Budapest Business Journal 2806

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

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 6

MARCH 27 – APRIL 8, 2020

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SPECIAL REPORT

Manufacturing

SPECIAL REPORT

How AI is Reshaping Manufacturing It takes a lot less investment to set up an AI-driven quality control scheme than most company execs would think. The result can be a whopping hike in productivity without the need to cut jobs. 15 SPECIAL REPORT

4th Industrial Revolution Aims at Transformation As digitalization is an engine of growth that impacts all sectors, the key to economic competitiveness is businesses’ preparedness for digital transformation. The digital revolution in industrial production is expected to bring a transformation of similar magnitude to its predecessors. 18

SOCIALITE

Business Threat Number One?

Socialite Isolation: Painless Ways to Adjust to Homeworking Homeworking is now the logical and perhaps the only way for many businesses to keep going in these coronavirus-inspired times of ours. David Holzer has worked from home for more than 25 years and shares what he’s learned. 22

NEWS

Pandemic Crisis Hits all Sectors

“V”, “U” or “L”? Only time will tell which shape the current crisis will take, but one thing is for sure: upgraded forecasts of this year’s GDP growth for Hungary are a thing of the past. The question now is how well the government’s economic package will work and for how long will it need to be deployed. 3

FOCUS

BUSI

N E SS

As businesses and lawmakers find themselves operating in an unprecedented environment, with home office increasingly vital, we take a snapshot of the overall picture in Hungary in what is an incredably fast moving story.

See our reporting inside across multiple sections. 2, 3, 5, 8 -9, 22

Trends in Translation: AI is Here, but Transcreation on the Rise According to independent market research firm Common Sense Advisory (CSA), the global translation industry is set to grow to USD 56.18 billion by 2021. For an insight into the form this growth is most likely to take, we spoke to a couple of industry experts. 20

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Budapest Business Journal | March 27 – April 8, 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, Nicholas Pongratz, Robert Smyth, Zsófia Végh.

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

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KEEP CALM, STAY AT HOME, AND CARRY ON Truly, these are unchartered waters in which we find ourselves. This morning I received an email from the World Financial Association. In an unprecedented move, it called on central bank governors and heads of state to coordinate something unheard of: a two-week general shut-down of the financial markets and trading platforms.

According to the WFA, while the main economic players are asked to shut down gradually or completely, “Financial markets are continuing to run in the most ordinary manner like nothing happened, destroying trillions of values every day on no basis as they trade on virtually no knowledge, triggering panic of the public and businesses.”

The WFA goes on to say. “We cannot pretend to run the largest industry in the world as if we were in ordinary times, thus acting in complete disconnect from what is happening.” Wow. By now, only a fool could fail to recognize the gravity of the situation that faces us, and you, dear reader, are no fool. At times it can feel that the news is overwhelming.

Indeed, advice for those in isolation, whether self-imposed or in enforced quarantine, includes limiting exposure to news that can often seem to be little more than “death, disease and disaster.”

As journalists, our principal role is to report what is going on, and how it affects you. If that is our right, in a free society, we also consider it our duty to do so fairly and accurately.

One of the things we always strive for at the Budapest Business Journal is balance. In this issue, you will find plenty of reporting on the COVID-19 crisis and the government’s economic response to it. It is not by accident

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that our cover photo, in a rare step for us, reflects the topic itself, rather than being a portrait of one of our interviewees.

But among the serious reporting, you will also find some humor – Stay Home and Drink Wine – and reporting of some of the more positive things that are being done.

With a view to something called “solutions journalism”, an increasingly important buzzword in our industry, I’d like to invite you to share with us your coronavirus stories. We would like to hear how the virus is affecting your business, of course, but also what you are doing about it, and what you are doing to help your community and the wider world around us.

While we continue to print the newspaper, we appreciate that some will have limited access to the print version, and others are fearful of the possibility of COVID-19 being transmitted via paper. We wish to help, as best as we can, by sharing information as widely as possible. We have, therefore, decided to make the paper available to all, including non-subscribers, in a free downloadable PDF format for the duration of the emergency period. Look for the link on the main page of our bbj.hu website.

And talking of our website, we recognize that there is a real thirst for information right now, and so we have extended our coverage so that there are now regular updates across the weekend (at 10 a.m., noon and 5 p.m., or as near to that as timing and events will allow). We have covered occasional major breaking stories before, but this is the first time we have committed resources to regular weekend reporting. We hope you find the extended service useful and informative.

Robin Marshall Editor-in-chief

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News///macroscope

Pandemic Crisis Hits all Sectors

“V”, “U” or “L”? Only time will tell which shape the current crisis will take, but one thing is for sure: upgraded forecasts of this year’s GDP growth for Hungary are a thing of the past. The question now is how well the government’s economic package will work and for how long will it need to be deployed.

ZSÓFIA CZIFRA

Desperate times call for desperate measures; that could be the motto of these days when a pandemic sweeps across the globe, forcing people to change their lives and habits overnight, and new measures that we could not even imagine before are being introduced every day.

Economies of the world are trying to adapt to the new situation, without even knowing what the next day will bring and for how long this period of emergency will last.

While many hoped for a “V”-shaped crisis, where a sharp decline is followed by a quick upturn, now it seems that it will take longer for the global economy to recover, and Hungary is obviously no exception.

Both global and domestic recession seems to be unavoidable now; the question is how long the pandemic and its devastating effects will last.

Governments all around the world have introduced stimulus packages to keep the economy afloat and the Hungarian government has also come up with measures that it hopes will help individuals and enterprises to weather hard times.

The European Union has also done its part by announcing a coordinated response to counter the economic impact of the coronavirus. According to the plan, the EU, not applying its regular allocation system, will give money directly to the member states in order for them to fight the coronavirus epidemic and restart their economies.

Keep the Economy Afloat

On March 18, Prime Minister Viktor Orbán revealed five measures aimed at protecting Hungary’s economy and employees from the negative effects of the pandemic.

Prime Minister Viktor Orbán addresses the plenary session of the National Assembly on March 23, 2020. To the right in the background is Péter Harrach, a leader of the Christian Democrat (KDNP) faction, wearing a facemask due to the coronavirus epidemic. Rather than political debates, it is time to unite, the PM said. Photo by MTI/Tamás Kovács.

The government has imposed a moratorium on all loan repayments for individuals and companies until the end of the year.

Short-term business loans will be extended until June 30, and the interest rate on all new consumer loan interest rates will be capped at the central bank’s base rate plus 5% maximum. With the base rate currently at 0.9, that puts the maximum interest rate at 5.9%.

Sectors hit hardest by the pandemic include tourism, hospitality, entertainment, culture, sports and transportation. In order to ease the shock, the government introduced measures such as tax exemptions. Employers in these sectors will be exempt from paying payroll taxes until June 30.

Employees will also see a reduction in their required contributions, including a moratorium on pension contributions.

Health insurance premiums will be capped.

The new rules forbid the termination of rental contracts and place a moratorium on rental price increases. Tourism development contributions are suspended until June 30.

A week later, additional steps followed the first package in order to keep smalland medium-sized enterprises in business or minimize their damages.

According to the new measures, more than 81,000 sole proprietors and businesses registered to pay the Itemized Tax for Small Businesses (KATA) would be exempt from monthly tax payments until the end of June. The measure applies to trades such as hairdresser, cosmetician, plumber, gas-fitter, carpenter, sports trainer and home care provider.

Orbán also said evictions and forfeiture of property would be suspended until the end of the state of emergency. Eligibility periods for mothers who are currently on child leave will be extended until the end of the state of emergency.

Banks to get Extra Liquidity It was not only the central government; the National Bank of Hungary (MNB) also took action in order to provide the necessary liquidity for the banking sector. On Tuesday, new measures were introduced to boost liquidity, while the Monetary Council left the key rate unchanged at 0.9% at its rate setting meeting.

The MNB also decided to introduce a new fixed-rate collateralized loan instrument. Lending will be provided at a fixed interest rate by the MNB with unlimited liquidity.

“To address the challenges posed by the pandemic, it is key to ensure the required level of liquidity. In order to preserve effective monetary policy transmission, the Monetary Council is ready to take further measures to provide additional liquidity,” the rate-setting Monetary Council said in a statement.

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Shape Matters: a Lot

The central bank now expects inflation to slow to 2.6-2.8% this year, below its previous forecast. It also revised its growth forecast; now it says that the economy would slow in the first half of this year, but rebound later. In light of the announced measures, it seems that the central bank has shifted focus.

“The bank, for the time being, focuses on providing sufficient liquidity for the banking system and the markets, and has not yet decided on bond buying in the secondary market,” CIB analysts reacted to the announcement.

The central bank has already boosted short-term market liquidity via its FX swaps and broadened the range of permissible collateral with corporate loans, helping the country’s banks, in a separate move last week.

According to MNB Deputy Governor Márton Nagy, Hungary’s base interest rate is still the lowest in the Central European region, and monetary policy continues to be the most accommodative. He said GDP growth could slow to 2-3% this year as a result of the coronavirus pandemic and its economic fallout. In an optimistic scenario, however, the economy would bounce back relatively soon.

“The base scenario is a ‘V’-shaped recovery, for which we need to do a lot (to make it happen) [….] and it is surrounded by very big uncertainty,” Nagy told an online news conference.

He said if the crisis lasts until the end of the summer, or until the fall, then this year’s GDP growth could be much lower and in that case a “U”-shaped recovery could become more likely.

The deputy governor also said that the goal now was to preserve the potential GDP growth over the long-term. He emphasized that the fallout from the coronavirus crisis could hit all sectors of the economy.

Numbers to Watch in the Coming Weeks The KSH publishes the February data of the Hungarian industry on April 7, and will also release figures on Hungary’s accommodation establishments; both industry and the tourism sectors are badly hit by the pandemic. More relevant data is the consumer price index for March, to be published on April 8.

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

Head at KCG Partners’ Tax Practice Announced Senior tax advisor Bálint Zsoldos has been appointed the head of tax practice at KCG Partners Law Firm. Zsoldos has gained extensive experience in taxation in the last 10 years both in the government and private sectors.

“Bálint has sound tax knowledge and a strong client-focused approach.

Expanding our tax team with a designated head with his unique expertise is a major step in the process of further strengthening our tax practice. It enables us to keep contributing to our clients’ success by a dedicated tax advisory service offering our clients real added value,” said Eszter Kamocsay-Berta, managing partner of KCG Partners. “We are delighted to welcome Bálint on board.”

Zsoldos graduated from ELTE Law School and started his career at the National Tax and Customs Administration (NAV) as a tax lawyer.

Subsequently, he joined international Big Four firms KPMG and EY, advising local and multinational clients on tax treatment, tax planning and tax compliance on local and cross-border transactions.

In his most recent role as asset manager at Portico Investments Ltd, Végh was responsible for the management of the retail portfolio of the company’s 40 property units.

“The corporate group’s outstanding growth and future development potential hold exciting and complex tasks for me, so I look forward to working together,” said Szarka.

“I aim to further enhance the efficient and successful operation of the group’s financial processes and organization.

The supportive background provided by DVM group is important to me, providing knowledge, spirit, and a team, all essential for development and results.”

Tamás Sellyey, operational and sales director at DVM group says, “We are very pleased to welcome István in his new, complex role. I am convinced that the ongoing transformation, organizational development and mid-corporate ambitions of our group of companies require highly qualified and highly experienced senior executives not only in the construction but also in the support area.”

Deloitte Hungary Appoints Tech Advisory Partner Tamás Végh “I am glad that we have such a talented and experienced professional as Tamás in our team,” said Csaba Zeley, ConvergenCE’s head of asset management.

“From the very first moment, there was no question that his skills are the perfect match for this position. Tamás has been working in the property business for 15 years and with his competence, he will be able to contribute to our future achievements as a company.”

Big Four firm Deloitte Hungary has announced the appointment of Dániel Kiss as partner of its technology advisory branch, effective February 3.

DVM Group Names CFO

Bálint Zsoldos His main field of practice is indirect taxes and tax procedures. He also successfully liaises with the tax authority and regularly supports clients during tax audits.

DVM group announced the appointment of István Szarka as chief financial officer, responsible for handling and controlling finances, as well as keeping in touch with relevant service providers and partners.

The new CFO will take part in the coordination of capital-raising processes needed to ensure the future growth of the group as well.

Szarka began his career as an auditor, before gathering experience at Big Four firm Deloitte as tax manager, assisting the activities of multinational and domestic corporate groups for six years.

Senior Project Manager at ConvergenCE ConvergenCE has announced the appointment of Tamás Végh as senior project manager. In his new position, he will be responsible for the refurbishment of the CBC Office building.

Végh started his career at Lakásépítő Invest in 2004, before becoming facility manager at bauMax Ltd in 2006. There he was tasked with the organization of various services and the operation of bauMax Hungary’s 14 stores and a logistic park of 65,000 sqm area (including “A” category office buildings) near Ferenc Liszt International Airport.

Three years later he received a new assignment from Hochtief FMH Ltd. as a facility manager.

In 2011, Végh joined Cushman & Wakefield – DTZ Hungary Ltd. as a senior property manager. In this position, he managed a logistics and industrial property portfolio of 150,000 sqm across Hungary.

István Szarka He joined E.ON as head of finance, treasury, and tax in 2006. Three years later, he became tax director and head of the Center of Tax Competence Hungary.

He held that position until, when he joined Tesco, acting as country tax manager.

Dániel Kiss Kiss is an expert in CIO advisory, IT and digital transformation, as well as system integration. He also has experience as an IT and project management trainer.

He arrived at Deloitte with his team of 13 experts, raising the headcount of the firm’s tech advisory branch to almost 120. Before coming to the company, Kiss spent two decades at successful international companies in the field of software development, telecommunications, and advisory.

“Technology is no longer a luxury item; it is often available via a single click,” says Kiss. “Users expect a convenient and fast service. The automated operation of service providers’ processes, integrated at the level of transaction systems, is now a basic requirement of their clients and a prerequisite for their competitiveness in the market,” he adds.

“Deloitte has been working systematically for years to become a leading technology consultant in Hungary. With the current expansion of the technology advisory business, we have significant telecom and insurance expertise alongside the considerable banking and energy knowledge,” Kiss added.

Csaba Komjáthy, leading partner at Deloitte Hungary’s technology advisory

branch, says, “The core of Deloitte’s strategy is to provide end-to-end solutions to complex customer issues by unifying the competencies of various technological, industrial and other consulting areas. The expansion of the branch contributes to these endeavors by adding new professional fields and industry focuses to Deloitte’s service portfolio.”

Henkel Hungary Introduces Head of Beauty Care Henkel Hungary announced the appointment of Zsuzsanna Szak as head of its beauty care division, effective February 1. The expert has returned to Hungary after eight years of working abroad. She takes over the position from Ottó Németh who held it from 2016 to 2020.

“It is a great honor for me to be appointed and trusted by the management of Henkel CEE,” says Szak.

“I find the new position an exciting challenge, as I would like to leverage my international experience at home, having worked on regional and global projects for the past eight years in the fields of marketing, innovation, and strategy. I am fortunate enough to be able to implement the new plans with a great team of professionals working together, contributing to the further success of our popular brands, which is outstanding even in international comparison.”

Szak graduated in economics from the Budapest Business School prior to earning a master’s degree in international marketing. She started her career in Hungary at Friesland, then worked for Egyesült Vegyiművek and Colgate-Palmolive.

Afterwards, she went on to pursue a career abroad, working in Warsaw, Rome and then in Basel, where she worked on regional assignments and global innovation projects. In 2018, she joined the Henkel CEE team in Vienna, where she was responsible for 21 countries as marketing manager of hair care and styling.

Zsuzsanna Szak Prior to her latest appointment, she worked with Henkel’s regional team on a number of innovation and communication strategies that will be implemented in Hungary in 2020. In addition to her position as head of the division, Szak is also responsible for marketing management in the beauty care retail area.

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Coronavirus ///roundup Hungarian Startup Offers Help to EU Governments Given the critical situation due to COVID-19 pandemic, BondWeaver, a Luxembourgbased Hungarian startup that provides networkbased, data-driven analytics and predictive modeling services, has decided to offer its software free of charge to the governments of the Grand Duchy of Luxembourg and Hungary, as well as EU institutions. BondWeaver says its goal is not only to help government agencies and the network of health institutions, but also SMEs and the corporate sector. “The identification of key players and their potential deputies is crucial for government bodies and crisis management agencies,” says Caspar Kocsis, managing director of BondWeaver. “BondWeaver’s software solution can map the communication channels used by the stakeholders, identify the most effective ones and make recommendations to

Construction of BMW’s Debrecen Plant to Continue

Numerous Restaurants Join NetPincér

Caspar Kocsis

minimize the frequency of faceto-face meetings,” Kocsis adds.

The use of artificial intelligence and network science holds the promise of becoming a possible solution against COVIDrelated anxiety, helping public organizations and private companies focus more on efficient and professional work, BondWeaver says.

However, due to the successful management of previous years and the crisis management measures taken in recent days, the company is in a stable position and can survive a crisis that lasts for months. “Budapest Airport is addressing the current situation and is confident that a positive turnaround will occur soon after the epidemic has subsided,” hvg. hu quotes BUD as saying.

BMW has announced that the construction of its EUR 1 billion factory in Debrecen (225 km east of Budapest) will not stop and recruitment will continue, writes Népszava. In recent days Hungarian car manufacturers have announced factory shutdowns, including Audi in Győr (120 km west of Budapest), GreenGo Offering Suzuki in Esztergom (50 km Fleet to Assist Elderly northwest) and Mercedes-Benz at In the wake of the COVID-19 Kecskemét (90 km southeast). At coronavirus pandemic, GreenGo has the same time, it is worth recalling offered part of its electric car sharing that it was during the 2008-2009 global economic crisis that Mercedes’ fleet to the Metropolitan Police Department to help it organize care investment in Kecskemét was for the elderly, says portfolio.hu. In announced, and questions were addition, anyone who wants to travel raised then as to whether the new to Budapest in an emergency situation plant would be built. BMW has can sign up for free at GreenGo and clearly responded by saying that it is will get a 30% discount on their fare. planning for the long-term and that “In the current situation, we want the plant will be built and will not to help the people of Budapest to be affected by any temporary crisis manage their urgent matters safely, situation, Népszava adds. which is why we decided to cancel Airport Stable Enough the registration fee indefinitely,” said Bálint Michaletzky, CEO of GreenGo.

to Survive Crisis

As a result of governmental measures and border closures implemented worldwide, including in Hungary, Budapest Airport (BUD), the operator of Ferenc Liszt International Airport expects to suspend most passenger flights in the coming days, and passenger traffic is expected to remain very low or close to zero in the coming weeks or months, says hvg.hu.

a greater interest in freezers, kitchen appliances and steam disinfectants, which products have experienced sales multiple times their monthly average.

According to Media Markt, its goal is to “provide a wide range of products in stores, as well as in the webstore, in sufficient quantities” and to “monitor the changes in customer needs on a daily basis, in constant contact with its suppliers and partners.”

Media Markt Sees Boom in Electronic Goods Media Markt has seen increased traffic for laptops, desktops and monitors, printers, tablets and webcams in recent days, according to hvg.hu. At the same time, not only has the demand for products related to work and study at home increased, but there has also been

The number of restaurants joining NetPincér has risen dramatically in the past week, writes penzcentrum.hu.

Because of the coronavirus, restaurants have to adapt to reduced opening hours and a declining number of visitors, so home delivery could well become key to their survival. The most intense connection wave occurred among Budapest restaurants; fourfifths of the nearly 500 restaurants have joined the delivery service. But in recent days, the number of inquiries in big cities in the country has also increased significantly. NetPincér says it is responding to the changed situation through, among other things, continuous courier partner recruitment, developing contactless delivery protocols, and courier cash support, pencentrum.hu adds.

Varga: Banking System Prepared for Emergency The Hungarian banking system is prepared for the state of emergency and related special measures, said Minister of Finance Mihály Varga in Budapest after a meeting with representatives of the Banking Association on March 19, according to state news agency MTI. Varga said that the loan moratorium announced on March 18 would come into effect automatically, debtors would need to notify financial institutions if they wanted to continue repayment without interruption. The maturity of loans is being extended with the break in installments, so debtors do not have to worry about an increase in installments if the maturity was fixed. The minister also said that the government will remain in daily contact with the banking association and will agree with it the rules contained in the government decree and the related resolutions.

Wellness Weekends for Medical Volunteers With a value of nearly HUF 10 million, 111 Club wellness weekends are being offered by the Royal Club Hotel in Visegrád (40 km northwest of Budapest) to dedicated medical students helping to fight the new coronavirus, says novekedes.hu. The first 111 volunteers will be contacted in the next few days to gain positive reinforcement and spiritual strength as they work. Miklós Belán, general manager of the Royal Club Hotel, is encouraging other hotel managers to support volunteers joining emergency care schemes, novekedes.hu adds.

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30 YEARS OF FREEDOM: THE OPPOSITION ROUNDTABLE

Budapest, June 21, 1989 The Opposition Round Table in Parliament. To the right are representatives of the ruling Hungarian Socialist Workers’ Party (MSZMP), representatives of the Democratic opposition and observers in a semicircle. MTI Photo: Lajos Soós.

Laying the Groundwork for Democratic Hungary Led by different opposition and reform groups, the Opposition Round Table (Ellenzéki Kerekasztal or EKA) was set up with the aim of ensuring a peaceful transition from the socialist regime in Hungary to democracy. Though its main goal, the change of the regime was fulfilled, many critical questions, including those around the economy and the market, arguably remain unsettled.

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Talks started in the spring of 1989, as a follow-up to a demonstration that took place on March 15 that same year, where the opposition presented the conditions they wanted for the change to happen. The list of 12 points was mutually devised by various opposition representatives and read out by actor György Cserhalmi at the demonstration.

The wish list included multi-party parliamentary democracy; the rule of law, human rights and political freedoms; fair burden-sharing and the abolition of privileges; a functioning market economy with equity; cutting down on bureaucracy and violence; the restoration of the country’s sovereignty, neutrality and the withdrawal of Soviet troops.

A strategy on transition was also presented at Kossuth tér, which basically called for a strong and united opposition to serve as “an inevitable rival and negotiating partner of the governing party, the Hungarian Socialist Workers’ Party [MSZMP]”, said János Kis, representative of the Alliance of Free Democrats (SZDSZ). A few days later, SZDSZ passed a call for a roundtable of independent organizations, but withdrew it when a similar initiative was proposed by the Independent Lawyers’ Forum.

The Opposition Roundtable was formed on March 22, 1989, by the organizations invited by the Independent Lawyers’ Forum at the Law Department of Eötvös Loránd University, in the library of the Department of Criminal Law. There were eight founding organizations: the Hungarian Democratic Forum (MDF),

the Alliance of Free Democrats (SZDSZ), FIDESZ (the Fiatal Demokraták Szövetsége– Magyar Polgári Szövetség or Federation of Young Democrats–Hungarian Civic Alliance), the Independent Smallholders’ Party (FKGP), the Hungarian People’s Party (MNP), the Hungarian Social Democratic Party (MSZDP), the Endre Bajcsy-Zsilinszky Friendship Society (BSZBT) and the Independent Society.

A ninth, the Christian Democratic People’s Party (KDNP) joined later.

White House

Despite several attempts by the MSZMP to fragment the opposition, and differences among the EKA itself, on June 10, an agreement between MSZMP and EKA was signed in the “White House”, the communist party’s

headquarters. The two parties agreed to start a trialogue on the reform of the constitutional system, involving the State Party, the Round Table and social organizations and movements (also known as the Third Side). The parties stated that power was based on the people’s sovereignty and that no political power could acquire that sovereignty.

“Our aim is to not share power with its current owners, but that the citizens decide who they place their trust in for four years between elections,” Imre Kónya, head of the EKA delegation said when sharing the organization’s declaration of intent with the representatives of the regime.

“We must agree on the conditions of the amicable transition into democracy. [...]

The will of the people must be manifested at an open election,” he added.

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Erzsébet Szalai is a sociologist and expert of the system change. “The Kádárregime was an authoritarian system, not a dictatorship, which had been disintegrating from the beginning of the ’80s,” she tells the Budapest Business Journal. “The fact is that different social counter-elite groups were created during the death of the Kádár-system,” she adds.

Among them were the late-Kádárian technocrats, who worked within the state bureaucracy and were advancing in rank with the years, including Miklós Németh, who served as Prime Minister of Hungary from November 24, 1988 to May 23, 1990 (the last man to hold the post before the system change), Lajos Bokros (Minister of Finance between 1995–1996 in the government of Gyula Horn) and György Surányi (president of the Hungarian National Bank between 1992-1992).

Another group was the democratic opposition, which set itself outside the system and had the major role in creating political democracy, as opposed to the technocrats who prioritized the market, Szalai explains. They emerged from politically marginalized intellectuals of the “great” generation, that is, from those excluded from the institutions of power.

When this group began to take shape, it adopted a fundamentally left-liberal set of values, the expert wrote in a study in 1999.

A third group, the new reformist intellectuals, hovered between the other two. Their views were very close to those of the democratic opposition but, unlike them, the new reformists had been able to keep their jobs (while democratic opposition members were dismissed).

Social Elite

This was the social elite, and EKA was basically a forum to discuss matters and negotiate the rules that would later govern politics. Talks were nominally about both politics and economics, but the majority of the work covered the former, where the legal and political details of the transition were discussed. Not much was done concerning the economic path as, by the time dedicated

talks took place, the late-Kádárian technocrats had risen to political power and their views held sway, Szalai says.

In Szalai’s opinion, it was a mistaken notion in the process of the regime change to completely discard economic and social policy, and to adopt a doctrine of “the less state, the better.”

The starting point for discussions for EKA was that only cornerstones of the peaceful and democratic transition (e.g. electoral law, constitutional court amendment, party law, etc.) should be negotiated, while the ruling party recommended discussing all important political, economic and social issues.

EKA’s reasoning for sidestepping some of the more detailed debate was that the existing Parliament was not legitimate and therefore should not be entrusted with fundamental issues not directly related to the transition, writes political scientist András Bozóki, in an article in literary journal Beszélő.

As for the economy, EKA said it did not have sufficient information to be competent in the talks, nor did it want to give ideas to a regime already burdened with problems, as MSZMP would use the talks to share responsibility for the economic crisis between itself and the opposition, Bozóki writes.

So, the forum that was, in theory, created for these elite groups to consult about the country’s future failed to hold discussions on economic questions, Szalai says.

“The overriding view was that the market would take care of all the problems, which was a huge mistake,” the expert claims.

Neo-liberalism, which basically says that state ownership should be minimized, everything should be privatized and the market should be given freedom, was a mainstream view at the time.

“The liberals forming the social elite were invited to international conferences and had embraced these views,” Szalai explains.

“The liberals favored private ownership whereas the Third Side I also represented was thinking of mixed ownership: state, self-management and private ownership,”

Szalai says. She adds that this group soon found itself a minority as the incumbents and the opposition reached agreement. Part of the reason why the talks in the economic section dissolved fairly soon was this; that there was nothing to discuss, Szalai notes.

“Our aim is to not share power with its current owners, but that the citizens decide who they place their trust in for four years between elections.

We must agree on the conditions of the amicable transition into democracy. [...] The will of the people must be manifested at an open election.”

The discussion concerning politics was more interesting and intense, not least because there were many differences within EKA regarding on basic questions.

The debates, which began in June, revolved around the amendment of the constitution (including the position of President of the Republic and the Constitutional Court), party law and party financing, electoral rights, principles for amending criminal law, publicity, information policy and guarantees of nonviolence in transition.

Disagreements and Dissolution

There were serious disagreements, and the talks broke up several times, but over time the MSZMP became more inclined to give some concessions. Still,

News | 7

there was heated debate, for example, about elections, the nomination process and the introduction of the quota system, constituencies and lists, and the institution and election of the president.

During the summer of 1989, the MSZMP, led by the Reform Party, negotiated a peaceful transition program to call for multi-party free elections with the Opposition Roundtable.

By September 1989, the relations between the parties in the Opposition Round Table had become increasingly tense, writes Bozóki. Since the organization could only take a decision if all its members agreed, a potential split became more realistic than ever.

Five parties (the Bajcsy-Zsilinszky Friendship Society, Independent Smallholders, Christian Democrats, Democratic Forum and People’s Party) believed that the results achieved during the talks until that point should not be risked and that they needed the sign an agreement with Socialist Workers’ Party, which included several trade-offs.

Four other members (FIDESZ, the Social Democrats, Free Democrats and the Trade Unions League), however, thought that that a democratic state under the rule of law could not be created if the Workers Militia continued to exist; if the election of the President of the Republic were to proceed the parliamentary elections; if MSZMP did not provide an inventory of their assets and leave office and they did not want to enter into bargaining.

By September 18, the day set for the signing of the agreement, only two parties still refused to sign the agreement (FIDESZ and the Free Democrats). That day, the real story of EKA ended, Bozóki writes. Formally, the organization remained together until the free elections in 1990, but its role in the democratic transition ended. Those questions that remained unresolved on September 18, including the election of the president, were decided on a referendum on November 26.

Budapest, June 21, 1989 Representatives of the Opposition Roundtable: István Prepeliczay (Independent Smallholders’ Party, 3rd left), Lajos Für (4th left), György Szabad (5th left), László Sólyom (Hungarian Democratic Forum, 6th left), Iván Pető (6th right), Imre Mécs (Alliance of Free Democrats, 5th right), Tibor Füzessy (Christian Democratic People’s Party, 4th right), János Márton (Hungarian People’s Party, 3rd right), Dr. Imre Boros (Independent Smallholders’ Party, 2nd right, standing) and Sándor Keresztes (Christian Democratic People’s Party, 1st right) at the second round of political conciliation talks of the National Roundtable in the Hunter’s Hall of Parliament. MTI Photo: László Varga

2

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Budapest Business Journal | March 27 – April 8, 2020

Business

Unprecedented Times, Remarkable Actions

On March 23, Prime Minister Viktor Orbán announced further measures to ease the economic impact of efforts to contain the coronavirus, as outlined on page three (see “Pandemic Crisis Hits all Sectors”).

BBJ STAFF

That built on initial measures announced

by Hungary’s government on March 18. Among these were moratoriums on payment of principal, interest and fees on all corporate and retail loans until the end of the year.

In response, József Vida, president and CEO of the Savings Bank called for legislation to ensure that tax deadlines are extended to help the public and businesses, in an interview with novekedes.hu. Vida said massive fiscal and monetary interventions were needed to avoid further layoffs and corporate bankruptcies.

At the same time, the moratorium on loan repayments and other measures would place a heavy burden on financial institutions, he noted.

Vida therefore emphasized that the regulatory burden on the banking system also needs to be reduced in order to have the energy and financial resources needed to restart businesses in the future.

Savings Bank was not the only lender in the news, however. CIB Bank announced it has

provided

HUF 20 million

in immediate support for the purchase of medical equipment, including intensive beds, and disinfectants at Szent László Kórház, the dedicated COVID-19 isolation and specialist treatment hospital in Budapest, writes origo.hu.

The Italian-owned bank said it supports all government actions that help the Hungarian population and companies to overcome the difficulties caused by the coronavirus epidemic, and emphasized that it is following and acting in full compliance with legal requirements and will continue to do so in relation to the measures announced this week, pending further government decrees, origo.hu adds.

There was further good news for the healthcare sector when a consignment of medical supplies arrived from China. Prime Minister Viktor Orbán announced on his

Facebook page on March 24 that 70 tonnes of medical equipment had been shipped to Hungary, including more than three million masks, 100,000 articles of protective clothing, 100,000 pairs of gloves, 100,000 COVID-19 tests, and 86 ventilators.

Close Cooperation

The equipment was procured for the Semmelweis University by the Ministry of Innovation and Technology and their rapid delivery made possible by close cooperation between Hungarian and Chinese organizations, authorities and companies, state news wire MTI reported.

Speaking in Parliament the day before (March 23), the prime minister had said that Hungary has ordered “huge batches” of protective gear “from the East”, with more than 10 planes expected to deliver medical supplies, MTI noted.

The challenging situation of medical personnel being unable to leave their workplace could be solved by the “Pihentesd a dokit!” (“Rest a doctor!”) initiative, MTI reported separately.

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1st District

Szent László Kórház in Budapest has become ground zero for Hungary’s efforts to isolate and treat the COVID-19 coronavirus as the capital’s dedicated quarantine hospital. It is set to benefit from HUF 20 million in support from CIB Bank. Photo by Robin Marshall/BBJ Centered for now in Budapest, but with a plan to expand into the countryside as well, the charity is focusing on providing healthcare workers who cannot go home for fear of being the transmitter of the coronavirus with an apartment close to their workplace so they can get some rest.

According to Mónika Berke, the person behind the idea, nearly

20

medical workers

had already found an apartment just a couple of days after launch. The process of the sharing is very simple: after a brief inspection, the owner of the apartment is linked to the applicant, entering into free-of-charge contract. Any help and donations are welcomed by email: pihentesdadokit@gmail.com.

Banking Hours

Beyond its generous donation to Szent László Kórház, CIB Bank announced that all its branches will operate reduced opening hours, typically closing at 1 p.m.

Others are taking a similar approach, reports azenpenzem.hu. Budapest Bank informed its clients on its website that it will permanently close two small branches as of

April

30,

and temporarily close another five.

K&H Bank will only receive customers in person if they arrive with an appointment that can be requested by phone or on the bank’s website.

Several branches of Erste Bank are temporarily closed, and UniCredit has reduced its opening hours uniformly, so its branches are currently open from 9 a.m. to 3 p.m., azenpenzem.hu adds.

Doing Their Bit

Several companies have been doing their bit to help others. Regional real

estate developer Futureal Group, and its member firm Cordia, a residential real estate developer in Hungary, announced they will donate HUF 250 million to help fight the coronavirus epidemic, for an as yet to be decided cause, according to a press release sent to the Budapest Business Journal.

“In the current situation, we believe that it is our duty to support the fight against the epidemic.”

“In the current situation, we believe that it is our duty to support the fight against the epidemic,” said a representative of the companies, which are owned by the Futó family.

MOL Limo car sharing service, meanwhile, has said it is offering a

HUFdiscount 20,000

to healthcare workers, along with five cars with a driver to the capital city to facilitate social welfare work, says portfolio.hu. MOL Limo had announced last week that it will offer a 30% discount to all users.

In addition, the company is waiving the registration fee and will reimburse the monthly user fee with a HUF 1,000 coupon. For personal hygiene, every MOL Limo vehicle has also been equipped with hand sanitizer and an antibacterial handkerchief dispenser, portfolio.hu adds.

With reporting by Bence Gaál, Robin Marshall, Nick Pongratz and Ekaterina Sidorina.

2nD District

Business | 9

2nD District

288 sqm – 5 rooms, Corvin square

52 sqm – 2 rooms, FelvinCi street

55 sqm – 2 rooms, HársHegyi street

At the bottom of the Castle Hill, in one of the historical areas of Budapest, this baroque style villa house built in the 18th century has 380 sqm of lot and many make over possibilities.

Near Széll Kálmán Square, in a very quiet street, this sunny apartment benefits of a balcony and is situated within a condominium in very good condition with well-kept common garden.

This renovated, high floor apartment has beautiful panorama over the János Hill and is situated within a condominium with 2 elevators and reception service. Parking space in the courtyard.

390.000.000 HuF

49.300.000 HuF

53.500.000 HuF

+36.1.336.1706

2nD District

+36.1.336.1706

2nD District

+36.70.376.4138

2nD District

92 sqm – 4 rooms, tölgyFa street

130 sqm – 4 rooms, Csévi street

279 sqm – 5 rooms, nyék

Near Margaret Island, this very bright apartment in good condition has private gas heating and it is situated within a small condominium, in a very good location.

In a very quiet area, this two-storey, insulated semi-detached house has 61 sqm of expansion opportunity and 590 sqm of lot. Parking space in the garden.

This four-storey detached house in good condition has 1050 sqm of lot, 2 big terraces and 2 garages. It is located in a green and quiet area.

56.900.000 HuF

99.000.000 HuF

+36.1.336.1706

3rD District

+36.70.376.4138

3rD District

209.000.000 HuF

+36.70.376.4138

3rD District

200 sqm - 5 rooms, aranyHegy

162 sqm - 4 rooms, testvérHegy

283 sqm – 6 rooms, táBorHegy

This completely renovated, two-storey, mediterranean style detached house has panoramic view, 40 sqm of terrace, well-kept garden, 2 garages and 1447 sqm of lot.

This three-storey detached house benefits of separate rooms, 3 bathrooms, sauna, 25 sqm of terrace, 715 sqm of beautiful, well-kept garden, 2 garages and 20 sqm of guest house.

Close to the EuroCenter shopping mall, this two-storey detached house in good condition has nice panorama over the city, two terraces, 685 sqm of garden and a two-car garage.

115.000.000 HuF

119.000.000 HuF

173.900.000 HuF

+36.70.669.5350

5th District

+36.70.328.8501

+36.70.328.8501

5th District

5th District

183 sqm – 4 rooms, BajCsy-zsilinszky str.

140 sqm – 4 rooms, Balaton street

170 sqm – 3 rooms, st. istván CirCuit

This very bright, street facing corner apartment benefits of two bathrooms, two entrances and parking possibility in the courtyard.

Next to the Ministry of Defence, this completely renovated, very bright, street facing, high floor, luxury apartment has 2 bathrooms and a 14 sqm of balcony with a view over the Danube.

This completely renovated, very bright, street facing, luxury smart home has 2 bathrooms and balcony. There is a 100 sqm apartment for sale next to it, the 2 apartments can be united.

380.000 eur

174.900.000 HuF

219.900.000 HuF

+36.70.414.7759

6th District

+36.70.414.7759

7th District

+36.70.414.7759

7th District

76 sqm – 3 rooms, székely Bertalan str.

150 sqm – 4 rooms, damjaniCH street

172 sqm – 5 rooms, jósika street

Near Andrássy Boulevard, this spacious, very bright, street facing apartment has private gas heating and balcony. It is situated within a condominium with elevator.

Close to the City Park, in a nice period building with elevator, this very spacious, street facing apartment in good condition benefits of 4 separate rooms, 2 bathrooms and balcony.

In a beautiful, secession style period building with elevator, this completely renovated, unique apartment benefits of 5 spacious rooms, 3 bathrooms and 2 balconies.

52.500.000 HuF

105.000.000 HuF

158.000.000 HuF

+36.1.351.0446

+36.1.351.0446

+36.1.351.0446

Stop Press: British Diplomat Dies As this issue was going to print, we learned of the death of Steven Dick, the Deputy Head of Mission of the British Embassy in Budapest. The 10th victim of COVID-19 in Hungary, he was 37, and only took up post at the end of 2019. He had worked for some years in Kabul and Riyadh; it is not known if he had any underlying medical conditions.

U.K. Foreign Secretary Dominic Raab was quoted by the BBC as saying: “I am desperately saddened by the news of Steven’s death and my heart goes out to his parents Steven and Carol. Steven was a dedicated diplomat and represented his country with great skill and passion. He will be missed by all those who knew him and worked with him.”

13th District

13th District

13th District

36 sqm – 1 room, Hegedűs gyula street

80 sqm – 2 rooms, Felka street

104 sqm – 4 rooms, katona józseF street

This very sunny, south-facing, high floor apartment is situated within a condominium with elevator, in the heart of the district. It can be converted to a 2 room property as well.

In the heart of the district, this well divided, street facing apartment has 2 big and bright rooms. Medium condition. Excellent investment opportunity.

In a quiet street, this renovated apartment has spacious rooms, private gas heating and a nice balcony. It is situated within a nice period building.

30.900.000 HuF

57.900.000 HuF

73.900.000 HuF

+36.70.414.7759

+36.70.414.7759

+36.70.414.7759

gruppo t.F.m. kFt. 1068 Budapest, király u. 102. each agency independently owned and operated. • these offers are valid, till the apartments are sold. • these information do not constitute a contractual element.

2020_03_tecnocasa_bbj.indd 1

3/24/20 1:52 PM

10 | 2

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Budapest Business Journal | March 27 – April 8, 2020

PRESENTED CONTENT

Kodály Phili Aiming to be Debrecen’s Most Important Cultural Pillar The Budapest Business Journal speaks with Budapest-born but Debrecen-based music director Dániel Somogyi-Tóth about the cultural plans of the city, competition with Budapest and, of course, about the impact of the COVID-19 coronavirus pandemic.

ROBIN MARSHALL

BBJ: How long have you been involved with the Kodály Filharmonikusok (Kodály Philharmonic) Debrecen and the Kodály Kórus?

Dániel Somogyi-Tóth: I have been the managing and music director of the Kodály Philharmonic Debrecen as well as the music director of the Csokonai Theater Debrecen since 2011. I have diverse tasks both in the fields of music and management in my capacity as General Music Director of the city of Debrecen.

Ukrainian and Romanian borders are within 100 km. These efforts are in line with the intention of the government, which wishes to counterbalance the Budapestdominance of Hungary. It has been a question for a long time which city is going to have the leading role in the region’s economy: Kosice (Slovakia), Debrecen or Oradea (Romania).

most important cultural pillar of this large-scale development. Due to the international language of music and the cultural demands of expats, the orchestra is becoming a bit of an economic factor and we shall make every effort to make the best of this situation. We also wish to offer the leading musicians of Hungary an attractive alternative for a quieter life in the country, but with great musical potential. And, of course, hopefully, a new concert hall.

“Due to the international language of music and the cultural demands of expats, the orchestra is becoming a bit of an economic factor and we shall make every effort to make the best of this situation.”

Dániel Somogyi-Tóth

BBJ: What is your background?

Are you originally from Debrecen?

Where did you train?

DS-T: No, I was born in Budapest, but my mother’s family comes from a village near Debrecen. I graduated as organist and conductor from the Budapest Franz Liszt Academy of Music in 2006. Before that, I studied composition and piano at the Budapest Bartók Conservatoire.

BBJ: What are the advantages/ disadvantages of being based in a provincial city rather than the capital?

DS-T: In Budapest with 2 million inhabitants, there are 10 professional symphony orchestras, while there is one orchestra each in six further cities. This means that there is an orchestra for every 200,000 inhabitants in Budapest, while in the country, there is only one per 1.3 million inhabitants. Looking around, we can see that there are few cities of two million inhabitants in the world that have 10 professional orchestras. The rich musical tapestry of Budapest is certainly a rare global phenomenon, but, at the same time, the average salary of the provincial musician is the 30% of their Budapest peers. This unbalanced situation makes our competition quite difficult.

BBJ: What are your ambitions for the Kodály Philharmonic?

DS-T: Debrecen aspires to become a regional economic center on a European scale, alongside Budapest.

The city is predestined for this geographically, since the Slovakian,

BBJ: Finally, how is the coronavirus affecting the running of the Philharmonic?

DS-T: All concerts and rehearsals have been suspended. We hope that from the summer period we can start replacing them...

The new BMW factory in Debrecen seems to have settled this issue. The orchestra now needs to become the

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Budapest Business Journal | March 27 – April 8, 2020

COVID-19, the World Economy and Financial Markets: Part II The number of COVID19 cases had reached 451,355 and total deaths risen beyond 20,499 as at the time of writing (March 25), according to the dedicated Johns Hopkins University website (coronavirus. jhu.edu/), Les Nemethy and Sergey Glekov write in the second of three pieces looking at the economic consequences of the pandemic.

The good news is that there is a light at the end of the tunnel: Whether through herd immunity, containment, or invention of a vaccine, this, too, shall pass.

China has shown how to contain the virus with authoritarian methods, total lockdown.

South Korea, Singapore and Hong Kong have also experienced success, with somewhat fewer authoritarian approaches.

The United States and major European countries are finally getting serious about dealing with the virus. Let us hope that we learn from our mistakes and best practices emerge, which help us get the virus under control.

The bad news is that things will likely get much worse before they get better; the number of cases and deaths will likely skyrocket before we reach the end of the tunnel. Significant parts of the United States and Europe are likely to experience a Wuhan or Italian style spike in cases, with medical facilities overwhelmed, creating enormous humanitarian suffering.

The potential number of cases and deaths which might ensue when poorer countries

The Corporate Finance Column optimistic scenario as to what happens when the virus has largely been contained after just a few months!

Volatility Index VIX 80

2008 Financial Crisis 81pts

70 60

European Sovereign Debt Crisis 48pts

COVID-19 75pts

50 40 30 20 10 0

Souce: Data Yahoo Finance

are hit (that have less developed medical infrastructure) simply boggles the mind. This is a global problem and global leadership and coordination seem to be sorely lacking.

What happens to the economy and financial markets is predicated on the course of the disease. The following analysis is based on the above view of the course of the disease; in other words, the economy and financial markets are also likely to get worse before they get better.

Massive Stimulus

The Federal Reserve recently unleashed a massive stimulus package, reducing interest rates and injecting massive liquidity into the system, and other countries have followed, yet markets have continued to hemorrhage.

A virus cannot be fought with financial means. The effects of the economic and financial fallout might be somewhat alleviated, but so long as the virus continues to augment geometrically in large parts of the world, uncertainty will prevail, consumption and investment decisions will be postponed, and the economy and financial markets will continue to trend downwards.

There is fear that the Fed is in the process of firing all its bullets, and there

Business | 11

may not be much left soon. Perhaps we will see money being dropped from helicopters, to use the phrase coined by Ben Bernanke, the American economist at the Brookings Institution who served two terms as chair of the Fed from 2006 to 2014.

We can look to China as the first major economy of the world that has passed through the coronavirus storm and is beginning to emerge. According to the latest data of the National Bureau of Statistics of China, industrial output plunged at the sharpest pace (-13.8%) in 30 years in the first two months of the year, as outlined by news wire Reuters in its story “China’s Economy Skids as Virus Paralyses Factories.”

Car sales in China collapsed 79% compared to a year ago, according to data released by the China Association of Automobile Manufacturers. Passenger air traffic plummeted 85% from a year earlier, according to the Civil Aviation Administration of China (CAAC). Cargo traffic decreased 21%, according to CNN article “China Boasts Massive car and Aviation Markets.

Both Collapsed in February.”

Large numbers of businesses are bankrupt or are about to go bankrupt.

Businesses that have been shuttered for months have consumed cash and are starved for liquidity. And this is the

Frothy Markets

One should bear in mind that at the beginning of the year, markets were so frothy that they were almost looking for an excuse for an adjustment.

The fact that the world is so highly leveraged does not bode well (see our article “Debt Levels: Have we Learned the Lessons of 2008?” from May 2018.). All types of securities, including safe haven assets such as gold, are being liquidated because of the need to satisfy margin calls, driving markets in a negative spiral.

Corporate debt levels, including record levels of junk bonds worldwide, make the world more vulnerable to shocks.

Bankruptcies will proliferate. Certain countries, such as Italy, have extremely high debt levels. Economic contraction could even drive sovereign debt into default.

Unprecedented volatility is the most probable outcome for the next few weeks.

The Volatility Index VIX, the single best measure of perceived risk in the global financial system, has already reached its maximum since 2008 (see chart).

So where do we go from here? As already mentioned, this will depend on the course of the virus. Assuming that things will get worse, possibly much worse, before they get better in the majority of the world, economic output and financial markets will continue to trend downwards or even collapse.

Governments will be trying hard to contain the disease and doing their best to keep economies alive by applying fiscal and monetary defibrillation. Rest assured, this too will pass. But at what cost?

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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INSIDE VIEW

Mobility as a personalized service #MaaS Let us imagine a future where our travels are seamless and suited to our own preferences, by accessing all modes of public and private transport effortlessly.

A scenario where we can spend our time on activities which give us joy, instead of sitting in traffic jams for hours and waiting in a line of people in front of ticket machines. The good news is that this is no longer a utopian scenario.

András Kéri Manager, Advisory Services

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

PWC HUNGARY

Mobility as a Service

In our current transport system, users need to plan and book their travel on different platforms, then pay for these all services using separate channels. The wider the variety of modes the users wish to use, the more complicated it becomes to reach their destination. Mobility as a Service is a solution that offers a comprehensive approach to this problem, by integrating all modes of transport, including public and private, into a single platform, on which users can access trip planning, booking and payment gateways in one. MaaS offers a new alternative to our current ownership-based mobility practices.

Whatʼs Behind MaaS?

The existence of technology will not lead to immediate success.

The deployment of MaaS relies strongly on the regulatory environment and the availability of government subsidies. Moreover, local features, such as the public transport portfolio, the quality of the infrastructure and travel behaviors have a significant impact on the practical implementation of MaaS.

Good Practices

PwC has found five operating models based on analysis of global practices.

• City Transport Service Provider: This model was launched in Vienna, where the local public transport provider allows users to access public transport, car-sharing, car rental and parking services through the WienMobil application.

• Nation Transport Service Provider: A great example is Switzerland. The national railway company developed the SmartWay app, on which, besides the company’s own railway and carsharing services, micro mobility tools can also be accessed.

• External Market Player as an Operator: An external technology provider lies in the heart of this model, such as in the case of the Finnish Whim app. With the app, users can combine a variety of transport modes, and select monthly subscription packages or “pay as you go.”

• Public-private Partnership: This offers the opportunity to develop the transport systems of small rural areas, just as the EU funded the MAMBA project, which aims to improve the life quality of otherwise isolated communities with the integration of transport services.

• Private Transport Service Provider: According to this model, Uber has integrated the local public transport and bike-sharing services into its own platform, which can now be combined with Uber’s own ride-hailing and freight services.

Out with the Old

Today’s international examples are only forerunners of MaaS solutions.

In Hungary, due to the low integration of transport infrastructure, the failed attempts of public transport providers to develop digital services, and the fragmentation of the micro mobility and car-sharing markets, there is the possibility that a new model will be implemented.

pwc.hu

Poorly Planned Emergency Measures Wreak Havoc for Resident Expats and Border Police Sandra Perkins left Budapest on March 11 for a short stay in her native United Kingdom. Bad timing: While there, she learned of new Hungarian entry restrictions imposed on foreigners to contain the coronavirus.

Believing she held a permanent residence card, she was confident regarding re-entry, but cut short her trip. She could ill afford delay: lives were at stake.

EU embassies, overwhelmed with pleas for help from stranded citizens, were themselves unable to get definitive Perkins raises poultry, ducks, geese, answers on entry conditions for several chickens and Guinea fowl, on her days. But with sensible preparation, much smallholding in rural Hungary, where she’s of this stress and chaos was avoidable. lived for 15 years. Any extended absence, Hungary spends massive sums and these would starve. She boarded a Wizz promoting itself as an investment Air flight on March 19, reassured en route by destination par excellence. True, Perkins the check-in clerk that all would be well. herself is not the kind of foreign investor It wasn’t. Three police officers, posted normally gracing the pages of the well before passport control, rejected her Budapest Business Journal: her cash registration card, and ushered her, along injection into Hungary wouldn’t feature on with a British man proffering a Hungarian the central bank’s current account radar. birth certificate, into a separate waiting area.

At least, ranking as an EU/EEA citizen, “Like me, Hungary was his only place she was eventually allowed in after the of residence. If denied entry, neither of us debacle at the airport. Yet as the decree had anywhere else to go,” Perkins says. stands, other aliens – including U.S. and The pair joined a motley collection of Canadian citizens – regardless of the nationalities, some in great distress. One investments they may have made or the elderly couple, a Hungarian lady with a Dutch taxes they pay in Hungary, have been shut husband living in Hungary for 21 years, were out, at less than 12-hours’ notice, despite becoming frantic. He had been denied entry. holding valid residence documentation.

“They had to prove they were a married (The government communications office couple with their marriage certificate. Who failed to respond meaningfully when asked on earth flies with their marriage certificate?” for clarification on this issue for this article. notes Perkins, who, though stressed herself, The British Embassy has since clarified that did her best to placate the pair.

British citizens can enter Hungary, but will At one point, a police officer asked need to self-isolate. UK in Hungary, the everyone to write an email, attaching embassy twitter account posted on March photographs of proof of residence in 21: “British nationals residing in Hungary Hungary, to a given address. can enter only if holding a Permanent “The officer told us that we might get a Residence Card or a Registration reply today, hopefully. By this point I was Certificate&Address Card. Mandatory beginning to panic about how long it would self-isolation for 14 days upon return!”) take me to get home.... if ever,” she recalls.

Nobody denies Hungary the right to After a few, very hot hours, during which restrict entry at times of emergency, but Perkins’ asthma caused her additional by taking this sudden, ill-thought out distress, a passing policewoman noticed decision, without proper regard to its the Hungarian birth certificate of the obligations to resident foreign nationals, it British man detained with her. has severely damaged its credentials as a “She asked him why he was waiting. He reliable, international business partner. said he had no idea, only that he had been Note: Sandra Perkins is a pseudonym; denied entry. The officer said this was wrong, the person concerned asked for anonymity. and immediately escorted him through She emphasized that throughout her passport control into Hungary,” says Perkins. experience, the police officers involved Clearly, what was deemed valid, and what were sympathetic to their charges, despite not, depended on the officer involved. working long, stressful hours themselves.

KESTER EDDY

Body Temperature

Sometime later, Perkins was called, her body temperature checked, and she passed through passport control. Her ordeal lasted a mere three-and-a-half hours.

Many were less fortunate. Shaun Walker, a correspondent with the Guardian newspaper, had a 16-hour enforced sojourn, including a night of slumber with around 60 other detainees in a makeshift holding area.

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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Business | 13

Cushman & Wakefield is the latest consultancy to confirm that its staff are working remotely and, although it is striving to provide its regular services, meetings and other protocols will need to be modified.

GARY J. MORRELL

“With regard to the short-term impacts on economic growth, business activity and individual behavior are undeniable, and while the current consensus is for a rebound in the global economy in the second quarter of 2020, the exact trajectory is unknowable.

We therefore suggest a scenario planning approach, rather than betting on any bold predictions,” JLL says regarding the impact of COVID-19 on European markets.

The consultancy argues that investment activity is likely to slow in the first half

Photo by Cryptographer/Shutterstock

Retail and Logistics Sectors Hardest hit by COVID-19

“The fundamentals of the markets are seen as strong, but COVID-19 has put a halt to the super-cycle in term of development and transactions,” comments Benjamin Perez-Ellischewitz, head of capital markets at JLL Hungary.

“Real estate investment has fluctuated during previous crises, but the long-term trend over time has been for increased allocations to the sector and we see no reason for this to change. Real estate continues to offer attractive relative returns in comparison to other asset classes,” he continues.

other are simply faced with practical issues on how to progress deals even if they are keen to move forward with acquisitions.

Travel bans and the reduction of physical contacts make the organization of viewings and technical due diligence difficult,” Perez-Ellischewitz says.

Kevin Turpin, regional director of CEE research at Colliers International, argues that although it is far too soon to be quoting any figures, first quarter investment volumes in most markets are usually

Wait and See

of annual volumes, with the bulk often coming in the latter stages of the year.

“So, if we were to focus on a best case scenario where the world returns to some kind of stability by mid-year, then we might see investment activity returning strongly in the second half of the year as domestic and international capital looks to

20%

of

2020

as investors react to uncertainty, with the retail and hospitality sectors being the most affected. A shift to defensive assets is expected.

around

“Investment activity will be impacted in 2020 as some investors adopt a wait and see attitude in the coming months while

find a home. The various CEE governments and central banks obviously play a key role in damage limitation to the many businesses directly or indirectly impacted,” Turpin says.

“As for the real economy and real estate, the full impact of COVID-19 is uncertain, but it is clear that the tourism, retail and leisure sectors will be the most impacted in the short-term,” Colliers notes. With regard to the hotel and hospitality sectors, the impact of travel restrictions, event cancellations and the relicense of individuals to travel have immediately been felt in this sector. Essentially, occupancy will fall.

Rapid Rebound Potential

“Locations with a high proportion of international visitors are most exposed, while locations accessible to a domestic audience by car or public transport may benefit. There is potential for a fairly rapid rebound if the virus is contained in short order,” says JLL. It is argued that retailers must be prepared to navigate a period of elevated risks to cash flow and increased operational costs arising from a slump in consumer demand and disruption to supply chains.

This latter disruption is seen as the main effect on the industrial and logistics sector. Reduced activity at major gateway ports and airports is resulting in falling utilization rates and idle resources.

“This outbreak may accelerate the use of automation and robots in operations and reduce the reliance of the sector on labor,” JLL concludes.

Budapest Office Vacancy put at Historic low of 5% Total modern office stock in Budapest now stands at around 3.7 million sqm according to the Budapest Research Forum (consisting of CBRE, Cushman & Wakefield, JLL, Colliers International, Eston International and Robertson Hungary).

GARY J. MORRELL

The overall vacancy rate has fallen to a record low of about 5% from 8% in 2015 according to JLL. Total leasing demand for 2019 amounted to 637,00 sqm, which is the

highest annual volume on record, annual take-up has been rising since 2016., The Budapest office market has a potential pipeline of more than 570,000 sqm. Cushman & Wakefield have traced what it sees as record high demand

at

630,000 sqm

for 2019 with a record low overall vacancy of 5.5%. The consultancy forecast an improved pipeline of 230,000 sqm for 2020, although much of this space will be absorbed by the time of delivery.

CPI has delivered the 15,500 sqm Balance Hall in the Váci Corridor. This third phase of Balance Office Park on Váci út brings the total space at the complex to 35,000 sqm; there still remains the possibility for a fourth phase of the development.

JLL has traced 14 office projects that are due to be delivered this year, the largest of which is the 34,500 sqm Agora Hub and the 34,000 sqm Agora Tower, collectively representing the first phase of the 136,000 sqm Agora Budapest project.

New High

CBRE put the supply expectation for the year at 265,00 sqm, which would represent a new high in this cycle.

“However, further development delays are likely and hence some of the 2020 pipeline is expected to shift [back to ] later. In terms of leasing status, the volume currently scheduled for handover

280,000 sqm, though the vast majority of the latter volume is still in the planning phase and is, therefore, at risk of kick-off delays in addition to the actual timeline dragging out,” she explains.

in

2020

is currently 70% committed,” says Anikó Kovács, head of office advisory and transactions at CBRE Hungary.

For 2021, JLL has traced 280,00 sqm of new supply or soace under construction, of which 160,00 sqm is already let.

“Delays could occur towards to the end of the year as well, but it is still early to accurately judge the likelihood of projects pushing into 2021,” Kovács adds.

“The new supply currently scheduled for 2021 amounts to 211,000 sqm, all of which is currently under construction, while the new supply expectations for 2022 is circa

Agora by night.

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Special Report A look at how automation, digitalization and robotization are transforming Hungary’s manufacturing industry.

Or could do.

Conflicting Views on Robotization in Hungary 16 Fourth Industrial Revolution Aims to Transform Hungary’s Production

18

Manufacturing Continues to add Weight to Hungary’s Economy

19

Photo by Shutterstock

Manufacturing

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Special Report | 15

Photo by Besjunior/Shutterstock

How AI is Reshaping Manufacturing It takes a lot less investment to set up an AI-driven quality control scheme than most company execs would think. The result is a whopping hike in productivity without the need to cut jobs.

BÁLINT SZŐNYI

The use of automated quality control is becoming a must-have item in the toolkit of manufacturing businesses in order to prevail in the global competitiveness race. The application of such artificial intelligence-based solutions first gained widespread appeal in the developed world, where high wages made them a competitive alternative. By now, however, economies with lower wage levels are set to see similar proliferation due to the need to make up for a lack of skilled labor.

In Hungary, manufacturing is especially hit by labor shortage, and HR departments also face the problem of high fluctuation rates. According to a recent McKinsey study, automation, including smart quality assurance systems, can boost productivity by 30% as slashing costs helps rev up production volumes a great deal.

“Manufacturing requires predictability. Machines make the same decisions at the beginning as they do at the end of the shift, and although they also tend to make errors, at least they’re consistent even in terms of that.”

“Humans get exhausted after a while, and due to the repetitive nature of the work, their performance is also volatile.

That’s the last thing industry needs,” stresses Attila Agod, owner and CEO of Machine Intelligence Zrt., an AI Coalition member company.

“Manufacturing requires predictability.

Machines make the same decisions at the beginning as they do at the end of the

shift, and although they also tend to make errors, at least they’re consistent even in terms of that,” he adds.

Apart from predictability, machines are also super-fast. Units can be assessed within 50-100 milliseconds, that’s how Heineken’s automated system checks some 80,000 bottles per hour with an error rate of 0%.

Reflection and shadows can cause problems, though; therefore, lighting and camera positioning are key factors to have excellent quality control results. More importantly, products and manufacturing processes change frequently.

Deep Learning Data Sets

“Because of the coronavirus outbreak, a Chinese supplier might need to be replaced by one from Thailand, but the material or the color of that new part might be different, and whereas a human operator would notice the difference right away, deep learning schemes need a huge data set to do so,” Agod highlights a current bottleneck.

Since products are evolving, models need to follow suit. Any change made in terms of packaging or manufacturing process means that the training set of the deep learning model has to be extended with samples from the new batch. Initial training can work with around 1,000 units; however, the training set needs to be constantly maintained and updated.

“This is where so-called active learning kicks in,” Agod adds. “This means that machines are going to be able to ask questions whenever it’s necessary. For instance, when it comes to labeling, the machine might ask a human operator for guidance whether in a certain case it’s OK to use any given label. Based on the response, its data set gets updated accordingly.”

“We clearly expect market demand to soar right after the coronavirus pandemic is over. Decision makers understandably tend to put investment decisions on hold at times like these, but this crisis is certainly set to benefit our business in general, as companies will seek even more ways to engage automation.”

What matters most is the variation of the acceptable products. Metal items tend to look similar, but pretzels can vary in shape, or for products with moving parts you need a large number of specimens for training.

Hungarian SME execs might be skeptical as to whether this is just mumbo-jumbo for behemoths with deep pockets, and not relevant to their world. Yet, reality is subtler than that.

“Our customers normally decide to invest in AI-driven quality control if the payback time doesn’t exceed two years.

Company size is not necessarily what counts, though,” says Agod.

AI and Scaling

“We have customers with five and 50,000 employees. Size becomes a factor when it comes to scaling. If you have a production line that you want to duplicate, only the hardware costs double, the software needs to be developed just once. Accordingly,

smaller companies should not fear to venture into AI quality assurance territory, especially if it is of critical importance in their processes.”

Machine Intelligence Zrt. mostly deals with foreign customers or the Hungarian subsidiaries of foreign companies.

Substantial demand from Hungarian SMEs or multinationals is yet to gain on volume, but the interest clearly exists.

One of its customers is a startup that develops mobile apps to help eye doctors select the right glasses by optimizing the angle, position and size of lenses. The solution offered helps users precisely determine facial features based on a photo.

A German car manufacturer’s production line is another use-case: when putting together certain parts of the engine, pluggings need be to perfect, and it’s monotonous for a human to check in the long run.

In this case, deep-learning-based on cameras come to the rescue. It is perhaps worth noting that auto makers in Hungary are all well-equipped with computer vision-based quality assurance systems.

“We clearly expect market demand to soar right after the coronavirus pandemic is over,” says Agod. “Decision makers understandably tend to put investment decisions on hold at times like these, but this crisis is certainly set to benefit our business in general, as companies will seek even more ways to engage automation.”

Predictability of available workforce will play a more crucial role than ever, and AI-driven solutions can guarantee such predictability.

Attila Agod This is an area where many tasks formerly performed by humans can be taken over by machines.

The human role is going to focus on supervising machines working on the basis of active learning.

They help answer the “questions” of machines in case they are not certain of how to handle something. These algorithms also require constant development and training.

Annotation is yet another key factor to mention. Operators that used to observe units on the production line might be needed more to label specimens with the aim of improving data sets. So, it seems humans will not be replaced, but rather supplemented by the new tech, so that they become more productive.

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Conflicting Views on Robotization in Hungary According to an analysis by the Economic and Entrepreneurship Research Institute (GVI) of the Hungarian Chamber of Commerce and Industry, a significant number of Hungarian employees – 730,000 – work in areas where many of the tasks could be performed by machines.

GERGELY HERPAI

It is estimated that the pace of automation expansion in Central and Eastern Europe will be above the European average in the near future, so labor market effects are sure to be felt in this region, according to the GVI research into the automation of occupations registered in Hungary.

Routine, easy-to-write, and consequently programmable tasks that could be replaced by robots and computers

as a result of technical progress were considered to be tasks that could be automated by the research.

In GVI’s view, automation is a problem in some areas: certain non-routine, complex tasks, and skills such as dexterity, creative intelligence, or social skills, can still not be replaced by a robot, which could have a complementary role besides a human at best in these cases.

According to GVI, automation does not always lead to the termination of the professions concerned, since in most occupations only part of the tasks can be automated. Roles that require someone with tertiary education often cannot be replaced by new technologies.

“In the case of professions requiring higher education and other professions requiring tertiary or secondary education, we did not find any profession

that could be fully automated. However, in the latter group, 8% –

28,000 persons

– of the employed work in a profession which contains subtasks, which could be automatized,” wrote GVI. “Automation could help solve the longterm efficiency improvement measures in Hungary that are essential for increasing

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the country’s economic competitiveness and sustaining growth,” a separate study made by McKinsey on robotization in Hungary points out.

“There has been a significant decline in the creativity of work tasks in Hungary between 2005 and 2010, and the situation has not improved since 2010.”

According to its calculations, by 2030, automation will have a significant impact on one million jobs in Hungary.

While GDP fell and more than a million people lost their jobs following the 1989 regime change, economic growth was based on capital investment and productivity growth of about 2.3% a year between 1995 and 2009.

Since 2010, rising employment has become the main driver of economic growth. The number of employees has increased from 3.73 million to 4.35 million over the past seven years.

Higher Value-added

But while employment growth is approaching its ceiling, productivity has fallen in some industries. Automation, it proponents insist, offers opportunities for higher value-added jobs and increased productivity.

When looking at which sectors and in what workspaces it is worth using a robot for a company, the keyword is value. 21st-century robotics companies no longer look at where machine can lift more, bigger and heavier items faster than humans, but how they can relieve the human workforce so that it can shift to a higher value-added task.

Moreover, robotization can also be a partial answer to today’s coronavirus crisis, with robots stepping in for people in areas which are considered dangerous right now and which cannot be replaced by home office solutions, jobs on the factory floor being an obvious example.

The Danish industrial manufacturer Mobile Industrial Robots calculated the hourly wage of its 100 kg, in-house loading machine at a total cost

of

EUR 5.

Meanwhile, a warehouse assistant in Denmark has total wage cost of EUR 6-7 per hour, added to which the worker will sometimes require sick pay and will from time to time asks for a pay raise. While in Hungary the average wages are lower, similar calculations have comparable results.

“So, after a while, robotization will be a simple price issue,” says Júlia Varga, a senior researcher at the Institute of Economics at the Hungarian Academy of Sciences.

“If the robots are so cheap that it will be much better for the German car companies to robotize that part of production that they have currently outsourced to Hungary, then they will do it, so they can stay competitive,” she added.

Negative Views

In addition to opportunities, automation also presents social and economic challenges. A 2017 Eurobarometer survey found that 38% of Hungarians negatively evaluate automation, one of the highest rejection rates in the European Union.

“So, after a while, robotization will be a simple price issue. If the robots are so cheap that it will be much better for German car companies to robotize that part of production that they have currently outsourced to Hungary, then they will do it, so they can stay competitive.”

Their fears may be at least partly well-founded; according to a report by the World Economic Forum, by 2022, 54% of employees will need retraining due to digitalization and automation.

The good news is that companies will generally bear the cost of retraining well-performing employees.

But that also means that those who are less capable of creative, critical thinking and complex problem-solving will be more likely to be replaced by machines. Curiously,

Special Report | 17 despite Hungary’s much touted highly skilled workforce, some see a danger here.

“There has been a significant decline in the creativity of work tasks in Hungary

between

2005

and 2010, and the situation has not improved since 2010,” warns Miklós Illéssy, a researcher at the Social Sciences Research Center of the Hungarian Academy of Sciences.

The authors of the McKinsey study, though, think otherwise: according to the company those fears are unfounded and negative change will not happen for several reasons.

First of all, automation will not occur immediately because the transition rate is determined simultaneously by technical feasibility, social and infrastructural preparedness, and the economic benefits of automation. For companies, it will take time to fill vacancies, partly with human labor and partly with automated machines, which gives businesses, the labor market, and policymakers time to prepare for the transition.

Secondly, automation, along with economic development, will also create new professions and it increase the number of high value-added jobs, thereby generating higher incomes, which will create more demand.

Among all those studies, calculations and expert opinions, there is one thing for certain: there’s still a long road in Hungary for both man and machine for the proper expansion of robotization and the current global pandemic situation does not help in this either.

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Cooperation of Man and Machine: Suzuki Plant’s Development Project Reaches Final Stage As a result of a multi-stage production development project, the Suzuki plant in Esztergom (50 km northwest of Budapest) has increased the safety of its cars to meet today’s most advanced technological, market and environmental requirements. In order to make driving greener and more cost-effective, the manufacturer has developed a new composition of polymers needed for parts manufacturing, modernized its logistics system and made its welding system intelligent. The successful implementation of the project has been achieved through the coordinated work of more than 100 experts.

Innovation as a Core Principle Developing products of superior value by focusing on the needs of customers is the motto of the Suzuki group. In line with this corporate principle, Magyar Suzuki Corporation aims to offer exciting, innovative vehicles at affordable prices, that make lives easier. The company’s ongoing modernization effort, conducted with this objective in mind, has now reached an important milestone of a multi-stage research and development project that started in September 2016.

In the coordinated consortium effort led by Magyar Suzuki Corporation, Bay Zoltán Nonprofit Ltd. for Applied Research, PEMÜ Plc. and the Faculty of Information Technology and Bionics at Pázmány Péter Catholic University are also participating.

“Thanks to digitalization, the process of implementing new models from the drawing board of the Japanese parent company into Hungarian mass production is accelerating, making the launch of new models faster,” says deputy managing director Dr. László Urbán.

Digital Production Management on the Way Changing market needs and compliance policies mean car models change at a fast pace and the development cycle of vehicle models is substantially shorter than previously, creating the need for a flexible logistics system. In the framework of its innovation project, Suzuki has digitalized its internal parts supply system, which is capable of a real-time display of feedback related to material flow and stocks, hence improving productivity and reducing the chance of human error.

Modernized warehouse processes support a fully electronic product tracking system implemented in the factory, while the parts supply procedures in the assembly shop are optimized with the help of special software that simulates material flow.

Harmony of Robots Part of the R&D project was the creation of an active network of robots to follow the spot-welding process and the implementation of a communication network able to process structured data. The innovative system accelerates the introduction of new car models

by replacing manual inspection of welded body parts by software-controlled check-ups and connecting 3D models with spot welding coordinates of body parts. The development provides data analytics of robots, which shortens production time and offers a more advanced fault detection as well as predictive maintenance.

Suzuki, with the help of its partners, performs experiments to test the introduction of laser welding that allows more flexibility and shorter production cycles, enabling the simple welding of various alloys and light metals simply and quickly with no specific tools required.

New Base Materials The characteristics of end products are considerably determined by the base materials used for parts prototypes. This is one reason why Suzuki and its development partner have been making material developments, aiming to create polymers with better technical and flame retardancy parameters than the materials used currently. In the last phase of the project, the company runs tests investigating the behavior of polymers in a production environment and compares the current parts with those made from new materials. This helps Suzuki further increase safety,

contribute to the preservation of the environment and reduce the fuel consumption of its car models.

Company information Magyar Suzuki Corporation was established in 1991 and is currently still the only European manufacturing unit of the Japanese parent company. Magyar Suzuki employs 3,200 people directly and contributes to the livelihood of approximately 10,000 people through its partners, suppliers and a nationwide network of 78 dealerships.

The Esztergom plant started production in October 1992. Currently Vitara and SX4 S-CROSS models are manufactured here, thanks to which the company has been leading the domestic new car sales statistics for more than three years. The corporation also exports to countries as far away as Mexico, New Zealand and Japan. In addition to manufacturing vehicles for the domestic and international markets, the company also sells imported cars, motorcycles and outboard engines.

In 2018, Magyar Suzuki sold 171,885 vehicles in 123 countries. Some 95% of these cars were manufactured in Esztergom. According to the data from 2018, the company is the ninth biggest corporation in the country regarding revenue, and according to its export sales it is ranked eighth.

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Fourth Industrial Revolution Aims to Transform Hungary’s Production As digitalization is an engine of growth that impacts all sectors, the key to economic competitiveness is businesses’ preparedness for digital transformation.

The digital revolution in industrial production, often referred to as Industry 4.0 or the Fourth Industrial Revolution, is expected to bring a transformation of similar magnitude to its predecessors.

CHRISTIAN KESZTHELYI

“The Hungarian government is determined to create more new, high value-added jobs through digitalization than the number of jobs that will be lost. An important prerequisite for this is the creation of high value-added digital jobs (i.e. the digitalization of industry, agriculture and the services sector) and the systematic development of the digital skills of employees,” Roland Jakab, regional director of Ericsson Hungary, tells the Budapest Business Journal.

Hungary is doing its best to lay firm foundations for the fourth industrial revolution. The Industry 4.0 National Technology Platform was established in May 2016. The Irinyi Plan, named after chemist János Irinyi (who invented safety matches that ignited quietly and smoothly), sets out the main directions of the development of Hungarian industry, aiming to create a driving force for long-term growth.

A priority project called Developing Industry 4.0 Model Applications was launched to promote awareness, demonstration, and development. It is supported by the Industry 4.0 Model Factories and an Industry 4.0 Technology Center to stimulate the evolution of domestic manufacturing for small- and medium-sized enterprises and to increase their openness to industrial automation and control solutions for Industry 4.0 production systems.

Roland Jakab Hungary follows the European pattern: the fourth industrial revolution remains a privilege of multinationals and large enterprises, while SMEs are falling behind.

Although Industry 4.0 is spreading in the country, it is lagging not only the EU average, but also when compared to the other Visegrád Four nations (the Czech Republic, Poland and Slovakia), according to the Digital Economy and Society Index (DESI).

“The gap in SMEs has been recognized at EU and local levels. Initiatives, such as the Digital Innovation Hubs of Digitizing European Industry (DEI) and the Industry 4.0 Model Factories project led by the Industrial Development Coordination

Zoltán Gábor Agency and the ICT Association of Hungary (IVSZ) support SMEs to catch up,” Zoltán Gábor, a senior manager at Deloitte Hungary, tells the BBJ.

One-stop Shops

Digital Innovation Hubs (DIHs) are onestop shops for companies, especially SMEs, startups and mid-caps, to get help in improving their business operations,

production processes, products and services through digital technology. DEI prioritizes the support for a powerful DIH network to ensure that every European business can gain an advantage from digital opportunities.

“Industry 4.0 Model Factories is a free EU fund operative program that offers practical experience and knowledge resources to micro-, small- and mediumsized enterprises to become acquainted with Industry 4.0 technologies and uses, allowing them to increase their competitiveness,” Gábor says.

What is Industry 4.0? It relates to implementing state-of-the-art solutions such as industrial robots, fully automated production lines and 3D printing.

Companies buy such technologies to improve their performance; however, Hungarian SMEs face many challenges.

Digitalization and integration of novel solutions within the operation (both horizontally and vertically) and collecting and processing production line and product data pose challenges to SMEs. Nevertheless, digital tools can help free up staff from less-skilled production jobs, which may be one answer to the labor shortage. Increasing the level of automation needs different and higherlevel skills to operate the manufacturing facilities, Gábor explains.

As modern technology becomes more widely used, its price goes down. New emerging technologies, such as fifth generation connectivity (5G), can help to connect and collect data from the manufacturing equipment and products.

“However, the knowledge to utilize the benefits and implementation of the technology is a different topic, one where system integrators may help [….] in creating new digital processes, which establish the aforementioned vertical and horizontal integration and incorporate state-of-theart technology into those new processes to reduce cycle times, costs and increase overall effectiveness,” Gábor adds.

The Hungarian Picture

Today, Industry 4.0 technologies in Hungary include manufacturing/supply visualization, manufacturing execution systems (MES), supply chains, inventory and production design optimization, enterprise resource planning, advanced planning systems, big data, intelligent energy utilization, robotics supported manufacturing, additive manufacturing technologies and 3D printing.

Ericsson Hungary says it is busy contributing to the Hungarian fourth industrial revolution. Telco giant Magyar Telekom is installing a 4G/LTE-based industrial network at BorgWarner’s factory in Oroszlány, supplied by Ericsson Hungary and Cisco Hungary. The mother company has been active in Germany too: Ericsson pioneered 5G for automotive manufacturing together with Audi, and Ericsson and Telefónica will bring 5G car manufacturing to Mercedes-Benz.

But what are the challenges? “For manufacturing, it’s the race towards Industry 4.0 and the vision of high variance, low volume production. The current logic of economies of scale will no longer hold up, and the cost of producing one unit should be the same as producing one mass unit.

Naturally, this puts enormous requirements on efficient customization, not only on production lines, but contributing workflows, resources and logistics,” Jakab of Ericsson Hungary says.

“For manufacturing, it’s the race towards Industry 4.0 and the vision of high variance, low volume production. The current logic of economies of scale will no longer hold up, and the cost of producing one unit should be the same as producing one mass unit. Naturally, this puts enormous requirements on efficient customization, not only on production lines, but contributing work-flows, resources and logistics.”

Therefore, the work lies in defining how these challenges and requirements can be supported by cellular technologies and networks. For example, with mobility, it is possible to reconfigure wireless production lines faster, track workflows and redesign global operations and value chains.

Nevertheless, “industries are under constant pressure to improve product quality, boost factory efficiency, stay competitive, enhance safety, security and sustainability and remain profitable,” Jakab says.

For the bulk of these challenges, fifth generation connectivity may be the ultimate solution with its increased speed, reduced latency and reliable connectivity.

“Mission and business-critical use cases require the low latency, high performance and high reliability that only 5G provides.

5G opens the door to Industry 4.0 and Ericsson is at the forefront of the innovations,” Jakab insists.

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Manufacturing Continues to add Weight to Hungary’s Economy With its nearly 30% share of the manufacturing industry in Hungary, the automotive sector continues to have a dominant role, but electromobility and business service centers have also made some heavy investments in the country.

ZSÓFIA VÉGH

In a 10-year period between 2009 and 2019, manufacturing’s share of GDP has grown 1.3% from 20.2% in 2009 to 21.5% last year. On average, manufacturing industry accounted for 22.2% of Hungary’s GDP over the past three years.

The trend actually shows a slight decrease in the past couple of years: in 2017, it was 23.1%; in 2018, it was 22.1%; and in 2019 it was 21.5%.

Based on last year’s figure, Hungary places fifth in the European Union in terms of the weight of the industry following Ireland, the Czech Republic, Slovenia and Germany. Based on the number of those employed in manufacturing, Hungary ranks fourth, after the Czech Republic, Slovenia and Slovakia.

Within manufacturing, the automotive sector has the dominant role. Thanks to the country’s location, its skilled and low-cost labor as well as cost-effective production, Hungary has proved an attractive place for automotive investments.

The companies already here continue to develop their operations, bringing in more complex and developed functions and technologies or, in some cases, research, development and innovation centers.

Flagship Sector

From roughly HUF 3.6 billion in production value in 2010, this flagship sector of the Hungarian economy had grown to more than HUF 9.5 bln in 2019.

The automotive sector accounted for 28.9% of manufacturing industry last year, while its share of exports was 90.6%.

Strategic agreements between market players and the government are also seen as a proof of the importance of this sector. The majority of these are linked to the automotive industry: out of 83 such deals, 29 were signed with players of this sector.

Nóra Gyöngy-Kovács

“Still, its [automotive’s] role within the industry is a two-edged sword. […]

Due to its heavy reliance on the automotive sector, the Hungarian economy is highly exposed to demand changes and situations such as the current one.”

For the first time in the history of the Hungarian Investment Promotion Agency, the number of working capital investments in Hungary in 2019 exceeded 100, the Budapest Business Journal learnt from HIPA. Last year, a total of 101 projects resulted in EUR 5.35 million investment in

Hungary, creating 13,493 new jobs. There are three major trends behind the figures.

In terms of investment, 2019 was the year of countries targeted in Hungary’s Eastern Opening foreign relations pivot, and most especially South Korea, Japan and China.

Besides the traditionally strong German and U.S. circles, Asian investors have become more dominant. South Korea was placed first both in terms of the volume of investments made (50%) and the number of jobs created (30%). Together with Japan and China, a total of 19 investments originated in East Asia, which account for 38% of the newly created jobs.

With the expansion of FarEastern countries comes the growth of electromobility. Last year, 10 investments decisions involving eight large electric car batteries companies were made, including those of Samsung SDI, SK Innovation and Toray, worth EUR 2.85 bln, which accounts for more than half of the total volume, HIPA says.

Driving Manufacturing Forward, but for how Long?

The automotive sector’s share within the industry is significant: together with suppliers and related services it constituted 30% of all industry in 2019, contributing 15% of GDP and 25% of exports. It also provides employment to some 20.000 people.

“Still, its role within the industry is a two-edged sword,” says Nóra Gyöngy-Kovács, senior analyst at Equilor Befektetési Zrt. During growth periods, it has produced excellent figures but even before the coronavirus crisis hit the

markets, it had lost momentum first in China, then in the EU as well.

“Due to its heavy reliance on the automotive sector, the Hungarian economy is highly exposed to demand changes and situations such as the current one,” Gyöngy-Kovács notes.

For long, the general view was that this sector was unstoppable and in many ways it was true; factories and manufacturers were operating very profitably.

But its future is less bright, not least because the majority of cars produced in Hungary have

Special Report | 19 Electrifying Input

Adding the automotive industry’s e-mobility related investments to the production of batteries for electric vehicles, and a total of 60% of investment volume and 40% of the jobs created can be attributed. Among these is, for example, Audi’s e-transformation project which aims at expanding production capacities for electric engines.

The third trend is the continuous growth of business services centers or BSCs. Last year, 14 investment decisions in this field were made, which is more than ever before, HIPA notes. They will create 2,500 high added-value jobs in the period ahead.

There are two new players among the 14 investors, at least as far as BSCs are concerned. Sanofi and Tesco have long been present in Hungary in production and retail, but only recently have they entered the BSC sector.

With the expansion of FarEastern countries comes the growth of electromobility.

Last year, 10 investments decisions involving eight large electric car batteries companies were made, including those of Samsung SDI, SK Innovation and Toray, worth EUR 2.85 bln, which accounts for more than half of the total volume, HIPA says.

To ensure the supply of new investments and, just as important, reinvestments, the government has created some attractive incentives.

Among these are an attractive taxation system (including the 9% corporate tax), flexible labor market regulations and a subsidy system which supports job creation as well as innovation.

As of last October, the support system has shifted its focus to productivity, so the creation of new jobs is no longer a prerequisite for someone to receive asset-based, non-refundable cash grant granted by individual government decisions.

internal-combustion engines whose future, with electric cars gaining ground everywhere, is relatively short-lived. That makes investments like Audi’s e-transformation project, mentioned above, all the more important.

Also, Hungary has less skilled workforce than many Western countries, which, the analyst says, means less value-added jobs or function are brought here than might be.

“With diversification and by improving knowledge-based skills, the country could decrease its exposure,” Gyöngy-Kovács adds.

20 | 3

Focus

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Budapest Business Journal | March 27 – April 8, 2020

Trends in Translation: AI is Here, but Transcreation is on the Rise According to independent market research firm Common Sense Advisory (CSA), the global translation industry is set to grow to USD 56.18 billion by 2021. For an insight into the form this growth is most likely to take, the Budapest Business Journal spoke to a couple of industry experts.

Taking Time to Fly

DAVID HOLZER

Founded in 1990, Mother Tongue, an international translation agency with offices in London, Long Beach California and Singapore primarily works with advertising and marketing clients directly and through agencies.

The company’s core services are transcreation, translation, community management, search engine optimization (SEO) and search engine marketing (SEM) translation, voice-over and audio and video production as well as some content production.

Transcreation is adapting a message from one language to another while sticking as closely as possible to the original tone of voice. It’s primarily used in marketing and carried out by writers with a background in writing for a particular sector.

Community management is related to social media. If a company or organization operates social media channels in a number of languages but doesn’t have the capacity to manage these and engage with users in their own language, Mother Tongue will do so.

For James Bradley, operations director of Mother Tongue, the trends to watch are machine translation, increasing integration of systems and greater supply chain transparency.

“Everyone’s talking about artificial intelligence and machine translation and where they fit,” he says. “They are driving the increasing commoditization of translation, for example, for big,

response to the commoditization of translation. Traditional agencies know they need to offer something other than just word for word translation.

Transcreation is one way to deliver something machines can’t do.”

One agency growing the transcreation side of its business is Budapest-based Villam Language Services. Founded

by Tünde Gál-Berey, the company has more than 1,400 translators on its books. The agency offers translation from and into Hungarian as well as language pairs. It also offers data extraction services.

The Villam Language Services approach is to use its website as a webstore where clients order translations with fees calculated automatically. These clients are mainly SMEs in the business, legal and medical sectors.

Although 90% of the agency’s business comes from translation, Villam Language Services also offers interpretation services as part of a framework agreement with certain clients but doesn’t actively promote these. But it is beginning to raise the profile of its transcreation service.

“Hungarian companies are used to working with prices for translation that are calculated per character […] but transcreation is priced per project, based on an hourly rate and works out as more expensive.

We had to convince Hungarian companies that transcreation really can add value. To sell it, I had to place the price somewhere between translation and interpretation.” international brands who constantly need large volumes of content in other languages. This is driving down pricing for simple translation,” he explains.

“But, done properly, transcreation is as much a creative act as conceptualizing a product and developing marketing around it. So, although AI is the long dark cloud that hangs over our entire

As Gál-Berey explains, “We offer transcreation for Hungarian companies wanting to market themselves globally.

While transcreation is not new, it’s taken time for companies here to realize that this is what they want, especially if it’s related to marketing. It was initially a challenge to sell transcreation, but we now have some pilot projects.”

Why was it such a challenge?

“Hungarian companies are used to working with prices for translation that are calculated per character – usually Tünde Gál-Berey, founder and HUF 4 per character, including spaces CEO of Villam Language Services. – but transcreation is priced per project, based on an hourly rate and works out as more expensive. We had to convince Hungarian companies that transcreation industry, I’d say the day that more really can add value. To sell it, I had creative translation becomes purely to place the price somewhere between mechanical is a long way off.” translation and interpretation.”

The other two trends Bradley identifies Villam’s target audience for transcreation are influenced by the rise of machine is Hungarian companies that sell their translation. products online to an international Pain Point audience. She begins by selecting between “A big pain point in any translation or five and 10 translators for a project and localization project is how you move asks them to provide an example of their content around in an efficient way writing. From these, the client chooses two between languages and platforms, so or three writers. These are then trained in you need to have good ecosystems. the company’s products and culture onsite.

Companies like Mother Tongue are They will write social media posts and exploring the most efficient ways to create advertising, blog posts and interviews. these,” he says. Bradley says he is also Although Villam Language Services seeing a response to greater automation is changing its approach, there’s no but in the opposite direction. question that the translation industry “In the past, translation was a bit in Hungary faces the same challenges of a black box. Clients gave us source as it does globally. copy and it came back translated. They “It’s at our door as well,” Gál-Berey says. didn’t concern themselves with what was “We’re starting a machine translation going on inside the agency. Increasingly, pilot project with a Hungarian university we’re finding that clients want to know and looking at where it can fit into our who the individual writers working business model. But there always be a on their account are. Previously, we huge client base for transcreation and would have resisted this to prevent other value-added services such as our translators being poached. But, offering expert advice.” now we’re aware our clients understand that getting a good service also means working with great project and Find out more about relationship managers, we encourage Villam Language Services supply chain transparency.” at villamtranslation.com How about the growth in transcreation? and Mother Tongue at “Up to a point, there is greater demand mothertongue.com. for transcreation from clients. But it’s also being pushed by agencies as a

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Budapest Business Journal | March 27 – April 8, 2020

Focus | 21

Translation Agencies

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1982 28 500

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miklós bán Edit Takács –

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1997 23 530

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Alistair binks Péter Márton –

2890 Tata, Sport utca 20.

(1) 793-3610 info@ albionlanguages.com

ISO 9001

2005 17 1,500

György Kovács (100) –

boglárka Tímea Tési – –

1054 Budapest, Tüköry utca 5.

(1) 439-0650 info@leg.eu

ISO 17100

2007 20 1,396

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2004 13 1,984

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2005 14 300

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(1) 269-1153 office@icontact.hu

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(1) 413-6493 star@star-hungary.hu

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(1) 599-9299 info@ trmtranslations.com

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4

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Budapest Business Journal | March 27 – April 8, 2020

Socialite Homeworking is now the logical and perhaps the only way for many businesses to keep going in these coronavirusinspired interesting times of ours. I’ve worked from home for more than 25 years and I’m happy to share what I’ve learned in the hope that I can help you acclimatize to homeworking, avoid making embarrassing mistakes, and maybe even learn to love it.

DAVID HOLZER

Defining your workspace may not be the easiest thing in the world to do if you’ve had homeworking thrust upon you. But it’s essential if you’re going to be able to concentrate, especially in online meetings.

If you don’t have a home office already and your significant other is also working from home now, there’s even more reason to set boundaries.

Otherwise, they could come strolling blithely by when you’re in the middle of a meeting or start crashing about in the kitchen. Although your employer’s bound to be tolerant, it’s still awkward if you have to start shouting because your other half has decided to vacuum.

Your day could be structured for you by your employer. But, if it isn’t, you could find that, set free from the

Photo by Shutterstock

Socialite Isolation: Painless Ways to Adjust to Homeworking

This also means paying attention in the meeting. I was horrified to discover that Zoom had introduced an “attention tracking” feature that checks whether employees are actually looking at the screen.

In any case, it’s always a good idea to exit social media before a meeting. You don’t want a “not safe for work” video to start playing automatically in the middle of your boss’s pep talk.

Should your neighbor start doing some spur of the moment DIY in the middle of a meeting, bow out gracefully rather than attempt to drown them out.

Healthy Intake

Ideally, working from home should make us healthier. We have greater control over our diet, and we can take exercise breaks.

I’ve learned that it’s important to stop and take proper meals. This also makes me far more likely to prepare something healthy rather than snack on leftovers throughout the day.

Remember that it’s not a good idea to sit for longer than 30 minutes. To remind yourself to take a break, get up and walk around, use the Pomodoro method to break your day into 20-minute pieces with five-minute rests.

confines of the office and what we used to call the nine to five, you struggle to manage your time.

I’ve learned to love lists. At the end of every day, I check my list of things I was supposed to do and make a fresh one for the following day.

This doesn’t just make me as efficient as I’ll ever be. It also gives me a sense of achievement, especially if I’m in the middle of a gigantic project.

Time Management

Without the distractions of the coffee machine or water cooler gossip, you’ll probably find you achieve more than usual in any case. Rather than take this as a gift, many of us actually find more work for ourselves to do. This, in turn, leads to us working far longer hours than at the office because our work/life boundaries have blurred.

Remember that there’s absolutely no reason to start doing 12-hour days simply because you’re working from home. Train yourself to switch off your computer at a sensible time and resist the temptation to check your work emails.

If you work best early in the morning and tail off after lunch or you come awake at midnight, this is a great opportunity to adjust your working day to your natural productivity cycle.

As long as you get your work done, your employer can’t complain.

When you work from home, you soon discover there are many, many ways meetings can go horribly wrong.

If yours is a multinational company, check what time zone the meeting will happen in. Getting the time of a meeting wrong doesn’t just make you look inefficient. It’s an insult to whoever you were meant to be speaking with.

Double-check that the meeting technology you’re going to be using works on your computer. If you can, specify the platform yourself.

For some reason, Google Hangouts is a nightmare on my computer, so I always insist on Skype, Zoom or, nowadays, WhatsApp.

Video Links

Never, ever assume that you will be able to get away with not switching on your video camera. Even if the people you’re meeting with accept the excuse that “video slows down my connection too much”, you might still accidentally start the meeting with your camera on. Always make sure you’re fully dressed.

I got into the habit of just wearing a clean, pressed shirt but no pants in online meetings. This was fine until I was in a meeting and something made me stand up. There’s no going back from being caught in flagrante delicto in your underwear.

Similarly, don’t ever forget that your camera is on. I’m amazed by the number of people who tug away at their faces, stick pens in their ears and worse when I’m talking to them online.

I got into the habit of just wearing a clean, pressed shirt but no pants in online meetings. This was fine until I was in a meeting and something made me stand up. There’s no going back from being caught in flagrante delicto in your underwear.

The Pomodoro method is named for the tomato-shaped kitchen timer the Italian Francesco Cirillo used to develop it at university in the 1980s.

Mac has a handy time management app called Flat Tomato that enables you to set your time-outs automatically rather than have to remember to set the timer.

During your breaks, try to do some sort of simple exercise like touching your toes to loosen up your legs, back and shoulders and get the blood flowing.

Having a power nap of up to 30 minutes is also a great idea. Just remember to set your tomato alarm.

That is particularly important because, while home office might have been forced upon us right now, your company might very well be thinking about introducing remote working for your job on a permanent basis. Sleeping on the job isn’t the best way of safeguarding your future.

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Budapest Business Journal | March 27 – April 8, 2020

Socialite | 23

Stay Home and Drink Wine (but Always in Moderation) The Budapest Business Journal’s regular columnist Robert Smyth looks at how the developing COVID19 coronavirus crisis has hit even the local wine business.

ROBERT SMYTH

First, it was ProWein, probably the wine world’s biggest event on the calendar, which brings wineries and wine professionals each year to the German city of Düsseldorf, that was postponed until next year, from the original date of March 15-17, 2020.

Then, unsurprisingly, Vinitaly, which was originally scheduled to be held in the northeastern city of Verona from April 19-22, was postponed. Rather than call it off altogether, the organizers have decided to move it to June 14-17, a date which is already looking fairly optimistic given the tragedy that has unfolded in Italy.

Then, the London Wine Fair, which was due to take place May 18-20, was postponed with a new date yet to be announced.

Locally, Hungary’s VinCE Budapest wine show, a major wine event involving 160 exhibitors and lots of juicy masterclasses, which was due to take place April 3-4, has also decided to move the event, to June 6-7. It would be wonderful for us to be “back to normal” by then, but right now even that looks like a best-case scenario.

As people tasted with abandon at the buzzing Badacsony NewYorkban tasting as

Sourcing Wine Amid Coronavirus Taste Hungary, a dynamically expanding company for which I have led lots of wine tours, has unsurprisingly witnessed the mass cancellation of its tours and tastings, almost overnight.

Over 12 years it has steadily expanded from the husband and wife team of Gábor and Carolyn Bánfalvi taking guests on wine and food market tours to become a bastion of high-end wine and gastro-related tourism, employing more than 30 guides and sommeliers, replete with its own cellar tasting room/shop called the Tasting Table at Bródy Sándor utca 9, in District VIII. The Tasting Table has cancelled tastings until April 15 and is now functioning solely as a shop (11 a.m.-3 p.m. every day) with discounts now placed on its impressive wine selection (including exciting small

recently as February 28 (see my article in our previous edition) in the famous coffee house, nobody was predicting a winetasting lockdown here.

Then, as the threat of COVID-19 became very real and immediate, Tokaji Március was the first major local event (originally March 15) to be cancelled.

While there’s nothing quite like attending tastings and chatting with the winemakers as they pour you their wares, or (even better) visiting wine regions and the vintners at their wineries to understand precisely what’s in your glass, wine can be enjoyed anytime, anywhere.

Sip and Surf

Indeed, I have learnt a heck of a lot about the subtleties of wine while sitting on my

producers and an outstanding collection of Tokaji Aszú. It also offers curb-side pick-up for advance orders, free delivery in Budapest, and is also doing its signature cheese and charcuteries board for take-away and home delivery.

Tokaj’s Disznókő, the first major estate you encounter as you enter the Tokaj region and one which is delightfully surrounded by its own sloped vineyards, is staying sanguine on the subject on wine tourism. As recently as March 19, the Frenchowned winery posted on Facebook that it is looking for a new wine tourism manager.

Meanwhile, Bortársaság’s 20 shops remain open, with the gloved-staff regularly cleaning handles and surfaces while keeping a safe distance, and the distributor has lowered the threshold for free delivery to anywhere in the country from orders of more than HUF 15,000, to orders of more than HUF 10,000.

settee, gorging not just on wine but also on wine literature, with so much good stuff to be found online; taking a sip and then a surf, as it were.

For example, the appropriately named WineSofa (Winesofa.eu) is a valuable English-language source of wine-related news and features in Hungary and the other winemaking countries of Central and Eastern Europe.

“Stay home and drink wine” posted one wine colleague on her Facebook profile pic. Meanwhile, a meme has been doing the rounds in the wine community, entitled “Planning your next wine tour made easy”, which depicts the layout of a house and glasses of wine to be drunk in the various rooms.

If you want the wines quickly, just ask and they pledge to deliver the wines within four hours. In cooperation with Wolt, Bortársaság can also deliver chilled wines.

Another contactless delivery solution the company offers is Foxpost, whereby the wines are delivered to locker terminals where you can pick them up.

Antal Kovács’ natural wine outfit Pincearon.hu already gives free delivery on orders of HUF 20,000 or more, but now is also adding a 10% discount to orders above HUF 20,000 or more.

Radovin is keeping its three shops open from 9 a.m.-3 p.m. every day, delivers free in Budapest for orders of more than HUF 20,000, and gives an 8% discount on purchases of more than HUF 15,000.

Monarchiaborok has closed its bricks and mortar store for now, but its online webshop remains open and delivers free in Budapest for orders of more than HUF 15,000.

My last trip before the coronavirus clampdown took me to neighboring Croatia, including the Vinart Grand Tasting in Zagreb. It was exciting to encounter the Pušipel grape from the Croatian Uplands (the local moniker for Furmint), a couple of examples of which eschewed the use of oak, yet the wines were ripe, juicy and varietally pure with a tropical fruity twist.

Funny as this may be, the consequences for those working in wine tourism are dire, as it is in so many other service-based industries, and plenty of others too.

My last trip before the coronavirus clampdown took me to neighboring Croatia, including the Vinart Grand Tasting in Zagreb. It was exciting to encounter the Pušipel grape from the Croatian Uplands (the local moniker for Furmint), a couple of examples of which eschewed the use of oak, yet the wines were ripe, juicy and varietally pure with a tropical fruity twist.

For its Pušipel Prestige 2017, the Dvanajščak-Kozol winery decided to use acacia rather than oak, which beautifully supports the wine’s natural fruitiness, rather than impedes it. In other parts of Croatia, Furmint can also be called Moslavac and Ripon.