruptive, experts warn.

Software development is playing an increasingly important role in the automotive industry, so it is very important for European manufacturers to be able to compete in this field as well.

Automotive software development is expected to grow by 13% over the next five years, which will increase demand for software engineers

1. Available Talent. In Central and Eastern Europe, only

Compared to the Size of Their Automotive Sectors, CEE Countries Have 7 Times Less R&D Than Germany

13.4

Business | 13

McKinsey’s experts seem to see the possibility for a virtuous circle.

A broad-based automotive ecosystem extending across the region would boost local specialist training and further strengthen the entire R&D sector in the area.

In their recent study, the consulting firm identifies Western European

automotive companies and Central and Eastern European countries as the main drivers of this potential change.

However, it is essential that the car manufacturers decide on the targets at the CEO level, what further steps are needed in R&D, choosing the right location in Central and Eastern Europe and launching the necessary investments.

At the same time, countries in the region can anticipate change by encouraging the formation of regional clusters, encouraging business to engage with higher education, trade, civil and governmental institutions.

As a result, Central and Eastern Europe can develop an R&D-rich ecosystem that can have a positive impact on the economy of the region as a whole. The resulting values may also benefit other industries such as aerospace, defense and advanced electronics.

Moving R&D to Central and Eastern Europe is not the only option, of course.

Asia is another option, as is outsourcing to specialist companies. That said, McKinsey lists five reasons working in the region’s favor:

“Automotive manufacturers are increasingly competing with high-tech companies for leadership in the mobility industry,” said Andreas Tschiesner, the European leader in the automotive industry at McKinsey & Company.

“These companies and the CEE region as a whole will benefit from the R&D development of European automotive manufacturers here. With the changes, Europe’s motor industry can become stronger and more agile, and Central and Eastern Europe become more competitive.”

“Skilled workforce will be a growing asset: the number of job vacancies in information technology and communications technology increased

by

43%

between 2016 and 2018,” he adds.

According to Tschiesner, in order to remain successful, the European car industry needs to carefully consider its R&D strategy. He believes the contribution of Central and Eastern Europe can be crucial.

“These companies and the CEE region as a whole will benefit from the R&D development of European automotive manufacturers here,” agrees András Kadocsa, McKinsey & Company’s head of automotive for Central and Eastern Europe.

“With the changes, Europe’s motor industry can become stronger and more agile, and Central and Eastern Europe become more competitive.”

14 | 2

Business

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Budapest Business Journal | January 31 – February 13, 2020

Building Success on a Year-round Destination Running a multinational hotel chain is a Sisyphean undertaking, a little like painting the Golden Gate Bridge: the task is never over; no sooner have you reached one end of the span than you need to start again at the other. Similarly, senior hotel staff are challenged on a regular basis to keep things fresh, and hotels themselves undergo renovations and makeovers to keep them up-to-date.

Corinthia Hotel Budapest is doing both at the same time.

Jonathan Pace, general manager of Corinthia Hotel Budapest.

The Corinthia group is something of a specialist in bringing so-called “Grande Dame” properties back to life. The former Grand Hotel Royal (many Budapesters still refer to the Erzsébet krt. Corinthia, which originally opened

in

1896,

simply as “the Royal”) is just one example.

Mifsud has moved just across the border to the Grand Hotel du Boulevard Bucharest (built in 1867), while Pace arrived from what was once the Nevskij Palace Hotel, another iconic 19th century hotel building restored by Corinthia into one of the most celebrated hotels in the “Venice of the North”, as the Russian city is known.

Seasonality Effect

ROBIN MARSHALL

Jonathan Pace took over as general manager at the Corinthia in August, replacing the popular Jean Pierre Mifsud.

“I have been 23 years with the company; this is my seventh hotel. GMs rotate every four years or so,” Pace tells the Budapest Business Journal in an exclusive interview.

“I was in St. Petersburg until last year, but this is natural for us; it is part of international management, bringing in fresh ideas, a fresh pair of eyes, whilst not forgetting our roots and values and continuing to build on the successes of our predecessors.”

He says that he “always wanted to come to Budapest” having visited the country before, and adds that he nearly made the move a decade previously.

“Ten years ago I had almost bought the flight ticket to come, but then the company had other plans. I am very happy to come here finally after 10 years. I like the city. I like the property a lot.”

An obvious difference between the destinations is the seasonality effect. “St. Petersburg is very seasonal, although the city is working hard to get the best out of the off season, particularly winter, and you are already starting to see some results of that in the past couple of years. Previously, the season was only seven or eight months,” Pace recalls.

“Here it is practically a year-round destination; something is happening all the time. Being a large hotel, catering for events, we are doing a lot, even in January and February. Our client mix may change over the seasons – in the summer we have more leisure clients, in spring and fall more business travelers – but, in general, the city never stops. It is one of the most impressive things I have seen; both from a hotel and a city point of view, it is always buzzing.”

Most of Corinthia Budapest’s guests come from the United States and the United Kingdom, but Pace notes that the market mix is changing, with

Indian and Asian visitors “becoming very relevant to the entire city”.

As mentioned earlier, the hotel itself is also changing to meet today’s market needs. Pace finds himself overseeing one project, about to implement a second and planning for a third.

The existing project is seeing corridors and bathrooms given a gentle renovation,

20

and we want to be part of it. We also have the very well regarded Bock Bistro. We are positioning ourselves as one of the very few hotels to have so many eating options.

We want to be a culinary destination, not just a hotel.”

And it is not just the fabric of this historic hotel that is evolving. Pace says he has inherited a very good team, but he does have plans to augment it.

at a time,

in what will have been a two-year time frame once completed, and the GM admits he is looking forward to see it fully completed.

“We are also embarking on a room upgrade program. We are excited to have the designs ready, we are building up sample rooms and then we can go to tender to get the work done. We are talking about doing the whole hotel in one, or an absolute maximum of two years.”

Culinary Destination

The third project is much less advanced at this stage, but will see a third addition to the Caviar & Bull restaurant offering.

Caviar & Bull itself is now well established on Budapest’s fine dining scene. Next door, the newly opened Uncensored promises to take guests on an immersive 360º sensory journey through seven distinct cuisines.

“It is ranked number one at the moment on Trip Advisor, and already fully booked most nights,” Pace says.

Along with chef Marvin Gauci, who leads the Caviar & Bull brand here and back in Malta, Pace and his team are now looking into plans to turn the large atrium alongside the other two eateries into a more casual dining venue.

“It is nice to see so much local pride when it comes to restaurants and bars in Budapest, because there is a lot going on,

“It is nice to see such local pride when it comes to restaurants and bars in Budapest, because there is a lot going on, and we want to be part of it. We are positioning ourselves as one of the very few hotels to have so many eating options. We want to be a culinary destination, not just a hotel.”

“That’s not a negative; in reality, we have an obligation to keep on pushing ourselves to evolve in line with our guests’ needs in a sustainable way. After all it is the team and its delivery that molds the soul of the hotel.

So we will be seeing additions, on the F&B side in particular.”

For now, though, he and his wife and two young daughters are still getting to know their new home. “The family are very happy, and looking forward to visiting other parts. We have seen Szeged and visited [the wine region of] Villány; there is so much more to experience.”

3

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Special Report Office Equipment

Get Ready to say Goodbye to the Open Plan Office

This decade, offices are expected to transform drastically. It is not only the changing generations that are driving this rejuvenation, but also the idea that we can work better in improved conditions.

Forget open plan formats and cubicles, and get ready for home-like community offices arranged around function.

CHRISTIAN KESZTHELYI

In the past few decades, the open office concept was the accepted nom for an office.

On the one hand, it was said to encourage better communication among employees and more effective teamwork. It was also cost-effective: one could squeeze more workers into less space.

“As space partitioning was also decreased, it meant that lower expenses could be achieved, so attractive budgets could be presented to companies who wanted to relocate or expand,” Tibor Jancsó, manager of AGS Pro Kft., a dealer for König + Neurath Office Furniture in Hungary, tells the Budapest Business Journal.

“And companies loved this concept: higher communication and better teamwork, less space and a lower budget. It seemed to be the perfect solution,” he adds

The open layout spread rapidly, and today itstill dominates the scene, despite the fact that research has proven that the setting is not suitable for focused work.

Jancsó says

70% less time

is spent on interaction in such spaces and electronic communication, such as sending emails or direct messages to people sitting right next to you, increases sharply.

Jancsó says that is why the German office furniture manufacturer König + Neurath introduced its König City concept, which essentially organizes an office like a city: boasting dedicated areas for different functions, such as communication, focused work, leisure and so on.

Ten years ago it was quite different, though. “At the beginning of the previous decade, offices offered minimal comfort;

they focused purely on functionality,” Júlia Réka Varjú, Head of Office Furniture department at Basic Collection in Hungary, tells the BBJ. She stresses, however, that when we talk about office trends, mainly it refers to “A” category office buildings, which only multinationals and some progressivethinking SMEs can afford; the majority of Hungarians do not work in such circumstances.

Less Competition

“The labor market then saw less competition, turnover rates were lower.

At the same time, offices needed to meet the requirements of another generation: the Gen Xers. They focused on tight functionality: working units and some additional shared spaces, such as lobbies, meeting rooms, kitchens and dining spaces,” Varjú adds.

An office is not purely a working environment anymore; it has become a very important tool for human resources in both retention of staff and attraction of new talent in times when qualified workforce is scarce.

“The market has changed, one needs to compete with Western employers,” Varjú says. “Western trends come faster, and the requirements of Generation Y and Z are also different,” she adds.

As companies started realizing that open office spaces do not offer a universal solution for every need, a short transitional period sparked huge cozy areas, such as lounges, to better facilitate cooperation and teamwork.

This is expected to evolve further.

“Offices will look more like a home, equipped with interactive devices, for example, three-dimensional holograms for meetings and presentations,” Jancsó says.

As big dedicated working spaces will fade out, he adds, analysis of real-time data will reveal which areas are used more or less, which will help adjust offices to real needs. One thing is certain, however.

“Demand for private rooms and spaces for more focused work and private phone conversations is on the increase,” Jancsó adds.

Similarly, sit-stand working stations, where the employee can easily switch between working seated or standing up, are also becoming frequently-sought. Any transformation will take well-being as a key aspect.

Community Spaces

Tibor Jancsó

“Modern workplaces support flexible working,” she says, adding that home office has an economic approach too; a company needs to rent smaller places while can still get more employees to work.

Digitalization is also a game-changer. “It started with creating the right personalized ambience, such as the light adjusting according to the special needs when sensing that a worker is around,” Jancsó says. “If the worker leaves, the light turns off.”

Community spaces are also taking on increased importance. “As opposed to work-stations, community spaces are receiving bigger emphasis; allowing for better informal cooperation and better efficiency,” Varjú says.

She adds that new types of community spaces that help employees re-energize quickly (fitness rooms, relax spaces, game spaces) have also started appearing more often.

Júlia Réka Varjú At the same time, using digital solutions for booking meeting rooms, work stations or even devices, can support efficient work; employers may even find they need to purchase less equipment if it is properly shared and utilized.

Office equipment can also support more healthy way of working. “A chair can warn the user when it senses an incorrect posture or prolonged sitting. A table can advise a healthy working posture. Perfectly set light, temperature, and humidity can be set up to boost performance,” Jancsó says about the not so far future of office spaces.

Regardless of what type of technology is introduced, however, the most important aspect is that “the space should be arranged in a way that one can sit down to work for shorter or longer periods of time wherever,” according to Varjú.

“The three prerequisites for this are seating, internal internet network/Wi-Fi and 220-volt electrical network,” she says. The way of working and demand for functionality will further define spaces, whether it is for individual high-focus working or louder teamwork.

Yet, it is all impossible without a stateof-the-art, stable and secure IT system, Varjú concludes.

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Special Report

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Sitting Comfortably: The Office Wellness Trend in 2020 Sitting is the new smoking. This mantra was either coined or popularized by Dr. James Levin of the Mayo ClinicArizona State University Obesity Solutions Initiative around 2014. As we head into another year of work, this might be a good time to think about how you sit in 2020 DAVID HOLZER

Most workplace studies reckon that we spend between seven and nine hours sitting, which doesn’t sound good. But, for many of us, sitting at a desk in front of a screen for hours goes with the territory. So, what can employers and employees do to try and reduce the dangers of sitting for long periods of time?

Incidentally, though it’s perhaps not surprising, Levine invented the treadmill desk. On the face of it, the latest treadmill desks with things like LCD displays built in to the desktop so you can see how far you walk while you work and USB recharging ports sound great. But working while walking on a treadmill feels a bit like being a mouse on an exercise wheel. And if you stop the treadmill, all you’re doing is standing.

An obvious answer to reducing the dangers of prolonged sitting is to buy a standing desk and these have become popular. The problem is that, while standing to work might be better than sitting, it comes with its own set of health issues.

According to a 2015 study of standing desks carried out by Jack Callaghan, a professor at Canada’s University of Waterloo,

50% of people

taking part who hadn’t previously suffered from low back pain developed

it when they were asked to stand at a desk for two hours in a row.

Other research carried out in Canada found that the risk of heart disease was actually higher among people who spent most of their time at work standing.

Standing for long periods of time can also result in back, shoulder and neck pain as well as varicose veins.

Sit-to-Stand

Buying a tall chair is one way round overcoming the potential challenges caused by working at a standing desk, which kind of defeats the object. Sit-tostand desks are really the most logical solution.

As the name suggests, these are adjustable desks that allow you to move from sitting to standing whenever you feel the urge. Movement seems to be key to staying healthy at work. Callaghan’s research showed that we should be standing for at least

30

minutes

of every hour. The American Heart Association says that movement that raises our metabolic rate above what it is when we’re sitting can have meaningful health benefits, reduce the possibility of heart

disease or type two diabetes, and help keep us mentally sharp.

Apart from the health benefits that come with sit-to-stand desks, which are pneumatically, electronically or manually height adjustable, employees have the power to choose whether they sit or stand. Unlike installing a person at a desk with a treadmill, say, this bypasses the suggestion that employers are demanding employees change their work habits.

As we all know, it’s difficult if not impossible to concentrate if we’re sitting uncomfortably. Let’s start with five things to look out for in an office chair: 1. The backrest of your chair should be long enough to support your complete spine and follow your back’s natural curve.

2. Your chair should be adjustable, so that your feet can be flat on the floor and your knees at 90 degrees, parallel to your hips.

3. The chair should have adjustable armrests and lower back support.

4. A headrest may seem like an indulgence but not having one can cause back, shoulder and neck stiffness.

5. The seat should be padded to a depth of between two and four inches to take some of the pressure off your hips.

If you really want to sit in the healthiest way possible, a saddle chair is probably the answer. Inspired by Danish surgeon A.C. Mandal’s discovery that a seat that leans forward is the best way to maintain our spine’s natural curvature, the saddle

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Inkjet Printers: Keep it Simple (and Cheap)

Environmental Concerns

Companies looking at printer acquisition usually consider two options: inkjet or laser based products. In the past, customers preferred laser printers, a solution providing large quantity printing at a relatively affordable price, while inkjet printing was considered more an option for home users and small companies. But technologies have changed significantly and laser may not be the obvious choice for cost-saving printing any more.

Especially if you add environment protection to the decision factors, says Csaba Dobos, Epson Europe Business Account Manager.

BALÁZS BARABÁS

When talking about business printing, the first choice for acquisition managers (CEOs or CIOs) is still laser printing. This is largely for historical reasons, because this was the technology that became affordable for companies, about 30-40 years ago. Since then, it has not changed much. The components and the materials used have been improved, but the design has remained pretty much the same. Epson has chosen a different path, developing a completely new technology.

“There are many solutions within the inkjet technology, but Epson has developed

a completely new one: PrecisionCore micro piezo technology. Basically, this is a new generation technology, allowing the production of high-capacity printer heads,” Dobos says.

The inkjet technology itself is not something new; it has been used for a long time in printing houses. Epson has taken the core of this technology, the printer head, and built all the other printing elements around this so that it becomes a viable solution for offices too.

This results in several advantages for users: lower printing costs and more affordable maintenance, since the technology has become more reliable,

connected to the specific printing technology, but that’s about it,” Dobos adds.

Csaba Dobos, Epson Europe Business Account Manager. requiring significantly less maintenance than the laser devices. This is due to a less complex technology than laser printing, which requires heating units, imaging units and other elements that make printing more costly and less environmental-friendly, Dobos says.

“Larger Epson models can handle up to six million prints with no significant maintenance. Obviously, regular cleaning is required and the replacement of some smaller parts which are not

Speaking about environmental considerations, the several parts of a typical laser printer (drums, imaging units, burning unit etc.) have limited life cycles, between 20,000 and 100,000 pages, after which they need to be replaced.

During the life cycle of a printer, the waste produced by replacing these parts amounts to several tens of kilograms. That sort of amount is not produced by inkjet printers. In addition, energy consumption is also significantly lower, 20-200 watts vs. 1,000-1,500 watts in the case of inkjets and laser printers respectively.

When choosing a printer, companies weigh several other factors too, including printing speed and cost per page. There has been a long-standing perception that laser printers have better parameters than inkjets. But Dobos contradicts that.

The core of an inkjet printer, and the most expensive part, is the printer head.

The bigger the head is, the faster the printing will be, which, of course, impacts the product price too. Current inkjet models can print as many as 100 pages per minute, if required. Inkjet technology in itself is not limiting the printing speed, Dobos notes.

As for printing cost, Epson has developed a unique technology, which basically eliminates the costly ink cartridges, the EcoTank. These are separate ink tanks that users can easily fill with ink bottles. This makes refilling significantly faster and cheaper than cartridge-based printers, Dobos concludes.

3

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Special Report | 17

Height-adjustable Table Posture 45-61 cm 45-61 cm

45-61 cm

81-94 cm

63-76 cm

chair is said to offer the most comfortable position for people sitting for long periods of time. This is one of the reasons you’ve probably seen saddle chairs in your doctor or dentist’s surgery.

Sitting Safely

If you’re of the male persuasion, you might also like to know that, according to the medica-tradefair.com website, split saddle chairs with a seat for each buttock ease pressure on the male pudendal nerve, boosting fertility and sexual health.

ADVERTISEMENT

96-107 cm

63-71 cm

This is good to know because, in my experience, split saddle chairs are not the easiest of things to perch upon.

Although your choice of chair is crucial to sitting well, there are other things you can do to sit even better. The ideal position for your arms when you’re typing or using your mouse is for them to be bent at

90 degrees.

An adjustable keyboard and mouse tray attached to your desk will

enable you to sit with a healthy posture.

Poor posture can also be caused by your monitor not being in the right place. It should be just below eye level, so the first line of text is in line with your eyes. A laptop or monitor stand or arms will help you bring your screen to eye level and keep your posture correct.

Ultimately, whether you’re an employer or employee, the thing to remember is that spending hours sitting in an

unhealthy posture at work will have health implications that can impact back on productivity and the bottom line. Investing in well-made ergonomic furniture and understanding how it really works is always going to be a smart move for 2020.

David Holzer is a regular contributor to the Budapest Business Journal’s Socialite section, and one of the authors of The Healthy Office Revolution, available from Amazon.

18 | 3

Special Report

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Budapest Business Journal | January 31 – February 13, 2020

An Alternative to Windows 7 On January 14, Microsoft ended support for Windows 7, one of the most widely adopted operating systems for desktop computers and notebooks. Many home users and enterprises stuck with Windows 7 despite a very intensive proWindows 10 campaign

by Microsoft in 2015, when it launched the new operating system.

BALÁZS BARABÁS

According to web analytics companies, the market share in December 2019 was roughly 50% for Windows 10, 30% for Windows 7, and the remaining 20% split between Mac OS X, Windows 8 and Linux. There are no specific

figures for Hungary, but about one-third of world PC users must now take a decision on whether to keep using Windows 7, and face security risks, or migrate to Windows 10. Or perhaps, explore other options.

Probably not that many are familiar with the name of Mark Shuttleworth; more may be aware of his accomplishments. In the mid1990s he founded Thawte Consulting. The company, specialized in digital certificates and internet security, was later acquired by VeriSign, earning Shuttleworth a substantial amount of money. From 2004, Shuttleworth invested in developing Ubuntu Linux.

For a long time, the public perception of Linux software has been that is only something IT professionals are able to use, requiring a lot of additional coding and finetuning. While this is true for a specific part of the Linux ecosystem, there are many projects designed to bring Linux as close as possible to everyday users. Ubuntu is one of them.

So what are the pros and cons of considering Ubuntu Linux as a replacement for Windows 7.

User Interface

While not openly admitting as such, Ubuntu developers were probably aware that the only way to bring down barriers to new users is through a graphic interface similar to Windows. Looking at the latest LTS version (more about that later), the menu system and icons are very similar to the Windows interface, making the transition easy from the Windows ecosystem.

Installation

Again, pretty much the same as for any Windows version, no system administratorlevel knowledge required. The system is available for free download from the Ubuntu website in one single file, which needs to be transferred to DVD or USB drive (stepby-step instructions are available on the website). The system may be used either after full installation or using it in “live mode”, that is, without installing it, for those who wish to try it first. Also, Ubuntu can be installed alongside Windows, with the two systems available side by side, if needed.

Office Suite and Other Software

Ubuntu comes with preinstalled free software for office use. This includes mail client, web browser, ftp client, and a full office suite, all supporting Windows formats for word processor, spreadsheets, presentations, database etc., using OpenOffice or LibreOffice, depending on preference. Note that there may be some minor format compatibility issues between these suites and the Microsoft software. A broad range of additional software is available for download, but not all programs available for Windows are “translated” to Ubuntu Linux (see the cons at the end).

Using old Files

Ubuntu uses a different file system from Windows, but this does not mean that

old files previously used in Windows are not “seen” by Ubuntu. Drives, folders and files stored in different file system are accessible through Ubuntu too.

Support and Security

As with Windows, Ubuntu receives regular updates. These can be downloaded and installed automatically or manually, depending on the user preference. Ubuntu usually comes in two variants: the normal version and the LTS, or long-term support. LTS means that support for this version will be offered for a longer period than the normal version, but both can be easily updated to the latest version, as the process is fully automatic. Linux systems present a significantly lower risk of virus or malware infection than Windows.

The Cons

While a huge advantage of Ubuntu and the programs available for the platform is that they are free, only a small percentage of the software released for Windows is available for Ubuntu too. This issue must be carefully examined before opting for Ubuntu or, in case of a company, an option may be to keep one computer with Windows and the rest, with Ubuntu.

Ubuntu is a free and open-source Linux system and is, according to Wikipedia “officially released in three editions: Desktop, Server, and Core. All can run on the computer alone, or on a virtual machine. Ubuntu is a popular operating system for cloud computing, with support for OpenStack.”

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Cloud-based Solutions can cut IT Costs in Half Cloud computing combines cost and energy efficiency within the workplace, allowing a business to grow with user-friendly and easy to install IT solutions.

LG network monitors are designed to reduce cost and energy for a business: they are a breakthrough affordable and no-hassle multicomputing solution that is easy to support. New cloud systems bring convenience, enhanced connectivity and security, as well as cost efficiency to IT management.

The LG Cloud Portfolio is designed for wherever security and user interactions are crucial factors for success. From data-laden healthcare and finance to research-intensive higher education, every device is built with inherent security and simplified management to minimize potential downtime, letting professionals focus on the job at hand.

Streamlined Solutions in the Office In traditional PC-based systems, devices have their own memory and their own hardware components, while in cloud-based systems, data processing and storage is based on a central server, so, for example, when using a monitor, there is no need for a separate tower. The advantage of these connected systems is that, since the devices do not store data, any malfunction of the machine will not cause disruption to the organization’s day-to-day workflow, as all other devices will have access to all documents. Because the software background of the entire IT

system resides on the central server, various security and system updates can be managed from a single location.

Strong and Secure Computing

internally manages software updates and greatly reduces the risk of virus, spyware, and hacking as all data and memory are stored in the central data center.

“Secure data transfer is becoming extremely important in the IT industry. This is why LG expanded its highly acclaimed commercial desktop monitor portfolio to include state-ofthe-art client monitors and cloud solutions,” said Gábor Németh, IT B2B Key Account Manager of LG Hungary.

LG’s new suite of cloud monitor solutions are “With highly secure cloud computing solutions, designed with the IT professional in mind. LG’s LG’s broad portfolio of monitors are designed Zero Client display reimagines computing by to meet the evolving needs of end users in a providing a centralized network management variety of industries.” system that enables easy maintenance and streamlines operations. These units are Built for high-performance virtual computing, designed to provide uncompromised display these cloud clients are powered by Teradici quality and up to five times faster performance PCoIP, making them compatible with popular than previous models. Unlike traditional VDIs such as Amazon WorkSpaces, VMware, monitors, LG Zero Client models provide Citrix, and Microsoft Azure, without sacrificing built-in security with PC-over-IP (PCoIP), which display quality or security.

Saving Costs and Energy

The transition from traditional PC-based systems to cloud-based solutions reduces the total cost of ownership (the lifecycle cost of the system) by more than 50%. LG Thin Clients reduce operational and maintenance costs with streamlined manageability and long product lifecycles.

Office workers will never miss a single detail with LG’s displays of premium quality, as IPS panels deliver uniform and clear picture quality from any viewing angle. The dual USB 3.0, HDMI, and Thunderbolt ports offer easy connectivity in any situation. With the ergonomic stand of the 27 inch All-in-One Thin Client (model 27CN650W/N), office workers have the comfort to adjust, swivel and pivot the monitor for their comfort, and they can even host online meetings and video conferences with a built-in Full HD pop-up webcam and integrated speakers.

The 38 inch UltraWide client (38CK950N/38CK900N models) is a WQHD+ resolution, 21:9 curved screen which allows multiple data windows to be displayed on one screen at the same time in various layout settings, even from two different content sources.

With LG cloud computing systems, fewer cables and devices are required, thus the complete look of the office becomes cleaner and more transparent. The monitors are connected over the corporate LAN cable, which also acts as a power supply. These features allow for a simplistic setup. The only things required to get started on their LG Zero Client monitors are the keyboard and a mouse.

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Budapest Business Journal | January 31 – February 13, 2020

The Future of ICT Services Invitech became the first company in Hungary to offer Microsoft Teams as a unified ICT service, allowing the company’s clients to get one-stop access to the app, offering cloud-based teamworking and the infrastructure inevitable for such groups to operate.

The Budapest Business Journal discussed this and more with Zsolt Kemendi, COO for enterprise services at Invitech.

PRESENTED CONTENT

3

Special Report | 19 One of these solutions is the multicloud approach (the use of multiple cloud computing and storage services in a single heterogeneous architecture) utilized by the company during the development of cloud-based products.

Kemendi says that this approach is beneficial, as a number of clients require a combination of services rather than a single one.

While the most sought after solutions are still related to network services, the internet, and virtual private networks, as well as traditional voice services, the trends indicate an incoming change in the 2020s. That said, however, many customers are still looking for telephone services based on traditional ISDN technology.

“We have created an AI-based system which may result in a more effective and successful client management, thanks to the integration of robots. Requests arriving via email are handled automatically by this system. The AI utilizes the entirety of the Hungarian Wikipedia as a knowledge base in order to determine which human expert should receive the message.”

BENCE GAÁL

It’s been two years now since Microsoft launched M365, an integrated suite of apps and services that support the transformation of workplace collaboration, the modernization of business processes and the protection of critical information.

The system’s market-leading software package is Office 365, a central element of which is Microsoft Teams, a teamwork solution that offers chat, video conference, phone call and file storage capabilities in one integrated application.

Kemendi says that businesses with Office 365 subscription may now reconsider their strategies and opt for the implementation of a completely new technology besides their existing systems.

“Users of the teamwork software can assign tasks, communicate, and share information simply and swiftly,” Kemendi explains. “Furthermore, as a part of the service, Invitech provides a complete solution customized for the needs of the clients, including the phone numbers, the whole integration system operation, and optionally the telephone devices or the integration of other locally installed systems too.”

Microsoft Teams now has more than 20 million active daily users. The platform, available in 53 languages on 181 markets around the globe, can be used independently from geographic location. The solution has been adopted by large corporations such as Emirates,

Real Potential

“On the other hand, considering Invitech’s business areas, network Zsolt Kemendi, COO for enterprise services, Invitech. services may grow at a maximum rate between 3-6%, while voice services are already clearly declining.

The real potential, meaning received the software-maker’s FedEx, Lexmark, The Adecco Group, 30-40% per year, can be found “Cloud Service Provider Partner” KONE, and McCann Worldgroup. in cloud and security services,” certificate, earning the right to sell Long-standing Cooperation Microsoft’s cloud-based business the expert argues.

The collaboration with Microsoft Joining Invitech in 2012, Kemendi has solutions. Kemendi notes that, while is an example of Invitech’s excellent been in his current position since last relations with several big manufacturers June. Products and services delivered and businesses, with cooperation by his unit include connectivity, cloud, “Considering Invitech’s often resulting in the involvement voice, security and full-range endof these firms’ solutions into user support services. The focus is to business areas, network complex IT products. design and deliver ICT information and services may grow at a “Invitech’s corporate services business communications technology solutions has similar products and capabilities as that create value for customers and maximum rate between the largest player of the market, but we do accelerate their digital transition.

3-6%, while voice services not strive for a leading system integrator Kemendi says that the company has role, nor do we focus on application created a number of internally developed are already clearly development and related integration tasks,” solutions to achieve this focus, involving Kemendi says. “Invitech basically develops declining. The real potential, technologies such as Artificial Intelligence, the appropriate services on its own which can save a lot of time, according to meaning 30-40% per year, telecommunications, IT and data center the expert. infrastructure.”

“We have created an AI-based can be found in cloud He adds, “The company generally system which may result in a more and security services.” does not develop unique or industryeffective and successful client specific solutions, but instead management, thanks to the integration provides a customized, secure of robots. Requests arriving via IT and telecommunications cloud-based solutions are in high email are handled automatically by this background tailored to the customer’s demand among mid-sized businesses, system. The AI utilizes the entirety business needs.” larger enterprises are still careful about of the Hungarian Wikipedia as a The cooperation between using the new technology. knowledge base in order to determine Invitech and Microsoft is not new: Still, Invitech has a lot to offer when which human expert should receive the ICT solution provider has it comes to cutting-edge cloud tech. the message,” he says.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Digital Hardware Producers Ranked by total net revenue in 2018

seRveR

bRands RepResented

yeaR establisHed

www.samsung.com

tablet

samsung eleCtRoniCs magyaR ZRt.

oWneRsHip (%) HungaRian non-HungaRian

laptop

1

Company Website

pC

Rank

pRoduCed ComputeR types

659,989

–

–

✓

✓

Samsung

1989

– Samsung Electronics Corporation Ltd. (100)

Hwanseog Choi – –

1138 Budapest, Dunavirág utca 2.

(1) 453-1100 –

101,476

–

✓

✓

–

LG

1992

– LG Electronics European Holding B.V. (100)

kim Hyeong tae – –

1097 Budapest, Könyves Kálmán körút 3 A (1) 455-6060 kapcsolat@lge.com

total net Revenue in 2018 (HuF mln)

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

lg eleCtRoniCs magyaR keReskedelmi kFt. www.lg.hu 2

3

HuaWei teCHnologies HungaRy kFt.

79,859

–

–

✓

–

Huawei

2005

– Huawei Technologies Cooperatief U.A. (100)

li Jian, shi yanli – –

1138 Budapest, Népfürdő utca 22.

0680 HUAWEI –

4

Cloud netWoRk teCHnology kFt.

36,513

✓

–

–

✓

Ÿ

2017

– Foxteq Integration Inc. (100)

péter tálos – –

2900 Komárom, Bánki Donát utca 1.

(34) 886-069 komarom@emea.foxconn.com

5

ibm data stoRage systems kFt.

34,567

–

–

–

✓

IBM

1995

– IBM Ireland Product Distribution Limited (100)

János andrási, katalin turza, Zoltán Zerényi – –

2600 Vác, Deákvári fasor 16–18.

(27) 500-400 info@hu.ibm.com

6

HeWlett-paCkaRd inFoRmatikai kFt.

27,721

✓

✓

✓

✓

HP

2008

– Gatriam Holding B.V. (100)

edina tacsi, gábor gonda – –

1123 Budapest, Alkotás utca 55–61.

(1) 229-9999 info@hp.com

7

oRaCle HungaRy kFt.

21,247

–

–

–

✓

Oracle

1993

– Oracle Nederland B.V. (100)

titusz Csaba puskár – –

1095 Budapest, Lechner Ödön fasor 7.

(1) 224-1700 –

8

ibm magyaRoRsZági kFt.

16,523

–

–

–

✓

IBM

1936

– IBM Ireland Product Distribution Limited (100)

péter szalay Árpád Konc –

1117 Budapest, Neumann János utca 1.

(1) 382-5500 info@hu.ibm.com

9

FuJitsu teCHnology solutions kFt.

6,340

–

–

–

✓

Fujitsu

1999

– Fujitsu Technology Solutions (Holding) B. V. (100)

krisztina batári – –

1143 Budapest, Gizella út 51–57.

(1) 471-2111 info@fujitsu.hu

10

Dell Magyarország Műszaki megoldások kFt.

871

✓

✓

✓

✓

Dell

2007

– Dell International Holdings VIII B.V. (100)

maurice Joseph barrett, Robert linn potts – –

1062 Budapest, Váci út 1–3.

(1) 888-0550 attila_marosvari@dell.com

11

asus magyaRoRsZág kFt.

375

✓

✓

✓

✓

Asus

2007

– ASUS Europe B.V. (100)

Zoltán gyöngyösi – –

1075 Budapest, Wesselényi utca 16.

(1) 505-4561 backoffice_hu@asus.com

Ÿ

✓

✓

✓

✓

Acer

2006

– Individuals (100)

tamás József borhi – –

1023 Budapest, Árpád fejedelem útja 26–28.

(1) 336-3300 infohu@acer-euro.com

Ÿ

✓

✓

✓

✓

Lenovo

2005

– Invididuals (100)

anita lukács – –

1037 Budapest, Montevideo utca 16/A (1) 211-1402 info@lenovo.hu

Ÿ

–

✓

✓

–

Panasonic

2010

– Laurent Abadie (100)

takashi Furumoto – –

1117 Budapest, Alíz utca 4.

(1) 382-6060 reception.psee@eu.panasonic.com

Ÿ

–

–

✓

–

Sony

2010

– (100)

Fujioka yoshiyuki – –

1138 Budapest, Váci út 144-150.

(1) 777-9151 Yoshiyuki.Fujioka@sony.com

NR

www.huawei.hu

www.foxconn.com

www.ibm.com/hu

www.hp.com

www.oracle.com

www.ibm.com/hu

www.fujitsu.com

www.dell.hu

www.asus.hu

aCeR sales inteRnational s.a. magyaRoRsZági keReskedelmi képviselete www.acer.hu

NR

NR

lenovo teCHnology b.v. magyaRoRsZági Fióktelepe www.lenovo.com/hu/hu

panasoniC maRketing euRope gmbH soutH-east euRope Fióktelep www.panasonic.com

NR

sony euRope limited magyaRoRsZági Fióktelepe www.sony.hu

3

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Special Report | 21

Office Equipment Manufacturers' Branch Offices

11,478

koniCa minolta magyaRoRszág Üzleti megoldások kFt.

10,635

✓

–

✓

–

–

✓

–

3

Canon HungaRia kFt.

10,447

✓

–

✓

✓

✓

✓

4

xeRox magyaRoRszág kFt.

7,638

✓

–

✓

–

–

5

RiCoH HungaRy kFt.

3,550

–

✓

✓

–

–

2

www.hp.com/hu/hu

Ÿ

Ÿ

aCCessoRies

Home deliveRy

Consulting

Rental

paRts supply

otHeR

RepaiR

bRands CaRRied

majoR Clients in 2018

Ÿ

yeaR establisHed no. oF Full-time employees on july 1, 2019

Hp inC magyaRoRszág kFt.

1

seRviCes

sCanneRs

visual teCHnology

multiFunCtional maCHines

sHReddeRs

Fax maCHines

digital CopieRs

optiCal image CopieRs

Company Website

pRoduCts

laseR pRinteRs

total net Revenue in 2018 (HuF mln) total net Revenue in H1, 2019 (HuF mln)

Rank

Ranked by total net revenue in 2018

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive CFo maRketing diReCtoR

addRess pHone email

2014 31

– Alpha Holding Two B.V. (100)

kristóf takáts Tibor Rovó –

1117 Budapest, Alíz utca 1.

(1) 485-6580 –

– Konica Minolta Business Solutions Europe GmbH (100)

dániel székely Viktor Soós Attila Kószás

1117 Budapest, Galvani utca 4.

(1) 464-9000 ugyfel@konicaminolta.hu

–

HP

–

–

Konica Minolta, Develop, KIP

✓

✓

✓

✓

–

✓

Ÿ

1990 188

✓

✓

–

Canon, Therefore, Iris, UniFlow, Insta, Lifecake, hdbook

✓

✓

✓

✓

–

–

Ÿ

1994 127

– Canon Europa N.V. (100)

jaap van t ooster Orsolya Földi Csaba Kátai

1037 Budapest, Záhony utca 7.

(1) 237-5900 info@canon.hu

✓

–

✓

–

Xerox

✓

✓

✓

✓

✓

✓

Ÿ

1992 123

– XEROX Ltd. (100)

veronika brazdilova Emőke Vass Ádám Katona

1138 Budapest, Madarász Viktor utca 47-49.

(1) 436-8800 info@xerox.hu

✓

✓

–

–

Ricoh

✓

✓

✓

✓

✓

✓

Ÿ

1990 79

– Ricoh Europe Holdings Plc. (100)

michael Raberger Péter Eperjesi Mihály Eszes

2040 Budaörs, Puskás Tivadar út 14.

(23) 806-800 info@ricoh.hu

KYOCERA

✓

✓

✓

✓

✓

✓

TV2, Knorr Bremse, Richter Gedeon, Libri, Lufthansa Systems, Bárdi Autó

1992 23

László Juhász (90)Anikó Szabó Juhászné (10) –

lászló juhász Orsolya Jámbor Dorottya Juhász

1172 Budapest, Rétifarkas utca 16.

(1) 273-0100 global@ globalunion.hu

✓

✓

✓

✓

✓

✓

Ÿ

1991 24

Individuals (100) –

zoltán schneider – –

1089 Budapest, Delej utca 41.

(1) 477-4050 posta@kvint-r.hu

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ

1994

– Stefka Grozeva, Takashi Tomonaga (100)

toru osawa – –

1117 Budapest, Budafoki út 209.

(1) 382-7450 sales@brother.hu

Ÿ

2008

– (100)

miklós Fábián – –

1092 Budapest, Köztelek utca 6.

(1) 382-7680 info@epson.hu

– Shigeru Ogasawara (100)

miroslav tyburec – –

1016 Budapest, Aladár utca 4.building B (1) 814-8000 askoki@okihu.hu

– Sharp Electronics (Europe) GmbH (100)

lászló Horváth – József Starostiák

1138 Budapest, Váci út 191.

(1) 815-2500 info.sehu@sharp.eu

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

Ÿ Ÿ Ÿ Ÿ Ÿ Ÿ

www.konicaminolta.hu

Ÿ

www.canon.hu

www.xerox.hu

www.ricoh.hu

Ÿ

Ÿ

6

global union kFt.

1,828 1,232

✓

–

–

✓

✓

✓

–

✓

Banknote counters and testers, coin counters, enveloping and folding machines

7

kvint-R kFt.

1,140 997

✓

–

✓

✓

–

✓

–

✓

3D printers, matrix and label printers, accessories

3D Systems, HP, Lexmark, Brother, UTAX, Tally Dascom, Printronix

Brother

Epson

www.globalunion.hu

www.kvint-r.hu

bRotHeR CentRal&easteRn euRope gmbH NR magyaRoRszági keReskedelmi képviselete

Ÿ Ÿ

✓

–

–

✓

–

–

–

✓

Portable printers and scanners, labelling equipment

Ÿ Ÿ

✓

–

✓

–

–

✓

✓

✓

–

www.brother.hu

NR

epson euRope b.v. magyaRoRszági Fióktelep www.epson.hu

oki euRope ltd. magyaRoRszági NR Fióktelepe www.oki.com/hu

sHaRp eleCtRoniCs (euRope) gmbH NR magyaRoRszági Fióktelepe www.sharp.hu

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

–

–

–

–

–

–

Ÿ

Ÿ

Ÿ Ÿ

✓

–

✓

✓

–

✓

–

–

Accessories

OKI

–

✓

✓

✓

–

✓

Ÿ

1992

Ÿ Ÿ

✓

–

✓

✓

–

✓

✓

–

Interactive boards

Sharp

✓

✓

✓

✓

✓

✓

Ÿ

2008

Ÿ

Ÿ

This list was compiled from responses to questionnaires received by January 28, 2020 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14., or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu

4

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Socialite Valentine’s Day in Budapest: An Insider’s Guide My Hungarian partner and I met in Budapest, and spent our first Valentine’s Day together here. On that first freezing Valentine’s, we wandered Budapest from Heroes Square to the Danube, from morning to midnight. Beautiful blonde on my arm, I fantasized I was in a spy movie or a 1980s video for a kitchen sink ballad such as Ultravox’s “Vienna.”

DAVID HOLZER

For me, the romance of Budapest isn’t confined to monumental statues, the glittering spires of the buildings that line the Danube between Széchenyi lánchíd (Chain Bridge) and Margit híd (Margaret Bridge) or the parks in which it’s easy to imagine 19th century poets lifting away the furry earmuff of a minor princess so they could drip a sonnet in her shell-like.

Many of the buildings that line the often canyon-like streets of Districts VII and VIII also have a battered allure to them, right down to the bullet holes that pockmark their palimpsest facades. Even the apartment blocks in districts like the 10th, where you’ll find Budapest’s surreal Chinatown, are shrouded in a brutalist air of romantic mystery. I accept I may be going a bit too far here.

One of the most surprising things about the first glorious Valentine’s Day I spent with my now partner was when I discovered it had only existed in Hungary since 1989.

What was traditionally celebrated in Hungary on February 14 was Bálint Nap (which makes sense, as Bálint is Hungarian for Valentine). In Hungarian folklore, it was a good day to sit your geese and chickens on their eggs. It was about fertility and welcoming spring, more in line with the Roman Lupercalia.

Under socialism, which the Hungarians called communism, Valentine’s Day wasn’t officially celebrated at all. Still, I’d like to think there were incurable, intrepid romantics who smuggled in cards and heartshaped boxes of candies from the West.

Valentine’s Day took off after the change in regime in 1989 when, according to the Hunglish.org website, “Ági Guba, the director of the Hungarian Professional Florists Association decided to bring the tradition to Hungary as more of a commercialized effort than a holiday steeped in past traditions.”

I can only imagine that Hungarians, who – generalizing terribly, I know – have a taste for the chocolate box aspect of romance, took to Valentine’s Day like ducks to rosé.

The Big Deal

What’s interesting is that Women’s Day on March 8 is still more of a big deal in Hungary than Valentine’s Day. This is because it’s a holiday rooted in touchyfeely socialism. It began as a way of honoring female laborers in the New York garment industry who struck for better working conditions.

In Hungary, male workers present their female coworkers with flowers and chocolate on that day. The first international Women’s Day was on March 19, 1911. It shifted to March 8 in 1917 to celebrate the achievements of the brave women of Russia, who mobbed up in St. Petersburg to protest food shortages and demand the end of WWI and Czarist rule while they were about it.

Women’s Day was first observed in Hungary in 1913, partly as a bid to demand equality for women. When the socialists came to power at the end of WWII and the country fell into Russian

control, Woman’s Day became an official celebration. Given that March 8 is so close to February 14, I’m sure Women’s Day in Hungary was a bit of a Trojan Horse for undeclared romantic feelings.

I still manage to forget Women’s Day every year, much to my woman’s chagrin.

But I’m great at Valentine’s Day. Here’s how we’ll be spending Valentine’s Day in Budapest. My apologies that what follows is so couples centric. I’m not being singleist or #wetwo but, as I gushed earlier, my Budapest is for lovers.

We’ll start with a drink at the Párisi Udvar, the newly reopened and spectacularly renovated Art Nouveau shopping arcade with bars, a restaurant and hotel on Petőfi Sándor utca, just up from the Danube.

Hungarian Temple

Apparently, the Párisi Udvar is a kind of temple for Hungarians, including my partner. Having a drink and spilling it down one’s shirt while gazing at up at that extraordinary roof becomes a quasireligious experience.

I’m told by Anna Révi of Párisi Udvar that, on Valentine’s Day, the hotel will “allow guests to time travel to Budapest’s Golden Age, where classic heartwarming love stories occurred decades ago and continue to do so today. Couples are able to experience a fairytale and elevate the amorous experience with our restaurant’s ‘Sweet and Bubbly’ offer and our spa’s ‘Párisi Romance Couples Massage’.”

After this, to work up an appetite, we’ll schlep over the Lánchíd and up to the mystery-shrouded cobbled streets of the Old Town for dinner at the Pierrot restaurant on Fortuna utca. Apart from its superb menu, this is a long, low-ceilinged and artfully lit restaurant which gives it a romantic vibe. I’m also hoping that there’ll be some nice tinkly-winkly jazz of the slushy sort to provide the soundtrack. I pray to St. Bálint it’s not violins.

I’m lucky enough to be a citizen of what’s called Brodyland so, to continue the evening, we may well head over to boho-mantic Brody House at the grander end of District VIII. They’re having a “Drink & Draw” event led by the young Hungarian artist Boglárka Nagy, who’s steadily becoming internationally known.

She’ll guide guests as they draw each other and sip the “Brody Love Potion,” made of Tanqueray gin, rose, pomegranate, citruses and drops from secret tinctures.

This sounds like a Valentine’s experience with a difference. The only thing is that neither my partner nor I can draw for toffee.

For Párisi Udvar, it is probably easier just to search Google than type in its website address (https:// www.hyatt.com/en-US/hotel/ hungary/parisi-udvar-hotel/budub).

Pierrot is at www.pierrot.hu and Brody House is at www.brody.land.

4

www.bbj.hu

Budapest Business Journal | January 31 – February 13, 2020

Socialite | 23

Downstairs at the Great Market Hall, after you pass the pungent pickles stalls and the engagingly eerie sight of live (just) if resignedlooking carp and catfish crammed into tanks at the fishmongers, you come to Bor tér (Wine square), part of Hungarikum utca, which pays homage to all things uniquely Hungarian, from Magyar foodstuffs and tipples, to Ányos Jedlik’s soda syphon, and from Zsolnay porcelain to the Rubik’s Cube.

ROBERT SMYTH

Bor tér not only provides a concise summary display of Hungary’s wine regions and grape varieties (in English and Hungarian), it also has plaques on its walls that honor the 29 people to have been named Winemaker of the Year, a title awarded every year since 1991 by the Hungarian Wine Academy (Magyar Bor Akadémia).

It was here on January 22 that the plaque was unveiled for the 2019 winner, Csaba Koch, who makes his wine mainly in the lesser-known region of HajósBaja at his eponymously-named winery, although he also makes a portion of his wine in the more highly coveted and much better known Villány, where he bottles under the name of Vin Art. “Receiving the award is not only a great honor, but also a great responsibility,” said Koch, referring to the commitment to quality that the award entails, on joining an impressive list of former winners. His comments are more than mere words; the 2005 winner, Eger’s Béla Vincze, was later hit by a scandal, but has worked hard to reinstate his reputation.

A glance at the Winemaker of the Year list is a veritable “Who’s Who” of the Hungarian winemaking firmament and works its way up and down the land, and even beyond (into present day Romania in the case of 2018 winner Géza Balla from the Ménes region, near Arad) and it doesn’t just focus on the most esteemed regions.

Photos by Balázs Mohai

Koch Joins Hungaryʼs Winemaking Greats

Hungarian Winemaker of the Year 2019, Csaba Koch (holding glass).

While it is easy to be cynical regarding the selection of certain winners, a glance at the ever-lengthening list does give credit where credit’s due.

Koch is a more than worthy winner, for his ability to achieve unerring quality, from clean, correct wines that certainly do what they say on the packet and give good bang for the buck, to more complex and exciting offerings.

high and the alcohol is low. However, when I was in Champagne visiting lots of smaller producers, there were plenty who challenged that assumption and sought to make more “vinous” Champagne from later harvests.

Koch’s Vin Art Cabernet Franc 2016, shows that he can mix it with the Villány big guns: it has nice concentration and balance, as well as that characteristic tobacco leaf note of good Cab Francs.

Clean and Floral

10th Generation

Koch Frisch Irsai Olivér 2019 (HUF 1,815 from the winery’s webshop) is clean, floral (think elderflower and roses) and fruity (especially lychee) with good concentration and the kind of vibrant acidity that this extremely aromatic grape often lacks, doing a good bit more than the grape says on the packet.

This grape can promise plenty on the nose, only to give way to a short and flabby palate. It comes from a low yield per vine (much more concentrated than most Irsai) and from Koch’s best vineyards and is vinified in stainless steel.

Koch, who makes around 800,000 bottles of wine a year from 150 hectares (10 of which are in Villány), told the Budapest Business Journal that the 2019 vintage was very good indeed, with a nice combination of warmth and rain at the right time, resulting in very good aromas, as well as balanced acidity and nice concentration.

“The wines are looking good,” he said.

The high limestone content in the soil in Hajós-Baja (basically the other side of the Danube to Szekszárd, with loess in common with that region, rather than the sandy soils more typical of the other regions of the Great Plain) helps preserve the acidity, and even enables traditional method sparkling wine to be made, according to Koch.

Interestingly, the grapes for Koch 2016 Chardonnay Brut Pezsgő 2016 (HUF 4,400) were harvested at the same time as the grapes for his premium Chardonnay still wine, though the result is good.

Usually grapes in Champagne and for most traditional method sparkling wines are harvested quite early, when the acids are

Csaba Koch is the 10th generation of his family to be involved in wine growing and has been making wine for a living for 29 years. He is also experimenting with grapes that do not require spraying with pesticides.

The traditional gala dinner that will feature dishes made by various chefs around the Winemaker of the Year’s will be held on February 9 at the InterContinental Budapest.

February is also when the tasting season gets going again, with the 15th Ball of Hungarian Wines (Magyar Borok Bálja) happening on February 15, which will include 100 leading wines to go with food, along with a host of other activities.

In local wine terms, February also stands for Furmint February, with the centerpiece grand tasting event, replete with 200 wines poured by the people who made them, held at its usual grand venue of the Hungarian Agricultural Museum, on February 6.

Hungary’s flagship white grape variety has come a long way in the 11 years Furmint February has been held, and an offshoot tasting was due to be held just before we went to pint in London on January 29, following on from its debut last year – with 36 wines at this year’s tasting, open to consumers (at a cost of GBP 27), following the trader and press tasting.

Koch, who makes around 800,000 bottles of wine a year from 150 hectares (10 of which are in Villány), told the Budapest Business Journal that the 2019 vintage was very good indeed, with a nice combination of warmth and rain at the right time, resulting in very good aromas, as well as balanced acidity and nice concentration.

The London event was also due to include a masterclass celebrating 20 years of dry Furmint, by Carolyn Gilby, Master of Wine, who observed that it has recently been discovered that Furmint has a common parent to Riesling and Chardonnay in the now barely planted Gouais Blanc.

Actually, in a practice blind tasting of international wines I was recently involved in, a wine came up that some thought was a German Riesling, and I thought a Chardonnay from Chablis, France. It was, in fact, a dry Furmint from Tokaj, from the Szent Tamás winery in Mád, which nobody was expecting!