Budapest Business Journal 2816

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 16

SEPTEMBER 4 – SEPTEMBER 17, 2020

SPECIAL REPORT

IT & Systems Integrators

SPECIAL REPORT

New President to Bring Fresh Outlook to IVSZ Newly elected president Balázs Vinnai has vast amount of experience in founding, operating and investing in ICT firms, and brings with him a different outlook that will add to the scope of the IVSZ, says secretary general Attila Molnár.  11 SPECIAL REPORT

Huawei: A Tool in a Playbook?

While technology news in August was dominated by whether Microsoft would buy TikTok or not, the “Huawei issue” was deepening further. But for all the U.S. allegations leveled at the Chinese company, Hungary still seems happy to involve Huawei in developing its 5G network.  14

SOCIALITE

NNG’s New Pathfinder

Wise Words From a Viral Happiness Guru David Holzer found himself caught up in the need for COVID testing towards the end of his holiday in Mallorca.

Could he get back to Hungary? What is the future of foreign vacations?

And has he stumbled on a way of making money?  20

NEWS

Virus Leads to Drastic Fall in GDP Every segment of the Hungarian economy has suffered from the negative effects of the COVID-19 pandemic. As a result, Q2 saw an unprecedented GDP decline. Analysts are cautiously optimistic though; they foresee a faster than expected recovery, and think that third quarter data will underscore their expectations.  3

BUSI

N E SS

Local success story NNG, the personal navigation startup that went big, has been hit by the challenges facing the automotive industry and seen layoffs.

Chris Greentree is the American CEO charged with charting its next chapter.7

NEWS

Brexit, COVID, Friendship and Hungary The four-year posting of outgoing British Ambassador Iain Lindsay has been bookended by two unrelated events that have had profound effects: Brexit and COVID-19.  6

News

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Budapest Business Journal | September 4 – September 17, 2020

BBJ

THE EDITOR SAYS

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

Bence Gaál, Gergely Herpai, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Ekaterina Sidorina, Robert Smyth, Zsófia Végh.

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

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

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

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BBJ-PARTNERS

August, at least where I live in Gödöllő, went out with a bang. Quite literally, and several of them, in fact, as the god of thunder took up residence in our skies for most of the night. It was one of those storms that seemed to have more light than sound, but was no less impressive a son et lumiére show for all that.

It seemed an appropriate, if dramatic, way of drawing some matters to a close. The kids’ long summer holiday (which seemed to have lasted an eternity, given they had been homeschooling since mid-March) had finally come to an end. On September 1, autumn began, at least under the meteorological system of splitting the seasons into four equal three-month periods (astronomically speaking, fall doesn’t begin until the autumn equinox, which is on September 22 this year). It was also, of course, the start of the academic year.

Sadly, these weren’t the only things September 1 brought: we also saw the closure of the country’s borders once again, in a bid to prevent further importation of the virus. Just about the only positive thing you can say about that is at least it takes away the uncertainty of worrying when they might close, especially if you are on holiday, but it wasn’t exactly the cheeriest way to welcome in a new beginning.

It is, however, a stark reminder of how fragile any nascent economic recovery will be. We were back in the office, the borders were open, people could holiday, the weather was good. But the warning signs were there, the way countries suddenly moved on Hungary’s traffic light system for demarking safe destinations, the worrying spikes in France and Spain, among others.

Here, too, cases are on the rise again, having grown by 118 to 6,257 on September 1, with 616 deaths. Everyone of those deaths is a tragedy, and one of the first hit the

British Embassy hard, with the loss of its 37-year-old deputy ambassador Steven Dick. Ambassador Iain Lindsay speaks movingly about that (and much else) in his farewell interview with us inside this issue.

I wondered what others think about the level of risk in Hungary. According to the U.S. Centers for Disease Control and Prevention website, in its Travelers’ Health section, Hungary carries a level three warning. The advice has not been updated since August 6, but says “COVID-19 risk in Hungary is high. CDC recommends travelers avoid all nonessential international travel to Hungary.” That seems a little overblown to me, but in governments around the world there is a near constant tension between health departments wanting to keep people safe and trade and business ministries hoping to keep the economy alive.

It has become common place to hear people say something along the lines of “We just have to wait for a vaccine to arrive.” What the U.S. White House calls Operation Warp Speed has seen giant leaps made around the globe to rush through a vaccine, but our columnist Les Nemethy makes the point that it won’t necessarily be a silver bullet.

I was speaking with my 90-year-old mother the other day.

She hasn’t been outside the confines of her nursing home for six months now. “I think my generation had it easy,” she told me. “Of course, we had the war, but you just gone on and dealt with it, didn’t you?” Typical of her to dismiss the little matter of World War II in one sentence, but I think we will all have to tap into that sort of mentality before we can finally say we are post-COVID. Robin Marshall Editor-in-chief

Photo by MTI/György Varga

Photo by fortepan.hu/Pál Berkó

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ONE STEP FORWARD, TWO STEPS BACK?

THEN & NOW

Social distancing during an academic year opening ceremony on September 1 at a school in Szombathely (222 km southwest of the capital), as the rising case numbers of COVID-19 continue to cause alarm globally. The black and white image from the Fortepan archive shows a very different type of year opening ceremony in Budapest in 1955, with more social elements and less distancing.

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Budapest Business Journal | September 4 – September 17, 2020

News///macroscope

Virus Leads to Drastic Fall in GDP

Each segment of the Hungarian economy has suffered from the negative effects of the novel coronavirus pandemic. As a result, the second quarter of the year saw an unprecedented GDP decline. Analysts are cautiously optimistic though; they foresee a faster than expected recovery, and think that third quarter data will underscore their expectations.

Changes in Gross Domestic Product in Hungary, 2008-2020 Annual economic growth rate; seasonally and calendar adjusted and balanced data

The reality was even worse than our worst expectations: this is how one bank economist described the reaction to Hungary’s second quarter GDP data. The initial figure was published on August 14 by the Central Statistical Office (KSH), followed by a second estimate on September 1, which is basically unchanged from the first.

Analysts and the government previously expected an approximately 10% decline in the second quarter of the year from the same period in 2019. The number that eventually came out was an even more shocking fall of 13.6%; when adjusted for seasonal and workday effects, GDP declined by 13.5%.

GDP for the first half of the year fell an unadjusted 6.1% and an adjusted 5.8% year-onyear. Quarter-on-quarter, GDP slipped by an

adjusted

14.5%.

In a statement published after the data was released, the Ministry of Finance pointed to the unprecedented impact of the coronavirus crisis on the economic performance of European Union member states, and noted that economic contraction in Hungary was smaller than the 14.4% average decline for the EU in Q2; the seasonally adjusted data for the EU was 14.1%, according to the blocwide statistical body Eurostat.

While that is true, however, compared to its neighboring countries, Hungary underperformed its peers: in Slovakia, the

Worst on Record

“This data is the worst on record by a high margin. It makes it official that Hungary is going through a technical recession. Local economists were more pessimistic than the Bloomberg consensus, but even locals were surprised by this dip,” he wrote on the website think.ing.com.

He added that the recovery will slow as the temporary economic policy measures are coming to an end (e.g. short-term work schemes, tax relief) and economic reality will catch up, notably in the labor market.

“All in all, we still can end up with “only” a 5.5% GDP drop

in

2020

Quarterly Change in GDP, 2008-2020; seasonally and calendar adjusted and balanced data

Source:

ZSÓFIA CZIFRA

projection for this year’s economic contraction to a range between 5.5% and 7.5%. Next year, the economy could grow in the 3-5% range, he added.

second quarter GDP fall back by 12.1% on a yearly basis, while it declined by 10.7 in the Czech Republic and 7.9% in Poland.

‘Exemplary’

Minister of Finance Mihály Varga said that government measures to shield the economy from pandemic fallout and support a speedy recovery are the equivalent of about 20% of GDP, an “exemplary scale” in the EU. “The goal is for the Hungarian economy to return to its pre-crisis path as soon as possible and to achieve again growth of around 5% next year,” the ministry said.

Although analysts expected a two-digit setback, the 13.6% decline took many of them by surprise.

The Hungarian economy had basically fallen back to its Q2 2016 level, said Takarékbank analyst Gergely Suppan.

However, he drew attention to the fact that after lifting the restrictions and with the restart of car manufacturing, the economy had showed a sharp jump from the middle of the second quarter, which will, according to the analyst’s expectations, show up in the Q3 GDP data. Suppan said the bank had lowered its forecast for the decline in GDP this year to 3.9%. Takarékbank sees a rebound to

7.2% growth

in 2021, he added.

Like Suppan, Gábor Regős of the generally pro-Fidesz economic research institute Századvég thinks that the Hungarian

economy will show signs of recovery in the third quarter of the year; unless, that is, severe restrictions are re-introduced.

However, he believes the GDP data will still be in the negative range in the third quarter of the year, meaning the setback might be around 4-5% for the full year, he said.

As for the second quarter, he noted that the most impacted sectors were, besides tourism, the entertainment sector and industry, but the virus had a notable negative effect on logistics services as well.

ING Bank chief analyst Péter Virovácz said the bank had scaled down its ADVERTISEMENT

as a whole. If targeted lockdown measures slow the rebound (but still not a full second wave with a full lockdown), we see GDP falling by around 7.5% this year. Anyhow, it will take at least two to three years to see Hungarian economic activity reach precrisis levels,” Virovácz wrote.

Also, as the economy performed worse than expected and because economy protection expenditures will be required, this year the government is expecting a deficit of the budget higher than projected earlier, the finance ministry announced at the end of August.

The deficit of the budget to GDP could be somewhere between 7% and 9%. The slowing economy and tax relief measures introduced to ease the burdens of the coronavirus pandemic resulted in a sharp decline in the yearly income of the central budget: more than HUF 1.4 trillion is missing from the budget, according to cautious estimates.

Numbers to Watch in the Coming Weeks The Central Statistical Office will release data on July’s industrial production today (September 4); it should be a good indicator for the third quarter performance of the Hungarian economy. Consumer prices for August will be out on September 9.

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Budapest Business Journal | September 4 – September 17, 2020

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

In addition to core assurance services, he plans to strengthen the company’s role in SAP consulting, cybersecurity services, risk management and digital skills development, both in Hungary and internationally.

In addition to his professional activities, László has played an active role in PwC’s social responsibility and diversity projects, the company says.

Szecskay Lawyer to Advise European Commission The European Commission’s Directorate General for Competition – the EU’s antitrust enforcer – has selected Szecskay competition lawyer Sam Baldwin to serve as a non-governmental advisor, the law firm has told the Budapest Business Journal.

Baldwin will form part of a panel advising the Commission in connection with its work in the International Competition Network (ICN). The ICN’s mission is to advocate the adoption of superior standards and procedures in competition policy around the world, formulate proposals for procedural and substantive convergence, and seek to facilitate effective international cooperation to the benefit of member agencies, consumers and economies worldwide, the law firm says.

Sam Baldwin “It’s a privilege to be working with the Commission and in the ICN,” Baldwin tells the BBJ. “Although a lot of my work as a lawyer is representing companies against competition authorities, I’m a strong supporter of competition policy.

The ICN works tirelessly to find the best ways to get competition law right and its great to be able to contribute to that.”

The firm’s managing partner, András Szecskay, and antitrust practice group head, Anikó Keller, say they are are delighted with the appointment. “Competition law and policy is playing an increasingly important role in Hungary, as in every country,” they say in a joint statement.

“Being selected to advise the European Commission is a real testament to our standing in the international competition law community. We are pleased to be contributing to the ICN’s work and It also benefits our Hungarian clients as it helps us spot enforcement trends and developments early.”

Leasing Director Named at Horizon Development Kata Mazsaroff assumes the role of leasing director at Hungarian real estate company Horizon Development from this month, according to a press release sent to the Budapest Business Journal.

Having graduated with a degree in Economics (Business Communications) from the Budapest Metropolitan University, Mazsaroff started her career in 2006 at the Digital Realty Trust, REIT in Boston, where she was responsible for the marketing and portfolio management of East Coast properties.

Since 2007 she has been fulfilling various positions at Colliers International in Budapest in occupier services including tenant representation, workplace advisory, and change management.

Over the course of 13 years, she managed 250,000 sqm of office projects with a lease

Kata Mazsaroff value of EUR 280 million. Her last position at Colliers International was director and head of occupier services and office agency.

“I am excited to have the opportunity to join Horizon Development, where premium quality, innovative solutions, and future-proof value creation represent the company’s core principles,” Mazsaroff says.

“Furthermore, I look forward to extending my knowledge by gaining insight from the developer’s angle whilst adding value beyond the strategic leasing activities towards the acquisition and design phases.”

Founder and managing partner of Horizon Development Attila Kovács, managing partner Balázs Czár and associate partner Gabriella Sasvári welcomed the new leasing director.

“We are extremely pleased to have come to an agreement with Kata, with whom we had the pleasure of closely working together on different projects during the past couple of years. With her utmost professionalism and thorough knowledge of the real estate market, we are confident that she will be a real asset in our organization, not only leasing and divesting our prime development projects, but also shaping our development concept with her true understanding of the tenants’ mindset and current organizational priorities,” they said.

PwC Hungary Appoints Assurance Leader PwC Hungary has announced the appointment of László Radványi as the new leader of the company’s assurance service line, taking over from Árpád Balázs, who will coordinate services provided to companies in the financial sector as lead partner for financial services and serve in regional management as a member of the PwC CEE partner council.

The assurance service line includes accounting advisory, risk management and cybersecurity, as well as PwC’s Academy, the firm’s adult education center.

Radványi joined PwC Hungary in 2003. He became a partner in 2015 at the age of 35, and has since taken a leading

László Radványi role in domestic and regional assurance transformation projects. His main objective is to offer clients innovative, automated solutions to help them cope with the challenges of an ever-changing business environment.

Hungarian Data Protection Commissioner in 2011, then worked as a data protection expert at the National Authority for Data Protection and Freedom of Information

SBGK Makes 3 Partner Promotions SBGK Attorneys at Law has announced the promotion of three of its attorneys at law, Boglárka Borbély, Ádám György and Krisztián Osztopáni to partners, increasing the total number of partners at the firm to 11. All three have been working at SBGK as attorneys at law for many years.

Boglárka Borbély Boglárka Borbély graduated from the Faculty of Law of Eötvös Loránd University (ELTE) in 2012. Firstly, she worked at a law firm engaged in civil, commercial, and banking law, then she obtained experience in the central administration in Hungary and in the United Kingdom. She joined SBGK in 2014. After passing the bar exam, she became the leader of a team of attorneys and junior associates. She has been an accredited public procurement consultant since 2016 and she obtained a degree as a lawyer specialized in public procurement in 2020.

Krisztián Osztopáni (NAIH). During his time at the authority, he was the rapporteur for more than 700 cases, which covered the whole area of data protection. With six years of professional experience, he joined SBGK in April 2018, where he established a unique data protection and data privacy practice group. Osztopáni also serves as a data protection officer (DPO) at some of his clients. He has been a regular lecturer at ELTE since 2015 on data protection. He is one of the authors of the newly published Commentary of GDPR, published by Wolters Kluwer.

Commenting on the three promotions, SBGK president Katalin Szamosi said: “The appointment of three excellent young colleagues as partners is not only recognition of their efforts and work, but also a milestone in the life of the firm.

This is the first time that three colleagues have been promoted as partners at the same time, moreover from three different legal areas. This is proof and confirmation of work of many years which have led SBGK Attorneys at Law to become an innovative and trustworthy professional partner in other areas of business law, beyond intellectual property law.”

The appointments were effective as of March 19, but SBGK says it postponed the announcement of the partner promotions due to the coronavirus pandemic.

Horváth to Co-head Dentons’ Europe Energy Group

Ádám György Ádám György also holds a law degree from ELTE, and an LL.M. in intellectual property and competition law from Munich Intellectual Property Law Center. After gaining experience in several foreign law firms, he returned to Budapest and started his Hungarian legal career as an attorney.

He is currently a Ph.D. candidate at ELTE. He has recently been involved in complex IP cases and represented a client before the Court of Justice of the European Union.

In 2020, the WTR 1000 and Legal 500 publications included him as a rising star, while according to iam Patent 1000, he is a leading individual in patent litigation.

In 2018, he was elected to the new membership committee of the Budapest Bar Association. He is also a mentor of the Hungarian Fashion and Design Agency and the leader of the Legal Committee of Young Entrepreneurs Association Hungary.

Krisztián Osztopáni received his law degree from the University of Pécs in 2010. He started his legal career with the

Global law firm Dentons announced the appointment of Anita Horváth as co-head of the energy group in Europe.

As co-head of the Europe Energy group, Horváth will serve alongside co-head Arkadiusz Krasnodębski to further develop Dentons’ transactional offering within the energy sector.

Based in Budapest, she is among the premier lawyers advising on complex domestic and cross-border M&A, joint ventures and private equity transactions in Hungary, and frequently leads multijurisdictional deals. In addition to her regional appointment, Anita was also recently named co-head of the corporate and M&A practice in Hungary, alongside partner Rob Irving. She has been a partner at Dentons since 2015.

“Having advised most of the premier energy players on their strategic projects in Hungary and CEE, I look forward to replicating our energy team’s success on a European level. As Dentons is home to the largest energy-focused team of lawyers in the world, in my new role, I plan to further enhance our strength in advising developers, investors, contractors, financiers, governments and regulators on their energy sector related projects,” Horváth commented.

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Industrial Market Continues to Provide Development Opportunities Cushman & Wakefield expect low industrial vacancy and reasonably stable demand levels for Hungary going forward, with a focus on builtto-suit (BTS) and semi-speculative opportunities. Those projects that are already underway are expected to be handed over with a delay of one quarter, with 47,000 sqm of new space is expected to be delivered in the second half of the year.

GARY J. MORRELL

News | 5

“The vast majority of our customers in Europe have remained open for business and, even at the peak of the COVID-19 outbreak in March to April, 95% were still open,” he adds.

As of this summer industrial stock for Central European (Czech Republic, Hungary, Poland, Romania and Slovakia) stood at 37.5 million sqm; by end of this year, that figure could

reach

40 million sqm,

Prologis Park Budapest Harbor by Prologis.

Key completions for the first half of the year include 23,000 sqm at CTPark South, 18,000 sqm at East Gate Business Park

by Wing, 13,000 sqm at Prologis Park Budapest-Harbor and 10,000 sqm at Budapest Dock Szabadkikötő.

The industrial market in Hungary (and wider Central Europe) is seen by analysts as the sector in the most positive position in the post-coronavirus crisis period.

Continued low vacancy rates and stable rental levels are forecast due to high demand; however, due the lockdown many speculative projects have been put on hold despite the strong demand for space.

In the current market environment, it can be difficult to differentiate between speculative and BTS projects.

“Depending on location, developers will be using different development strategies,” comments Ferdinand Hlobil, head of Central European Industrial at Cushman & Wakefield.

“Some locations will need speculative developments to attract more demand, while other locations might be under high demand pressure anyway. So developers could ‘sell the space from the plans’,” he adds.

Developers are essentially working on BTS developments with a speculative element, Paweł Sapek, head of Central Europe at Prologis, says.

according to Cushman & Wakefield.

Poland and Czech Republic continue to be the dominant Central European markets. Both countries benefit from their geography in major logistics and industrial networks, notably with close proximity to Germany.

Romania is also emerging as a major industrial and logistics market with more than 4 million sqm of stock. Major developments are ongoing in the western Transylvania region of the country, an indication that a regional industrial network has emerged in the country outside of Bucharest.

The Hungarian industrial sector is generally regarded as underperforming in the volume of deliveries in comparison.

Further, the developer-led market here is mainly limited to the Budapest area; a functioning commercial developer-led industrial market has not been established outside the capital.

Central Europe Industrial Stock H1 2020 (sqm)

Open for Business

“Depending on customer needs, we are able to deliver both speculative and BTS space. In Europe, our assets are located in the largest consumption markets and key logistics hubs, which we believe will be most resilient in an economic downturn,” Sapek says.

Czech Republic . . . . . 8.8 million Hungary . . . . . . . . . . . . 2.3 million Poland . . . . . . . . . . . . 19.7 million Romania . . . . . . . . . . . . . 4 million Slovakia . . . . . . . . . . . . 2.6 million Source: Cushman & Wakefield

Some COVID Restrictions Return Coronavirus ///roundup NICHOLAS PONGRATZ

On September 1, Hungary closed its borders to most foreigners in anticipation of what some might consider to be the onset of the second wave of the coronavirus epidemic in the country, as the number of recognized active cases more than doubled in a single week from 885 on August 25 to 1,820 on September 1.

Gergely Gulyás, the head of the Prime Minister’s Office, said the measure marks a return to restrictions in place during the initial wave of COVID-19 infections in the spring and were warranted because of the rising number of new cases.

Exceptions to the entry ban will be made for convoys of soldiers, some business people, some cross-border commuters, transit traffic and diplomats, he said. Hungarians returning from abroad after September 1 will be required to produce two negative COVID19 tests, 48 hours apart, to be exempted from a mandatory 14-day quarantine.

At a meeting on August 31 in Bled, Slovenia, the Czech Prime Minister Andrej Babis had asked Prime Minister Viktor Orbán to allow Czech nationals into

Hungary who had already booked rooms in the country for September, Minister of Foreign Affairs and Trade Peter Szijjártó said on his Facebook page.

An agreement was reached allowing Czech citizens with a recent negative COVID-19 test entry into Hungary and, after further negotiations, the “Czech example” was also applied to the other Visegrad Group members, Poland and Slovakia, he added. A decree issued by Szijjártó published in the latest issue of the official gazette Magyar Közlöny will also allow commuters from Croatia, Slovenia, Austria, Slovakia, Ukraine, Romania and Serbia to enter Hungary for periods of up to 24 hours as long as they remain within 30 kilometers of the border.

Domestic firms centered around travel and tourism, already compromised by the effects of the coronavirus so far this year, have had to make several adjustments according to this recent development.

The Hungarian National Chamber of Hunting has petitioned for a similar travel ban exemption for visiting foreign hunters, because they do not visit popular places frequented by tourism, but travel to the sparsely populated countryside, coming

into contact with a minimal number of people there, the chamber argues, adding that it the sector makes much of its money at this time of year.

Hungarian low-fare airline Wizz Air said its operational capacity is likely to be lower than anticipated in the third quarter of its business year because of renewed travel restrictions, emphasizing that the persistent mobility restrictions across the network are likely to keep capacity at around 60% in October-December, as opposed to the 80% it had previously anticipated.

In other travel-related news, MÁVStart said it would reimburse the price of any international tickets for September without handling costs, regardless of the destination country, if the passenger chooses to cancel the trip. The news came after the state-owned rail company announced it was removing sleeping and dining cars from its international routes, effective September 1.

Recently launched Czech Railway company RegioJet will be suspending its operations in Hungary for September, Continental Railway Solution Kft., who licenses the firm in Hungary, told economic daily Világgazdaság (Global Economy).

Though hit hard by the fall in foreign traffic, tourism was still boosted by domestic travelers, especially when it came to rural accommodation, the vicepresident of the National Association of Rural and Agrotourism, Géza Szabó, told conservative daily Magyar Nemzet (Hungarian Nation) .

Accordingly, Zoltán Guller, head of the Hungarian Tourism Agency (MTÜ), told Magyar Nemzet that the country’s tourism industry needs to focus on domestic travelers, saying that “business policy for the commercial accommodations sector, catering and event organizers needs to be tailored to a new, domestic-centered tourism.”

He said the country’s tourism industry could be supported by domestic travelers choosing to vacation in-country, adding that a record 1.2 million Hungarians stayed in local commercial accommodations in July.

MTÜ intends to continue this approach in light of the renewed travel restrictions, launching a nationwide tourism stimulus campaign from September 9, where participating service providers will have special offers available until October 15.

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Brexit, COVID, Friendship and Hungary The four-year posting of outgoing British Ambassador Iain Lindsay has been bookended by two unrelated events that have had profound effects: Brexit and COVID-19.

ROBIN MARSHALL

Since he took up post in Budapest in March 2016, Lindsay has built a reputation as a highly vocal and visible promoter of British business interests in Hungary. But almost all of that has been done against the backdrop of the United Kingdom’s historic (and, to many, surprise) decision to leave the European Union.

The vote itself took place in June 2016, just months after Lindsay’s arrival. He had originally applied for the post in the late summer of 2014, when a referendum was not even on the agenda, far less Brexit.

“I applied for the job with a manifesto based on strengthening the bilateral relationship, particularly the economic side, and then suddenly the ‘Jolly Joker’ was thrown into the pack with the referendum result,” he recalls during an exclusive interview at the magnificent ambassador’s residence, the former Scitovszky villa in Lórántffy Zsuzsanna út.

He stops short of saying Brexit hindered his mission, but agrees that it became a “dominant” theme. “It took up time that could have been spent, objectively speaking, on constructive work on the bilateral relationship. It took up a lot of time in trying to understand what it would mean.”

Good Friends

Not that it seems to have got in the way of Anglo-Hungarian relations. Lindsay says the link is robust and in excellent health, built in part on the rapport between David Cameron, when he was British Prime Minister (from 2010 to 2016), and his Hungarian counterpart.

Lindsay recalls briefing the then British leader ahead of President János Áder’s trip to London in the summer of 2016, and saying that Orbán himself wanted to visit.

“David Cameron turned to me with this intensity in his eyes and said ‘Viktor Orbán can visit anytime he likes. He is a good friend of mine and a man of his word’,” Lindsay says.

That trust was built during the 2014 election of Jean-Claude Juncker as president of the European Commission, which the British had opposed. The ambassador says that although many had backed this position in private, when it came to the vote, only two countries stood against the candidate: Britain and Hungary.

The faith has been repaid. Lindsay says there has been no stauncher supporter of the British over Brexit that Hungary. “Prime Minister Orbán said at the time, and has

Iain Lindsay said since, that he is sad to see us go, but he respects the decision. He isn’t worried for the British. He is worried for the EU.”

Body Blow

COVID-19 has affected all organizations, but for the British Embassy it has been very direct, very personal, and very raw.

Among the first to die in Hungary was Deputy Head of Mission (effectively the deputy ambassador) Steven Dick, a 37-year-old diplomat who had only moved to Budapest in November 2019.

Lindsay describes it as “an absolute body blow” for the embassy’s 50-strong team, not helped by the fact it happened just a week after lockdown, with staff, including the ambassador, isolated in their own homes. The technology required for home office is very good for communication, Lindsay says, but not so much for empathy.

“Clearly it has had a huge impact on us personally with regard to moral: it hit us.

But we have, I think, come back fairly well.

This is not the final six months I would have wanted. I am not thinking so much personally as in terms of what we wanted to achieve with the bilateral relationship. I had already started to see that Steven Dick was an excellent diplomat, had taken to Hungarian, spoke it pretty damn well. It was such an awful tragedy, his passing […]

What might have been?”

Social Media Outreach

The embassy has a lively social media presence, often featuring Lindsay himself, frequently speaking in Hungarian, sometimes reciting Hungarian poetry.

The ambassador believes accessing the language, mistakes and all, gives the British an advantage when it comes to building the bilateral relationship. He says the United Kingdom is the only European

When the process of Britain leaving the EU began to speed up, for example, the embassy organized a series of townhall meetings that were also live streamed for those not in Budapest (since COVID came along, they have moved fully online).

While the ambassador says his communications team is regarded as one of the best in Europe, he insists the embrace of social media is not unique to Hungary, but is “part of the DNA of the Foreign and Commonwealth Office.”

“This is not the final six months I would have wanted. I am not thinking so much personally as in terms of what we wanted to achieve with the bilateral relationship. I had already started to see that Steven Happy Memories Dick was an excellent He officially leaves Hungary on September 15 and soon after will be replaced as diplomat, had taken to ambassador by a man he has known for Hungarian, spoke it pretty 20 years, Paul Fox (currently in Hungary making sure his Hungarian is up to speed). damn well. It was such an In October he leaves the diplomatic awful tragedy, his passing corps after a 40 year career, and will return […] What might have been?” to Bahrain, where he was ambassador country to insist its staff learn to speak Hungarian before they take up post.

Not only do Hungarians appreciate the effort, but it also gives diplomats a unique window into understanding the Hungarian soul as well as the culture, the ties to the land and the communities beyond the present day borders. However big and beautiful the capital may be, “Budapest is not Hungary, and Hungary is not Budapest”, Lindsay says.

There is a relatively small British community, the ambassador estimates it at 5,000-10,000, but it is not restricted to what he calls “the Budapest elites”. Many live out in the countryside. Social media means the embassy can keep in touch with everyone, both here and among the Hungarian community in Britain.

before moving to Hungary, to work as a consultant. He admits to having deep feelings for Hungary, and says he will certainly return from time to time.

He will take “so many” memories with him, not least carrying the flag for the British Team at the European Maccabi Games for Jewish athletes in Budapest last year, and leading the “March of the Living” commemorating the Holocaust in April 2019, which was dedicated last year to Jane Haining, the leader of the Scottish Mission school in Budapest from 1932, who protected her Jewish charges from deportation until she was arrested in 1944.

She died in Auschwitz aged 47.

But his happiest memory, he says, will be his Hungarian rescue dog, Juno, who will join Lindsay and his wife Bridget in their travels.

“I am optimistic for the future, both for Britain and Hungary.”

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Budapest Business Journal | September 4 – September 17, 2020

Business

develop further. “The navigation market is extremely competitive, but still very lucrative. There is a bright future for NNG built on that cornerstone,” he says.

The trick will be to make sure the company identifies future trends, as it has in the past when it moved from personal, hand-held navigation to in-car software.

“We need to make sure NNG does not get stuck in a trough behind the waves,” the new CEO says.

Built-in navigation systems are now all but standard (Greentree says it was NNG that persuaded some automakers to include it even in many basic models).

NNG is already at the forefront of cybersecurity in connected cars, and with good reason. The next stage is to “link the living rooms”: home; office; and car and, crucially, to make it “completely frictionless.” Or, to use an analogy from his engineering background, to find the most efficient way, the path of least resistance.

Navigating the Path of Least Resistance to Future Growth

NNG is a local success story, the personal navigation startup that went big. Still a successful company, it has been confronted by many of the challenges facing just about everyone involved in the automotive industry, and has seen layoffs. The Budapest Business Journal spoke exclusively with Chris Greentree, the American CEO who has been charged with charting NNG’s next chapter.

ROBIN MARSHALL

We caught up with Greentree via a video call just days before he arrived in Hungary (he took up post on September 1). He says he has seen the business plans for 2020 and 2021, but does not intend to make immediate changes. Rather, the initial aim will be to take a forensic look at what the company is doing now and how it goes about it.

“I take a fact based, data driven approach to running a business,” says the new CEO. “My big drive for the first few months is to understand how we will finish this year, and how we are positioned to achieve the targets for next year.”

Only then will he look to make changes.

“For me, what is key is that the whole organization is working to the same set of targets and goals,” he says. Everyone must share – and understand – a clearly articulated vision and mission. Greentree says management transparency is key, and the “say/do ratio” must be right.

“The workforce will need to trust management; the owners will need to trust the business. I want to increase the targets set for next year, but I need to do so from a diagnostic point of view of where we are now. So, if not in 2021, certainly in 2022.”

“NNG will always be a Hungarian company and always be in Hungary, but it is a global market and it needs a global footprint so it can be ‘local’ where ‘locality’ is needed.”

Chris Greentree

Early Adopter

He is a mechanical engineer by training, but is also a self-confessed techie (“I am a technology early adopter, I always have the latest thing”), who stated to learn programming in BASIC when he was eight or nine, and consumes tech news religiously.

He also likes to get his hands dirty. “I am grease monkey at heart. I used to say I couldn’t get my fingernails clean until I went to college because that was the first time I didn’t have my hands in an engine any free time I had.”

Greentree comes to NNG from Elektrobit, a Germany-based global supplier of embedded and connected software products and services for the automotive industry, a direct competitor in many ways. But he also had a

20-year career

at Honeywell, most recently as general manager of its Automotive Software division.

It was while at Honeywell that he got his MBA, but he says just as important were his bosses at the time. “I was part of one of the best product marketing machines, after GE, because many Honeywell executives came from GE and were building on the Jack Welch playbook. I learned more from them than I could ever have learned in doing my MBA.” What he leaned above all else was the importance of being able to recognize what value any development adds to

“Auto manufacturers are moving from a model of making money by selling metal to making money by selling the customer experience. What we need to do is build platforms that allow different solutions to come together, and I am very excited about those opportunities. The space has many players, but there is still a lot of blue ocean out there.” the business. Put another way, the most important thing is not how well something is made (though, naturally, it should be well made), or how clever or how well designed, but whether people want it.

Lucrative Market

Clearly, Greentree would not be taking on the role if he did not think NNG was a good company with potential to

“We will not create every piece of that, but our focus should be to find the sweet spot for NNG in the solution stack enabling this. I want to talk to users. I want to know, how does NNG find those functions that we can do better than our competitors?” Interestingly, some of this is driven (if you will pardon the pun) by the fact that the carmakers’ own business is changing.

“Auto manufacturers are moving from a model of making money by selling metal to making money by selling the customer experience. What we need to do is build platforms that allow different solutions to come together, and I am very excited about those opportunities. The space has many players, but there is still a lot of blue ocean out there.”

Brand Awareness

Would it help if NNG branding were included in the infotainment systems it powers? Greentree says it might potentially but, ultimately, he isn’t particularly concerned if car owners know his technology is inside their vehicle; far more important, far more valuable, is that the OEMs and Tier One suppliers know, if only to widen the potential number of requests for quotes (RFQs) from them.

“In the B2B space, the best thing you can do is to speak clearly to your market about the successful solutions you are part of. I am happy to be a white label company as long as I can tell the industry what we are doing.”

Does the arrival of an American CEO based in Switzerland signal a beginning of a break with NNG’s Hungarian roots? No. “It will always be a Hungarian company and always be in Hungary, but it is a global market and it needs a global footprint so it can be ‘local’ where ‘locality’ is needed.”

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Budapest Business Journal | September 4 – September 17, 2020

The COVID-19 Financial Hole is Getting Wider and Deeper

Photo by Shutterstock/Csaba Peterdi

Even if COVID-19 were to disappear tomorrow miraculously, it would take years for the already inflicted damage to work its way through the financial system, causing a deep recession or depression, warns Les Nemethy.

But the virus is not disappearing.

reset are becoming increasingly frequent.

The debt bubble and fiat currency debasement will be further accentuated as COVID-19 grinds on.

Given the massive amount of debt, monetary expansion, etc., we are guinea pigs to a vast experiment. The debate going on among economists as to whether we might experience massive inflation or deflation demonstrates how little we know where this experiment will lead.

Vaccine to the Rescue?

with further domino effects on banks (see below), medical costs, unemployment and hence deficit spending.

In fact, in many countries, case numbers are rising, which brings me to the subject of this article: the financial hole created by the pandemic is getting deeper and wider. Just the long-term cost of the disability/health effects already created by COVID-19 is estimated at USD 35 trillion, according to a bloomberg.com article.

In this issue, I will deal with three examples of how the effects of COVID19 are not immediate. They will take time to work their way through the system, like slow-motion dominoes falling. These examples include bankruptcies; the effects on the banking system; and deficits/ burgeoning debt/monetary expansion.

Bankruptcies

The Corporate Finance Column

We are at the very beginning of a long series of bankruptcies caused by COVID19. According to the Financial Times, as of mid-August 2020, 45 companies with more than USD 1 billion in assets have declared bankruptcy, compared to 39 in the same period during the 2009 recession.

As the virus grinds on, as companies consume their capital reserves, the number of bankruptcies is only likely to accelerate,

Effects on Banking System

Banks are better capitalized than in the 2008 crisis (see my earlier column in the May 22 issue on the subject, Could COVID19 Trigger a European Banking Crisis?).

However, as the coronavirus crisis drags on, the financial toll on banks will only increase.

Bankruptcies create non-performing loans; hence capitalization may yet prove inadequate, triggering a crisis of confidence.

The amounts of derivative contracts held by many of the “too large to fail” banks (e.g. Citibank, JP Morgan) are each measured in the tens of trillion of dollars, according to the Quarterly Report on Bank Trading and Derivatives Activities for Q3 2019, published by the U.S. Office of the Comptroller of the Currency in

December

2019.

That reminds me of Warren Buffet’s famous statement that derivatives are financial weapons of mass destruction.

Many countries have declared moratoria on debt payments, mortgage payments, rent payments, etc. Banks typically do not recognize loans subject to moratoria as being in default. But what happens when the moratoria expire?

Moratoria and creative accounting cannot be extended indefinitely.

What will happen in countries like India, Nigeria and Brazil, where there are many millions of COVID cases, and the banking system may be less able to withstand bankruptcies?

Deficits and Money Printing

The world was already facing a huge debt bubble prior to COVID-19. Government responses to the crisis have been to massively increase spending, including unemployment payments, “helicopter money”, bank guarantees, etc., which only serve to increase debt.

Global debt (households, non-financial corporates, government, financial sector) has reached a new record of

331% of GDP

in Q1 2020, up from 320% in Q4 2019 and continues to increase rapidly. Gross debt issuance also hit a record of USD 12.5 tln in Q2, an increase of 127% in respect of the quarterly average of USD 5.5 tln in 2019.

The money printing machines are working overtime. Forty percent of U.S. spending is already financed by the issuance of new debt/money printing, the New York Times has reported. References in the media to a dollar crisis, massive inflation or deflation, or a global financial

A vaccine might arguably help stop further shocks to the financial system, but would not stop the domino effects from existing damage working its way through the financial system.

But will we ever have an effective vaccine?

My own view is that many of the flu strains with us over the past years are also forms of coronavirus, and the vaccines against them provide at best partial effectiveness, and that viruses constantly mutate.

The chances are that we will find ways to reduce the spread of COVID-19 and treat it better, but there will be no magic bullet (like a smallpox vaccine that totally eradicates the disease) in the coming year or two.

Given the logistics of producing billions of vaccines, and the anti-vaxxer objections of large swaths of the population against taking them in the first place, even if a semi-effective vaccine were to be found, it will take time to roll it out. We should plan to live with COVID-19 for at least the nearand mid-term, and brace ourselves for the financial aftermath.

Bottom line: expect turbulence and volatility ahead. Liquidity will help you survive a downturn and take advantage of opportunities.

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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Company-in-a-Box: In Europe for Europe The COVID-19 pandemic has dealt a heavy blow to globalization as far as manufacturing companies are concerned. Many enterprises are now looking into ways of relocating their supply chains from China, which has been the global supply-chain hotspot of recent decades.

Europe and Hungary could emerge as winners from this trend, Tungsram president and CEO Joerg Bauer argues in the fourth part of its mini-series published with the Budapest Business Journal.

BBJ STAFF

Following the impressive growth of the first three months, the Alteo Group maintained the spectacular dynamics of its profit-generating capacity in Q2 as well, according to an investor presentation released by the company on the Budapest Stock Exchange website. Consolidated sales increased by 33% and EBITDA by 48% compared to the same period in 2019, mainly due to the fact that most of the group’s profits come from businesses that are less sensitive to the virus situation, which did not stop their dynamic growth.

The data for the first half of the year also suggests that the economic downturn caused by COVID-19 may cause far fewer problems for the next-generation energy

most prominent business trend in the post-COVID world. According to a survey by the Massachusetts Institute of Technology, mainly high-tech companies are likely to move part or all of their production to Eastern Europe, Mexico or Brazil.

Innovation Focus

In the wake of the COVID-19 pandemic, companies are increasingly turning their backs on globalization and shifting toward a more localized approach when it comes to supply chains, a recent study by Bank of America revealed.

According to a CNBC report covering the BoA study, 80% of the global manufacturing sector experienced supply chain disruptions due to the coronavirus crisis, forcing more than 75% to widen the scope of their existing re-shoring plans. Nevertheless, foreign companies looking to move their manufacturing processes away from China may

face

USD 1 trillion

in related costs over a five-year horizon.

Despite the hefty price tag, the move would still be beneficial for companies in the long run, according to the

Company ///news Alteo Maintains Profits Amid Pandemic

Business | 9

provider than for companies active in more pro-cyclical sectors. The impact caused by the epidemic was already felt in the first quarter of 2020 in the global economy and its major players, but the symptoms really intensified in Q2.

Duna House Issues 10-year Bonds An auction for bonds issued by Duna House on August 31 ended with a significant oversubscription, writes portfolio.hu. Institutional investors bought 10-year bonds with a nominal value of HUF 6.6 billion (the total number of bids submitted was HUF 9.45 bln). The bonds have a fixed interest rate and the coupon is 3%. The average yield is 2.3477%. At the beginning of August, Duna House

report. In fact, the epidemic only lent momentum to these efforts; several developments were already pointing to a corporate migration away from China before the crisis.

One such factor was automation, a key trend of the industry 4.0 era, which rendered the availability of cheap, manual labor redundant in many sectors and workflows. Additionally, the news coverage of recent years has been dominated by international trade regulation disputes and national security concerns, fueling corporate unease worldwide and particularly in the United States. Not to mention the fact that China is a far cry from being the embodiment of a state devoted to fighting climate change.

No wonder that two-thirds of the analysts quoted by the BoA study believe that relocating production will be the

announced that it was participating in the National Bank of Hungary’s Bond Funding for Growth Scheme (BGS), under which HUF 6 bln of bonds were initially authorized. Scope Ratings completed the rating of Duna House and the are rated “BB.” At the time it was announced, Duna House said the goal of the bond issue is to refinance a portion of its existing loans and support the company’s acquisition plans.

Magyar Telekom Taking Steps to Issue Bonds Magyar Telekom said its management is taking initial steps to participate in the Bond Funding for Growth Scheme (BGS) of the National Bank of Hungary (MNB), according to an announcement released on the website of the Budapest Stock Exchange. “The total amount of bonds that may be issued, the maturity of the bonds, the applicable interest rates and the timing of the bond issuance will be determined at a later stage and communicated in due course,” the announcement read. Magyar Telekom said it had started a review of its external

Europe and Hungary enjoy a strong position in this respect. In recent years, the government of Prime Minister Viktor Orbán has created a favorable economic environment for companies focusing on innovation, be they domestic or foreign.

Moreover, under the government’s recently announced “Invented in Hungary” policy, value-added manufacturing is also held in high regard.

Hungary-based Tungsram, which operates in 100 countries around the world, has also recognized the benefits of repatriating from China to a favorably positioned Central European location, says Joerg Bauer, President and CEO of Tungsram.

The company’s “In Europe for Europe” initiative aids enterprises seeking to move their supply chains to Hungary. Being an integrator of operations and manufacturing with its headquarters in Budapest, Tungsram developed a “Company-in-thebox” service package that offers a wide range of services and facilities.

The scope of services and support includes laboratory equipment and services, world-class manufacturing, financial, IT, HR, and legal consultancy, as well as involvement in R&D projects and access to the company’s global distribution network. As suggested by the name of the initiative, European companies can benefit the most from “moving home.”

The solution requires a long-term commitment from both the investor and the service provider, adds Bauer. The structure of the service allows investors to focus on their core business as the need for investment is significantly reduced and the risk of business failure also declines considerably, while the re-organization of operations can be accelerated by up to 12 months.

funding framework in order to diversify and enhance the maturity profile of its debt portfolio and obtain funding sources with competitive pricing.

BIF H1 Profits Rose 62%

First-half after-tax profit of listed property developer BIF rose 62% year-on-year to HUF 1.79 billion, boosted by one-off items, according to an unaudited consolidated IFRS earnings report released on the website of the Budapest Stock Exchange.

Sales revenue was up 3.7% at HUF 2.76 bln, and the “other operating income” line was responsible for most of the growth, rising to HUF 1.35 bln compared to just HUF 140 million in the base period. This included HUF 1.09 bln the company booked from selling property in Verseg (55 km northeast of Budapest) and a HUF 243 mln rise in the value of its investment properties. EBITDA was up by 72.4% at HUF 2.14 bln and operating profit was up 50.6% at HUF 1.84 bln. BIF had total assets and liabilities of HUF 60.40 bln at the end of June, little changed from the end of 2019. Long-term liabilities came to HUF 18.54 bln, up 18.6% in six months.

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Budapest Business Journal | September 4 – September 17, 2020

Special Report What are the latest trends for the sector? What direction will the ICT Association take?

What were the lessons learned from the first wave of the coronavirus? Has a white-label policy worked for CryptTalk?

All this and more inside.

Lessons Learned in the ICT Sector During the Pandemic

13

CryptTalk Takes White-label Strategy as it Waits for Quantum-computing

12

Huawei: A Tool in a Playbook?

14

Cost Saving Alternatives to Buying new Software

15

System Integration can Help Businesses Work Smarter

18

Photo by Shutterstock/Blackboard

IT & Systems Integrators

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Budapest Business Journal | September 4 – September 17, 2020

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Special Report | 11

New President to Bring Fresh Outlook to IVSZ Following 10 years as leader of the ICT Association of Hungary (IVSZ), Tamás Laufer, its president, stepped down in early August. His successor, Balázs Vinnai, who has vast amount of experience in founding, operating and investing in ICT companies, brings with him a different outlook that will further add to the scope of the organization.

Secretary general Attila Molnár talks to the Budapest Business Journal about the expanding roles of the organization.

ZSÓFIA VÉGH

BBJ: How will the arrival of the new president shape the workings of IVSZ? Attila Molnár: During the past 10 years, the continuity granted by the previous president, which I dare call the Golden Age of IVSZ, allowed for very a stable operation. We have evolved a lot and have transformed substantially. From an association of IT, telecommunication and electronics companies, in line with the way digitalization has changed, we have stepped out of this “trinity” and by now have turned into the sole organization representing the entire scale of digitalization for the interest of its members, promoting new technologies and improving competitiveness, both our members’ and the country’s.

The new president, Balázs Vinnai, has a solid track record in this sector; not only did he build remarkably successful

Of these, three main areas have stood out: education (also as a response to acute labor shortage in the sector); industry digitalization and SME transition to industry 4.0 and sectoral digitization; and, last but not least, innovation. Once the main strategies had their responsible person at the ministry, the work at IVSZ changed. Every technological field has a member of board responsible for it and they more closely follow what is going on. So, to answer your question, I am not expecting a change; we will likely continue on this path and will probably add new fields (such as mobility and fintech) to the list.

“At Székesfehérvár, for example, last year a dozen teachers were trained on a scholarship for a year, who then passed this knowledge to their fellow colleagues.

This spring, the shift to digital education in their school was smooth. We have to invest in it, but if we do, it delivers results.”

Attila Molnár startups, he also had the chance to follow the operation of these as an investor abroad. He is bringing a fresh viewpoint and approach with him and will probably incorporate some of it in the organization as well. With him, the representation of a younger generation of the market will also be more enhanced within IVSZ. BBJ: During the past five or so years, IVSZ has been best known for devising a number of digital strategies. Will the market experience of the new leader shift the focus more towards the market?

AM: What IVSZ does is create demand, encourages, catalyzes a whole ecosystem.

A digital strategy forms the frame for the digitalization of an entire sector. Once the government decides to spend on that specific sector, then the market will move more there as well. When we started to create digital education strategies, several new firms specialized in digital education were established. Recently, their work came to attention and became in demand when students were forced to study from home due to the coronavirus. But we do have a few other strategies that receive disproportionately less (media) attention.

One is digital agriculture. Precision sowing, spraying or growing of plants has a myriad of benefits, from saving pesticides to improving crops; they are less prominent in the news, but these programs exist.

Regarding the focus on the market, what most of our members would be the

“The new president, Balázs Vinnai, has a solid track record in this sector; not only did he build remarkably successful startups, he also had the chance to follow the operation of these as an investor abroad.

He is bringing a fresh viewpoint and approach with him and will probably incorporate some of it in the organization as well.” happiest about is that we provide them businesses on a silver tray. IVSZ’s job is to do this not directly but to create the opportunities for them to find business by, say, organizing an event, creating a platform where they meet potential partners, etc. And I believe we have done well in this field. From a five-member organization in 2010, we vaulted into prominence in 2014 when we cooperated with the government in creating several strategies in the Digital Welfare program.

Now we are 25 members, responsible for GINOP projects and several significant events on top of our standard activities.

BBJ: You talked about IVSZ’s role as an organization. How active are its members and how effective is the cooperation between the parties?

AM: Actually, when the virus started, most IVSZ members became very active. Everyone gave feedback and contributed with their own means to the solution of the problem. When working from home was introduced, the telecommunication networks in the country had to bear 1.5-2 times the normal load, something IT experts also had to deal with from home. We saw all our member taking actions, offering help, member work was buzzing. Over time, as the virus receded, they all returned to the issues of their companies, so it is our job as well to keep the activity levels up.

BBJ: How well did digital education function during the pandemic?

AM: IVSZ’s education workgroup have pointed out in several interviews since then the difference between digital and remote education. What we saw was the latter, normal education using digital tools. Digital education is about developing digital skills, where the tools, although they matter, of course, are not in the focus, nor is physical distance.

In this field, we have a long way to go, from training teachers to establishing this type of education in schools, to actually training students. There are some good examples: at Székesfehérvár, for example, last year a dozen teachers were trained on a scholarship for a year, who then passed this knowledge to their fellow colleagues. This spring, the shift to digital education in their school was smooth. We have to invest in it, but if we do, it delivers results.

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Special Report

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Budapest Business Journal | September 4 – September 17, 2020

CryptTalk Takes White-label Strategy as it Waits for Quantum-computing CryptTalk first burst onto the domestic news scene in the spring of 2016 when the Hungarian Ministry of Interior said it wanted to outlaw the awardwinning Magyar telephone encryption system. The ministry alleged that CryptTalk posed a national security risk, enabling terrorists to converse by phone without fear of being overheard by the authorities.

KESTER EDDY

Four years on, Arenim Technologies AB, the company behind CryptTalk, is alive and well, boasting a list of clients that includes OTP Bank, international law firm Oppenheim and the Boston Consulting Group. Revenues last year totaled EUR 0.9 million, up 19% on 2018.

designed that even the operator is unable to monitor and decrypt client phone conversations.

“There is no ‘back-door’ with CryptTalk,” says Megyeri, using industry jargon to describe the “way into” a communications system for security monitoring. “It is technically impossible to hand over any code or key that could be used to decipher calls made with the [CryptTalk] system,” he underlines.

Ministry Endorsement

Indeed, ironically, the ministry complaints constituted a solid endorsement of the system, resulting in an additional 1,000 or so new CryptTalk users at the time, says Szabolcs Kun, chief strategy officer (and with Megyeri, co-founder) of Arenim Technologies.

(Kun stresses that if any national security authority presents evidence of criminal misuse of CryptTalk, the company will terminate its contract with the individuals concerned. Thus far, no such authority has ever appeared with any such evidence.)

The genesis for CryptTalk began in 2008, when Kun was working on a telecommunications project where a large international customer wanted a service to encrypt phone calls. Kun had the prototype ready in about 12 months, but it took Attila Megyeri “It was really quite absurd,” Attila Megyeri, chief technology officer at Arenim Technologies, tells the Budapest Business Journal, recalling the row at the time.

“My mother called me and asked: my son, are you really going to jail? We were on the top page of [news website] Index, with the threat that if we didn’t hand over the contents of the code, we would go to jail.”

In practice, the authorities held off, and today the ministry is silent, seemingly persuaded by CryptTalk’s argument that it cannot hand over any codes, since the system is so

until

2014

to finalize the concept and launch CryptTalk for Apple iPhone devices, initially only focusing on Hungary.

Meanwhile, Kun and Megyeri had teamed up, founding Arenim Technologies Kft. to develop telecom software for call centers and private branch exchange solutions. (Arenim Technologies AB is registered in Sweden, chosen for that country’s legal system, with its emphasis on privacy protection.)

But despite their best efforts, remarkably affordable pricing (the cheapest individual package is a mere USD 10 per month), glowing user

recommendations and high praise in two security audits by NCC, the U.K.based Cyber Assurance consultancy, winning clients has proved agonizingly difficult and time consuming.

By April 2016, even boosted by the free publicity from the Hungarian interior ministry, CryptTalk had acquired just 9,000 users. The issue, says Kun, is that CryptTalk is a “trustbased” product.

“Someone told me years ago, ‘Hey, Szabi, you’re like the Christian church: you’re selling faith.’ If someone is a believer, then you are OK. If someone is a nonbeliever, you can [almost] never convince him,” he says.

Although persuading the telcos to take up CryptTalk is also no easy matter – the process typically takes between one and two years from start of talks to launch – the results quickly showed up in the top line.

Revenues at Arenim Technologies AB, at just EUR 278,000 in 2016, climbed to EUR 349,000 in 2017 and then more than doubled to EUR 758,000 in 2018. Despite the effects of the coronavirus pandemic, sales are likely to be around the EUR 1 mln level.

Strategic Rethink

The slow growth in client numbers forced management to have a strategic rethink.

“We realized we were trying to evangelize the market by ourselves, as a small company, but marketing your product to people in the era of WhatsApp and Viber, to be on the same page with free software, that’s a struggle,” says Kun. As a result, management shelved plans for offices in South Korea and Canada, instead opting to sell the core CryptTalk software as a “white-label” product to existing large telecommunication companies, which have easy access to a massive, trusting customer bases, and allow the telcos to sell the product under their own branding.

“The very first day when the first publicly available quantum computer is on the market, even if itʼs an unreachable price, then there will immediately be capacity out there to decrypt specific security level codes. And on that day, we have to be on the market, ready with our products. And if that day comes, I think my bank account will be filled.”

“This was a game changer. We focus on doing what we do best, which is develop the software, and leave the sales and the customer support to the larger players. They’ve got the networks ready, in hand. They may have two million customers. Of course,

only

1%

might be interested in this encryption service, but that’s 100 times more than our reach,” says Kun.

Szabolcs Kun

White-label Growth

Today, four major telcos use CryptTalk software, tailored slightly to suit their own needs and brands. Although branded CryptTalk users now number 30,000, Kun estimates that white-label sales account for 70% of recent growth, and white-label revenues are likely to surpass those of own-branded this year.

Arenim Technologies, now in its 10th year, employs about

35

people,

the majority in Budapest, and hires regular sub-contractors for specialist fields as needed.

“The company’s in pretty good shape.

We have at least two legs, and [though] this C-19 virus period tested us, we [came through] very well. We didn’t have to fire anyone, or cut salaries or costs,” says Kun. Company engineers are now preparing for the next challenge, the emergence of so-called quantum computers that will have so much computing power that even CryptTalk’s highly complex encryption codes are likely to be at risk of being cracked.

“This is not a market today, but, the very first day when the first publicly available quantum computer is on the market, even if it’s an unreachable price, then there will immediately be capacity out there to decrypt specific security level codes,” says Kun. “And on that day, we have to be on the market, ready with our products.

And if that day comes, I think my bank account will be filled.”

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

PRESENTED CONTENT

3

Lessons Learned in the ICT Sector During the Pandemic The Budapest Business Journal asks László Marton, COO for corporate sales, marketing and customer care at Invitech, about how the company reacted to challenges imposed on the ICT sector by the coronavirus pandemic.

BBJ: Do you see any evidence that the corporate sector is embracing infocom solutions with greater trust since the lockdown began in March?

LM: We can see that the demand for applications related to teleworking and bandwidth expansion, for example, has

and cases where working from home requires further IT security solutions.

So we didn’t have to invent and introduce new things: our data center services and cloud solutions are also well scalable. Perhaps it is worth noting that, in preparation for a possible second wave, based on the spring experience, we refined one or two of our workflows, placing even more emphasis on speed, minimizing lead times in case we experience a significant increase in customer demand again.

“In the spring period, records could be measured in internet traffic; there were periods when there was an increase of up to 25% compared to the weeks before the epidemic.

By the way, the domestic network withstood this load very well.”

BBJ STAFF

BBJ: What did the ICT sector in general, and Invitech in particular, learn from the pandemic?

László Marton: An important experience for the customers of Infocommunications service providers was that a situation could arise at any time when they had to apply a series of new technological and IT solutions very quickly and en masse in order to survive. So, Invitech had to excel in catering to such needs as rapidly as possible. There were lots of companies that were obviously surprised at how suddenly they needed to provide employees with the infrastructure needed for telecommuting and to create the technical conditions to maintain their business continuity in practice.

This is natural, as this situation we have encountered is basically unprecedented, and the ICT sector has had a huge role to play in proposing and building the most optimal solutions possible by responding quickly to the needs of clients. At Invitech, after switching to working from home in almost a day, we had to serve rapidly increased, massive customer needs, which I think we successfully solved; our systems and business processes performed very well.

The efficiency and speed of my colleagues serving the needs of our partners from their homes surprised even me. The importance of using IT services which are flexible, scalable and have spare capacity, even if it is a classic solution such as a wired data connection, can be a lesson for all economic players.

Special Report | 13

László Marton

“Perhaps it is worth noting that, in preparation for a possible second wave, based on the spring experience, we refined one or two of our workflows, placing even more emphasis on speed, minimizing lead times in case we experience a significant increase in customer demand again.” become much higher than before. In addition, confidence in services such as cloud solutions, which were still stagnating in many places, is now growing.

An increased number of companies that previously believed it is too early

to use cloud services, are now looking at how these services can help their work, how much they support their business success. The epidemic has shown that there is no constantly stable business environment; unexpected events can always occur, and it can be of great help if IT systems can be supported by the knowledge base and infrastructure of a specialized company.

So, while in many cases there was a lot of trust placed in in-house systems in the past, the last few months have highlighted the great need for an outside expert service provider in trouble.

BBJ: What is Invitech doing to prepare for a potential second wave of COVID-19?

LM: The first wave has shown that we have everything in our service portfolio that can help a company if it wants to switch almost entirely to teleworking, supported by our Teams Connect solution, for example. However we also have many tools for increased data traffic

BBJ: How much more can data traffic grow given the current network if more people want to work from home office and more households need stable, fast internet? Is there latent capacity, or will more investment be needed in infrastructure?

LM: In the spring period, records could be measured in internet traffic; there were periods when there was an increase of up to 25% compared to the weeks before the epidemic. By the way, the domestic network withstood this load very well.

Invitech’s own infrastructure was also in place, thanks to our networks which were designed and built to have large reserves.

There is also very serious and forwardlooking work in progress on capacity expansion, which is why we were able to meet the sudden surge in traffic needs. We want to continue applying this forwardthinking, situation-ready mindset in our network development.

BBJ: What ICT-services do you think will become less popular in the next few years for an integrated provider like Invitech, and which services will see demand grow?

LM: Invitech is an infocommunications solution provider that provides managed services realized on its own infrastructure in areas such as data connectivity, data centers, cloud solutions, IT security and IT outsourcing.

In these areas, we cannot see a service that has a declining popularity We believe that it will continue to be very beneficial for companies to outsource tasks related to infocommunications infrastructure and its operation. The importance and role of IT security is constantly growing, if only because a great number of companies are moving more of their activities to the online space. There will be expansion in other areas as well, as companies will want to relocate more business processes to cloud solutions and rentable IT solutions every year. In these services, Invitech will continue to be a key player and innovator in the market.

14 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

Huawei: A Tool in a Playbook?

to switch to alternatives such as Finland’s Nokia or Sweden’s Ericsson.

Many have so far resisted the prospect of pushing Huawei out of the bidding process

for

While technology news in August was dominated by whether Microsoft would buy TikTok or not, the “Huawei issue” was deepening further. The Chinese company has released Mate 40, the last mobile device equipped with Kirin, the Huawei chipsets, and the United States Department of Justice released an indictment by the U.S. Attorney against Huawei on fraud, intellectual property theft, money laundering and other charges.

BBJ STAFF

Meanwhile, the State Department has increased the pressure on European countries to stop cooperation with the telecom equipment vendor. As things stand now, the costs of replacing all Huawei technologies would be enormous, while it is still not clear how the company’s hardware would represent security risks to the countries involved. And this is just one side, among numerous others, in the Huawei story.

Huawei is a relatively new player on the technology market, founded in 1987. Since then, it has seen a rapid and continuous development. Many suspect that this is largely due to the founder, Ren Zhengfei, being a former army officer.

In a country so centralized and tightly controlled by its communist regime as China, it is certainly hard to believe that a former military man with no experience in technology suddenly turns into an investor and builds a huge business in a strategic area with no involvement from the government.

But Huawei insists that this is exactly the situation, and Zhengfei was not, in fact, military-turned-businessman, but quite the opposite. He joined the Communist Party and the army to prove his loyalty to

5G

Although a relatively new player, Huawei is well established in Europe. This is the French head office of Huawei Technologies in Boulogne-Billancourt. Photo by Shutterstock/HJBC the government, so that he could run his business later unobstructed.

The fact is that Huawei is popular on the consumer market, even with new strong players on the market, like Xiaomi, Oppo and others. According to market research company Gartner, Huawei is still second regarding its share on the global mobile device market, after Samsung, albeit with a shrinking share: while in Q1 2019 Huawei had 15.58%, in Q1 2020 it had decreased

to

14.13%.

As for the number of sold devices, the drop is much higher, down 27.3% year-on-year.

Lack of Harmony

While it is true that all major vendors experienced lower sales in Q1 (only Xiaomi managed to grow, by 1.4%), Huawei will probably face further falls in the next quarters, at least among Androidbased devices. Last year, Google halted Huawei’s license, following a United States government ban on American companies doing business with several Chinese companies, including Huawei.

This means that Huawei users will not be able to install Google applications on their smart devices (at least, not officially).

Huawei immediately announced that it will speed up development of Harmony OS, its own mobile operating system, to replace Android and Google apps.

It is uncertain if users would adopt such as system, especially in the West.

But, if Harmony does spread among Asian countries, Huawei would gain an unexpected advantage over Google, achieving the opposite result of what U.S. President Donald Trump had hoped for, increasing the advantage of American companies over others.

But basically, with mobile devices, the situation is relatively simple; they are easily replaceable with another vendor, since the hardware is very similar. But when it comes to telecommunications equipment, things get complicated. And Huawei is present here, too.

Historically, protecting telecommunication networks is a matter of national security, filed under the

“critical infrastructure” category. With communications extending far beyond voice services, digital networks connect users, utility services, financial and health institutions, military organizations, companies, and data banks.

contracts due to fears it will drive up costs.

In the meantime, operators will look to see how fast Huawei is able to restructure its supply chain and find new, non-American chipmakers to serve it.”

In all this turmoil, there is one other element not very often discussed. With Huawei already present on the European market, deeply embedded, as we have seen in the case of Deutsche Telekom, has there been any evidence until now that the company has seized sensitive data, breached critical systems, harmed deliberately clients in any way?

Well, no. And that is the position of the Hungarian government in this issue.

Hungary is usually a strong supporter of the Trump White House, but during a visit

by U.S. Secretary of State Mike Pompeo to Budapest in February last year, Minister of Foreign Affairs Péter Szijjártó was unusually blunt.

“If you look at that Chinese company which is very often in the news nowadays regarding telecommunication, is it present in Hungary? Yes. Who are its major contractors? A German and a British company. So, when it comes to China, I think hypocrisy should be left finally behind.”

Cost Effective

Using fifth generation networks, huge amounts of data can be transferred in milliseconds, which opens new perspectives for digital services. And for telecom equipment suppliers too, where Huawei has already set foot with 4G technologies and offers reliable and costeffective systems.

The question is: are these costs too good to be true? Are telecom operators being lured into buying them so that China can tap the data transferred through Huawei systems? Huawei says “No”, but the U.S. administration certainly thinks so. On

August

17,

the U.S. Commerce Department announced that it “further restricted access

by Huawei Technologies (Huawei) and its non-U.S. affiliates on the Entity List to items produced domestically and abroad from U.S. technology and software.”

In effect, Washington is blocking the use of any American technology in processors powering Huawei networking equipment.

This means not only physical components, but also all codes, for example instruction sets running inside the circuits.

To understand the size of the problem, look at Deutsche Telekom, which uses Huawei technologies in Austria, Croatia, the Czech Republic, Germany, the Netherlands and Poland. Poland and the Czech Republic have already agreed to cut Huawei’s market access. France (traditionally opposed to many U.S. requests) said it will phase the company out gradually over the next years. Spain, together with Germany, has not taken a clear position yet.

Switch or Stick

So, what next? According to Politico, “With so much uncertainty surrounding Huawei, operators face a choice of whether

“If you look at that Chinese company which is very often in the news nowadays regarding telecommunication, is it present in Hungary?

Yes. Who are its major contractors? A German and a British company.

So, when it comes to China, I think hypocrisy should be left finally behind.”

Later last year, Szijjártó announced that Huawei would be involved in the rollout of the Hungarian high-speed 5G network.

The United States, however, has made its position on Huawei crystal clear.

In an op-ed published on August 26, U.S. Ambassador to Romania Adrian Zuckerman, was explicit in his words.

“Communist China, like the communists controlling Romania previously, wants to control the Romanian people and Romania at any cost for its personal gain. They will do so at any cost: spy, steal, lie, and bribe to do so. Huawei Romania is just one tool in the Chinese communists’ playbook. They have other state actors like the Confucius Institutes and businesses that are trying to achieve the same goal. This is the time to stand up for freedom and democracy.

The poisonous falsehoods of a corrupt communist Chinese government, wrapped in pretty lies, cannot be allowed to enslave the people of Romania.”

Special Report | 15

3

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

According to a poll of economists recently conducted

by Reuters, it would take two or more years for euro zone GDP to reach pre-COVID-19 levels. That means company revenues will remain moderate and cost cuts will need to go deep into budgets.

There is one category that all companies have, but few consider when it comes to saving money: software.

BBJ STAFF

Software vendors and their resellers are continuously pushing clients to upgrade to the latest version. Better features, more collaboration, more efficiency, better security: these are the reasons usually invoked. But are the new features really worth the price? Is there staff training needed for operating them? At what cost?

Look at the history of Microsoft Windows releases, for example, and you notice that some were unpopular (ME, Vista), while others were so successful that vendors had a hard time replacing them with the new edition.

Photo by Shutterstock/Markus Mainka

Cost Saving Alternatives to Buying new Software

popular are Libre Office and OpenOffice), but they are not able to fully display the document formatting of files created in MS Office word processors, spreadsheets or presentations.

Furthermore, third party products implemented in applications usually have a dependency on classic Microsoft products such as Word or Excel, or Access components which are not working with open source.

The Relicensed Alternative There is a third alternative: relicensed software. These are usage rights that are no longer needed by the owner company because of scenarios like signed Microsoft agreement which fully covers the existing technical environment, centralization of server environments and/or movement to cloud too, but are still well ahead of the end of their support life cycle.

Relicense AG, which has a strong focus on Eastern Europe, deals in these usage rights from upgrading owners like ZF Friedrichshafen or Nifisk.

name and handle the sourcing/sales processes with our own experts, former employees of Microsoft, the biggest software resellers in Europe, software auditors and license managers,” explains Alfred Girr, Relicense AG’s director of sales for Eastern Europe.

“In Eastern Europe, the products are roughly six years in use and normally the support life cycle will end soon or has already ended so there is the need to upgrade the software. Microsoft is playing with that, increasing the pressure on the companies to go to cloud solutions, to sign cloud software agreements,” says Girr.

“The demand in Eastern Europe is huge and buyers are able to reach a

10-20 years

ago at a company, assign the necessary license to the corresponding user, find the cheapest license for him or her. Thus we may find a lot of unused licenses in the company, which can be used for many goals, for example to sell on the second hand software market or exchange them for a new module.”

60-70% discount

Windows

7

was so successful that it would probably still be in use at many companies, had the company not shut down support for it in January this year.

So, it seems that there is nothing wrong with keeping software that is one or two versions old; what is more, this applies not only to operating systems, but also to office suites and other programs. The expenses of the cloud, as an alternative to the existing models, are high and expected to grow further.

Companies planning software deployments usually have two choices: buying so-called on-premise products or usage rights (often Microsoft products), or open source /free software.

Both have their pros and cons. For example, there are free of charge alternatives to MS Office suites (most

“The demand in Eastern Europe is huge and buyers are able to reach 60-70% discount in comparison to the known price level by working with us.”

License Review

When it comes to cutting costs with software, licensing enterprise systems may be an area worth checking. Briefly: software systems developed by SAP, Oracle, Microsoft and others have complex licensing agreements. One example: licenses are sometimes issued not per computer, or processor, but sometimes per cores of the processor, and with a multiplicator factor.

Sellers regularly perform audits at partner companies, and if the result shows that the users accessed features that were not licensed, the fine can result in a shocking amount.

On the other hand, the company may be paying license fees for features that employees never use, which means unnecessary costs.

These issues can be handled through Software Asset Management (SAM).

Sándor Zsoldos, CEO of Budapest-based IPR-Insights License Consulting explains how it works.

“We can reorganize the license structure set up

Sándor Zsoldos “We are transferring the usage rights to the next end clients, in our name. We act not as a broker, but as a trading company which is buying those assets in our own

in comparison to the known price level by working with us. Even more important, next to the pricing impact and compliance to legal obligations, we can still offer on-premise products. The products we are able to offer still have a long support lifecycle: for example, MS Office 2016 Professional or 2019 Professional until 2025. The software vendor, Microsoft, is in this case obliged to offer security patches until the end of life cycle mentioned above,” he explains.

Naturally, the questions arises: what is the compromise when buying relicensed software? First, the buyer cannot upgrade to a new version of the software. Secondly, the licenses cover use “in the EU, based on the existing court decision, and in regions which did implement or adopt international usage rights in IP law, like Switzerland, but are not allowed for use in general worldwide,” Girr adds. South Africa, China, and the United States are not covered, for example.

Alfred Girr So, is it better to hire a SAM manager, or outsource this area? “There are many cases in which it is worth outsourcing, as we are talking about many products of many vendors. One or two employees will never be able to complete the tasks of a consulting firm with 35 specialists, each of them having extensive knowledge about a specific vendor,” Zsoldos says.

“So, yes, the administrative tasks are worth outsourcing. We can prepare decisions, offer the necessary information, but the CIO or the CEO has the responsibility to decide what and how he or she will buy; the decision is ultimately his or hers,” Zsoldos says.

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

Software Developers

Germany

-

4,532

4,534 1,980

no. of full-time employeeS on july 1, 2020 of tHem, no. of SoftWaRe DevelopeRS

99,50

DiStRibution of oWn pRoDuCtS

26,657 13,139

ReSale

main expoRt DeStinationS

26,535

ConSulting

DoRSum infoRmatikai fejleSztő éS Szolgáltató zRt.

SoftWaRe expoRtS in 2019 in a peRCentage of total expoRt (%)

www.evosoft.hu

SoftWaRe pRoDuCtS

inStallation

2

evoSoft HungaRy kft.

total net Revenue in 2019 (Huf mln) in H1, 2020 (Huf mln)

1

Company WebSite

oWneRSHip (%) HungaRian nonHungaRian

Siemens

A

A

A

A

1,259 1,141

– evosoft GmbH (100)

istván petényi Erika Balogh Zoltán Gönye

1117 Budapest, Kaposvár utca 14–18.

(1) 381-6400 sales@evosoft.com

12

Poland, Croatia, Slovenia, Slovakia, Romania, Bulgaria, Czech Republic, Austria

Wealth Management Platform, My Wealth, Wealth Management Communication HUB, CA Master, Corporate Portal, Reco Agent, Clavis

OTP Bank Nyrt., Magyar Államkincstár, Takarékinfo Központi Adatfeldolgozó Zrt., MTB Magyar Takarékszövetkezeti Bank, Erste Bank Hungary Zrt., CIB Bank Zrt., OTP Alapkezelő Zrt., Wiener Börse AG, DSK Bank PLC., Posta InIT Zrt.





–



211 29

(100) –

Róbert kő – –

1012 Budapest, Logodi utca 5–7.

(1) 487-3030 info@dorsum.eu

–

Ericsson Magyarország Kft,, Morgan Stanley Analytics Kft., Avon Cosmetics Hungary Kft., OTP Bank Nyrt, ,Hydro Extrusion Hungary Kft,, Ép-GéPés Holding Kft.









218 101

Individuals (3) Qualysoft Holding Ltd. (97)

lászló gáspár Tamás Zimányi Mátyás Borbély

1118 Budapest, Rétköz utca 5.

(1) 889-9800 office@qualysoft.com

142 70

Individuals (100) –

Csaba Rozenberszki Judit Andráskó Zsolt Rozenberszki

1038 Budapest, Ráby Mátyás utca 7.

(1) 436-7850 info@rrsoftware.hu

277 A

(100) –

Szilárd ocskay, katalin Sass Judit Nyeste László Mezriczky

1138 Budapest, Váci út 185.

(1) 465-5100 nexon@nexon.hu

www.dorsum.eu

QualySoft infoRmatikai zRt.

SoftWaReRelateD aCtivitieS

net Revenue fRom SoftWaRe Development in 2019 (Huf mln)

Rank

Ranked by net revenue from software development (HUF mln) in 2019

3,612

5,071 2,736

4

R&R SoftWaRe zRt.

2,715

2,881 1,335

5

5

nexon vállalkozáSi éS keReSkeDelmi kft.

2,324

4,675 2,483

-

-

NEXONbér, NEXONhrm, NEXON_PORT, NEXONtime

2,029

2,534 768

32

Germany, Austria

3

www.qualysoft.com

www.rrsoftware.hu

www.nexon.hu

6

SySData pSe kft.

www.sysdata-pse.com, www.pse.hu

7

p92 it SolutionS kft.

8

itWaRe kft.

9

www.p92.hu

www.itware.hu

teRC keReSkeDelmi éS Szolgáltató kft.

libRa SzoftveR

14

SalDo pénzügyi tanáCSaDó éS infoRmatikai zRt. www.saldo.hu



A





–



A

Siemens









90 82

Individuals (100) –

ákos Szekendy – –

1143 Budapest, Gizella út 51–57.

(1) 780-5000 contact@ sysdata-pse.com

-

Sony Music Entertainment, Blackhawk Network, Hellmann Worldwide Logistics, Kelvion Holding, BONAGO Incentive Marketing Group, An Post, Magyar Gáz Tranzit, Országgyűlés Hivatala





–

–

21 17

József Molnár (76), Szilvia Tömösvári (12), Gusztáv Turschl (12) –

gusztáv turschl Júlia Király –

1038 Budapest, Fürdő utca 2.

(1) 453-4100 contact@p92.hu

DXC Technology Magyarország Kft., Magyar Telekom Nyrt., ASIAl Corporation





–



22 9

Individuals (100) –

Sándor Dankó Erzsébet Papanek Izabella Tüzes

1117 Budapest, Budafoki út 209.

(1) 463-0626 infomail@itware.hu



36 4

Magdolna Demeter (60), Miklós Konrád Molnár (30), Miklós Molnár (10) –

magdolna Demeter, miklós konrád molnár, miklós molnár Judit Horváth Magdolna Demeter

1149 Budapest, Pillangó park 9.

(1) 222-2402 titkarsag@terc.hu

Zsolt József Koltai (90), Piroska Békei Koltai (10) –

zsolt józsef koltai – Diána Wágner

1149 Budapest, Nagy Lajos király útja 117.

(1) 220-6458 sales@trilobita.hu

1,028 550

19

Japan

Fleetware vehicle GPS system

-

TERC V.I.P. (GOLD, SILVER, BRONZ), TERCETALON

478

400

266

www.calltec.hu

13 fejleSztő zRt. www.libra.hu



804

997 537

612 A

732 300

266 A

-

-

–

–

-

aDDReSS pHone email



85

479

top loCal exeCutive Cfo maRketing DiReCtoR



1,027

www.infoconsulting.eu/hu

CallteC 12 ConSulting kft.

Austria, Czech FusionR, VERK Garantiqa Hitelgarancia Republic, USA, and cDMS product Zrt., GIRO Zrt., HEINEKEN UK, Nigeria, lines: ERP, BSS, Hungária Sörgyárak Zrt., Italy, Romania, Utility, CRM, SFA, Invitech ICT Services Kft., Sri Lanka, EDM Magyar Suzuki Zrt., NISZ Zrt. Philippines

USA, UK, Germany

www.trilobita.hu

infoConSulting 11 HungaRy kft.

–

1,027 589

www.terc.hu

tRilobita 10 infoRmatikai zRt.

–

majoR ClientS in 2019

Parliament, municipalities, construction companies, design firms

TriDoc enterprise, OTP Bank Zrt., MVMI Zrt., TDE TriDoc standard, ITS Kft., UniCredit Bank Zrt., TriWorkflow, Bank of China Magyarország, TriCommission Linamar Hungary Zrt.

–

IFS Applications ERP/EAM/ESM system

–

D1 document management system,, F1 fleet management system, P1 accounting and financial system











–



17 9

ANY Biztonsági Nyomda Nyrt., BioTechUSA, FÉMALK Fémöntészeti és Alkatrészgyártó Zrt., Inno-Comp Kft., VAJDAPAPÍR Gyártó Kft., Wellis Magyarország Zrt.









25 5

– InfoConsulting Group/FinCode sp. z o.o. (100)

imre Sturcz Cecília Léber Gábor Halász

1132 Budapest, Váci út 22–24.

(1) 236-3700 infohu@ infoconsulting.eu

A





–



A A

Gábor Cseresnyés (100) –

gábor Cseresnyés – –

2071 Páty, Kökény utca 43.

(30) 600-1400 info@calltec.hu

kálmán faur Zoltán Komora Katalin Sáfár

1113 Budapest, Karolina út 65.

(1) 255 3939 info@mve.hu

ákos balogh Enikő Kovács Dániel Burján

1135 Budapest, Mór utca 2–4.

(1) 237-9800 vezig@saldo.hu, informatika@saldo.hu

147

1,272 676

-

-

LIBRA11; LIBRA3s

MVMI Informatika Zrt., FKF Nonprofit Zrt., D-Gesztor Kft., Tiszamenti Regionális Vízművek ZRt., DAKÖV Dabas és Környéke Vízügyi Kft., Kaposplast Kft., KMKK Középkelet-magyarorszgái Közlekedési Központ Zrt., Magyarországi Evangélikus Egyház, T-Szol Zrt., Alföldvíz Zrt.

84

786 357

-

-

A

Várkapitányság Nonprofit Zrt., Fővárosi Állat-és Növénykert





–



63 19

Volán Elektronika Zrt (25.200), Individuals (66,40), Carolinainvest Kft. fa. jogutódja (0.100), EasySec Kft. (8.300) –

–

–

–



38 6

Individuals (100) –

3

www.bbj.hu

A

www.4ig.hu

NR

aleRant zRt.

NR

balaSyS it kft.

NR

gRapHiSoft Se

A

www.alerant.hu

A

www.balasys.hu

A

www.graphisoft.com

ibm NR magyaRoRSzági kft.

A

A

www.ibm.com/hu

kulCS-Soft SzámítáSteCHnika nyRt.

A

logmein kft.

NR

A

www.logmein.com

miCRoSoft

NR magyaRoRSzág kft. www.microsoft.com/hu-hu

multiSoft kft.

NR

A

nng SzoftveRfejleSztő NR kft.

A

main expoRt DeStinationS



22 1

(100) –

kálmán faur jr.

Zoltán Komora Katalin Sáfát

1113 Budapest, Karolina út 65/C (1) 436-0540 info@vtsoft.hu

A A

Individuals (100) –

gellért jászai – –

1037 Budapest, Motevideo utca 8.

(1) 270-7600 info@4ig.hu

33

AMCS Kft. (100) –

gábor Darmai – –

1117 Budapest, Infopark sétány 1.

(1) 205-0055 info@alerant.hu

Individuals (100) –

Sándor Cseledi – –

1117 Budapest, Alíz utca 4.

(1) 646 4740 info@balasys.hu

– Nemetschek AG (100)

Huw Roberts Gábor Svéd Ákos Pfemeter

1031 Budapest, Záhony utca 7.

(1) 437-3000 mail@graphisoft.hu

Individuals (100) –

zoltán madár Tamás Koppány –

1087 Budapest, Könyves Kálmán körút 48–52.

(1) 204-7730 mail@grepton.hu

– IBM Ireland Product Distribution Limited (100)

péter Szalay Árpád Konc –

1117 Budapest, Neumann János utca 1.

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

Tibor Kulcsár (96) shareholders (4) –

ervin Szabó – –

1016 Budapest, Mészáros utca 13.

(1) 336-5300 info@kulcs-soft.hu

– Logmein Ireland Holding Company Ltd. (100)

john joseph markey – –

1061 Budapest, Andrássy út 9.

(1) 413-3780 recepcio.bp@ lonmin.com

– Microsoft Corporation (100)

Christopher mattheisen – Gabriella Csanak

1031 Budapest, Graphisoft park 3.

(1) 437-2800 –

Gábor Kelemen (73), Judit Gyenes Kelemenné (27) –

gábor kelemen – –

1115 Budapest, Bartók Béla út 105–113.

(1) 310-1492 sales@multisoft.hu

– COM3 Consulting S.á.r.l. (A), D&K Fortescue Limited (A)

Chris greentree István Nagy Orsolya Ludvig

1037 Budapest, Szépvölgyi út 35–37.

(1) 872-0000 legal@nng.com

– Oracle Nederland B.V. (100)

titusz Csaba puskár – –

1095 Budapest, Lechner Ödön fasor 7.

(1) 224-1700 –

A A

(100) –

lászló Szalóki – Norbert Somkutas

1133 Budapest, Váci út 76.

461-8030 revol@revolution.hu

1,050

– SAP SE (100)

Szabolcs pintér György Simon –

1031 Budapest, Záhony utca 7.

(1) 457-8333 –

– UNIT4 Business Software Holding B.V. (100)

tamás Wehring – –

1023 Budapest, Lajos utca 28–32.

(1) 268-1223 contact.hu@unit4.com







–

-

-

Abacus MUNKAÜGY (BÉR; TB; CAFÉ), Abacus MUNKAIDŐ

Arconic-Köfém, Bonduelle, BPW Hungária, T-Systems, Fővárosi Csatornázási Művek, Cellcomp Kft., Leier Hungária Kft,, Magyarországi Református Egyház, Magyar Suzuki Zrt., Mozaik ”+”, UPC, WHC holding, Diegeo., NMHH, KSH

A

A

A

A









2,235 A

A

A

A

A



–

–



895 A

A

CEE region

Zorp Gateway, Zorp Malware Detection, Zorp API Gateway

A









17,230 (2018)

A

A

A

A









oRaCle HungaRy kft. www.oracle.com

3,048 1,150

A

Germany, UK

A

Magyar Telekom, Allianz Hungária Zrt., ÁEEK, Telenor







–

17,973 A

1,668 (2018)

A

A

A

A

A

A

A

A

A

A

A

A





–



10,994 A

12,492 (2018)

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

1,173

A

A

A

A

A

91,449 EUR









A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

deep.ügyvitel, deep.erp

Balatoni Hajózási Zrt., RSM Hungary Zrt., TV2 csoport, Abroncs Kereskedőház Kft.









A

A

A

A

A

A

A

A

A

A

A

A









A

www.nng.com

A

24,525 (2018) A

NR

Revolution SoftWaRe

NR

Sap HungaRy kft.

www.revolution.hu

A

A

unit4 CoDa

A = would not disclose, NR = not ranked, NA = not appliacable

1113 Budapest, Karolina út 65.

(1) 273-3838 info@softc.hu

–

A

A

www.multisoft.hu

NR HungaRy kft. www.unit4.hu

kálmán faur Zoltán Komora Katalin Sáfár



A

www.kulcs-soft.hu

www.sap.hu

Branko Holding Zrt. (100) –



A

gRepton

NR

27 13

BaBér payroll accounting program

Swiss Post Solutions GMBH Magyarországi Fióktelepe, FKF Nonprofit Zrt., Trenkwalder Outsourcing Kft., Takarékbank Zrt., Magyar Turisztikai Ügynökség Zrt., Libra Szoftver Zrt., Humán Holding Üzleti Szolgáltató Kft., Mohácsi Takarék Bank Zrt., KÉZMŰ Közhasznú Nonprofit Zrt., FŐKEFE Rehabilitációs Foglalkoztató Ipari Közhasznú Nonprofit Kft.

A

NR infoRmatikai zRt. www.grepton.hu

NR

897 (2018)

no. of full-time employeeS on july 1, 2020 of tHem, no. of SoftWaRe DevelopeRS

4ig nyRt.

450 195

-

aDDReSS pHone email

DiStRibution of oWn pRoDuCtS

NR

20

www.vtsoft.hu

-

top loCal exeCutive Cfo maRketing DiReCtoR

majoR ClientS in 2019

ReSale

vt-Soft kft.

496 320

A

1,146 A

41,315 A

767 A

Special Report | 17

oWneRSHip (%) HungaRian nonHungaRian

SoftWaRe pRoDuCtS

ConSulting

16

26

SoftWaReRelateD aCtivitieS

inStallation

Soft ConSulting

15 HungaRy zRt. www.softc.hu

SoftWaRe expoRtS in 2019 in a peRCentage of total expoRt (%)

Company WebSite

total net Revenue in 2019 (Huf mln) in H1, 2020 (Huf mln)

net Revenue fRom SoftWaRe Development in 2019 (Huf mln)

Rank

Budapest Business Journal | September 4 – September 17, 2020

A

50 A

431 A

71 A

370 A

85 A

489 A

181 A

70 A

551 A

280 A

A

13 A

This list was compiled from responses to questionnaires received by August 31, 2020 and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

18 | 3

Special Report

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

Although the economic effects of COVID-19 shook the financial performance of system integrators in some cases in the country, the benefits of smoothly running systems can clearly help offset the difficulties we face in such an extraordinary scenario. System integration is a hot topic that ought to see much action in the months and years to come.

CHRISTIAN KESZTHELYI

In 2018, the Hungarian financial technology sector employed around 5,000 people, generating a sales revenue of almost HUF 120 billion, according to a recent publication by the National Bank of Hungary called the Fintech and Digitalization Report.

System integration was among the most important activities of the fintech sector, beyond data analysis, business intelligence, financial software development and payment services. Enthusiasm for system integration is justified.

It makes processes work smoother and more seamless, yet it is a complex issue to tackle.

Experts agree it is one of the most complex service activities, demanding a great degree of responsibility and competence in creating complex IT solutions is system integration. Proper support is a key factor in the process.

“Today, the IT services extended to business are so deeply integrated that decent business management that can meet the requirements of our times is simply unimaginable without IT support.

For this very reason, the seamless operation of a business depends largely on the effectiveness of IT support,” according to professional system integrator T-Systems Hungary.

Photo by Shutterstock/ra2 studio

System Integration can Help Businesses Work Smarter

When integrating systems in separate business divisions, requirements must be clearly set for effective IT performance. Designing complex ICT solutions needs thorough technical, architectural and technological planning to evoke solutions that create business value and optimized IT environments and budgets.

Critical Area

“One of the critical areas of success of large-scale and complex application introduction, application development, and application integration projects is software life cycle support. The aim is to produce and record large numbers of software components in the specific phases, such as analysis, planning, implementation, testing and introduction, and then constantly check their compliance,” T-Systems Hungary adds.

In the first half of the year, the profit before income tax Magyar Telekom (the owner of T-Systems), fell 33% year-onyear to HUF 17.02 billion, and the aftertax profit was down 42.3% at HUF 10.66 bln, according to a recent earnings report.

MTel’s total revenues fell 2.2% to HUF 157.18 bln.

System integration and IT revenues were down 18.2% at HUF 36.48 bln in Hungary, offsetting growth in telecommunication service revenues in Hungary and North Macedonia, along with positive foreign exchange impact from the strengthening of the denar compared to the forint, according to a report by state-owned news agency MTI. Listed IT firm 4iG, which had agreed in July of 2019 to purchase T-Systems from MTel pending regulatory approvals, but later tabled the deal, had a more bullish first half in terms of growth, however.

Its order book lifted 4iG’s first-half after-tax profit 34% y.o.y. to HUF 775 million, sales revenue went

up

39%

to HUF 20.2 bln and stock orders exceeded HUF 20.8 bln in mid-August.

The company said it eyes “further significant growth” over the next year organically and via acquisitions, aspires to become the leading IT system integrator in Hungary in two years’ time and looks to consolidate its position in the country by investing in new technologies and enhancing its capabilities in new sectors, according to an investor presentation released in August with its financial report.

System integration does not only help businesses cut cost and boost operational efficiency by ironing out the creases in their digital solutions and intra-system communication. It brings many benefits to end-users too.

Integrated Timetables

Government-owned railway and coach companies will start running with integrated ticket and tariff systems after 2021. Hungarian State Railways (MÁV) CEO Róbert Homolya expects that finding all the synergies and eliminating overlaps to boost efficiency and make a noticeable difference to passengers will take years. That said, a unified ticket and pass sales platform could be reality by the end of this year, he added in the first half of the year, when announcing the unification.

MÁV serves 140 million passengers annually, while coach service operator Volánbusz, the running of which MÁV took over on July 15 to streamline

operations and improve the passenger experience, serves more than

400travelers. million

The two companies employ 55,000 people in total.

Homolya said that unifying one timetable for all rail and bus services will be a long process, but he noted that some Western European countries had integrated rail and bus services decades before, which has significantly boosted passenger experience.

The planned integration of MÁV and Volánbusz is more than welcome; it is gravely needed. In light of COVID-19, experts of the World Economic Forum agree that better integration of passenger and freight transport is a prerequisite for making mobility more resilient and sustainable in a post-coronavirus world.

Such an integration requires a fresh look at city planning and infrastructure capacity and can be lifted by new collaborations.

The forum’s Global Future Council on Mobility stresses “the urgent need for better integration of passenger and freight transport to make our entire mobility system more resilient and more sustainable,” the WEF writes on its website.

The information technology or engineering process of system integration, joining different components into one large ecosystem, must ensure that each integrated subsystem functions as required. This can spark new functionalities, delivering added value both for companies on the operational side and end-users and clients.

As economies are trying to grapple with a way out of COVID-19 and work on making procedures more resilient for future unexpected external shocks, system integration appears to be a safe bet towards doing business smarter.

3

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

Special Report | 19

Systems Integrators

www.snt.hu

25,043 A

euRo one SZámítáSteCHnIkaI ZRt.

20,562 (2018)

6

Ibm magyaRoRSZágI kFt.

17,973

7

ntt magyaRoRSZág kFt.

8

delta InFoRmatIka ZRt.

9

InteR-ComputeRInFoRmatIka ZRt.

8,111

10

nádoR RendSZeRHáZ kFt.

8,070

11

aCCentuRe tanáCSadó kFt.

6,750

duna elektRonIka kFt.

5,088

5

www.euroone.hu

www.ibm.com/hu

https://hello.global.ntt

www.delta.hu

www.intercomputer.hu

www.nador.hu

www.accenture.hu

12

13

www.dunaelektronika.com

15

A

8,801 A

8,523 (2018) A

A

A

A

A

QualySoFt InFoRmatIkaI ZRt.

5,071 2,736

teCHWave HungaRy ZRt.

2,523

www.qualysoft.com

14

A

www.techwave.hu

kÜRt InFoRmáCIóbIZtonSágI éS adatmentő ZRt.

A

1,590 A

mIxed

novell

WIndoWS SeRveR

unIx

HaRdWaRe

SoFtWaRe

IntegRatIon oF oWn pRoduCtS

SoFtWaRe

4

S&t ConSultIng HungaRy kFt.

www.invitech.hu

25,785 12,393

HaRdWaRe

3

InvIteCH ICt SeRvICeS kFt.

A

addReSS pHone emaIl

mIxed

www.hp.hu

26,646

top loCal exeCutIve CFo maRketIng dIReCtoR

ConSultIng

dxC teCHnology magyaRoRSZág kFt.

oWneRSHIp (%) HungaRIan nonHungaRIan

It SeCuRIty

2

A

majoR ClIentS In 2019

SoFtWaRe development

112,113

www.t-systems.hu

opeRatIng SyStem oF SeRvICeS

eRp

t-SyStemS HungaRy ZRt.

type oF SyStem IntegRatIon

SeRvICeS

Sap SeRvICeS

1

Rank

Company WebSIte

total net Revenue In 2019 (HuF mln) In H1, 2020 (HuF mln)

Ranked by total net revenue (HUF mln) in 2019













A







–









Magyar Telekom Nyrt. (100) –

Zoltán kaszás – –

1097 Budapest, Könyves Kálmán körút 36.

(1) 452-1400 info@t-systems.hu

A

A

A

A

A

A

A

A

A

A

A

A

A

A

A

– ES Hague B.V. (A), ES Hague II B.V. (A)

Zoltán Czibók, krisztián kovács – –

1114 Budapest, Bartók Béla út 43-47.

(1) 279-8000 cegugyek@hp.com

gerald grace Dániel Majubu Orsolya Hladics

2040 Budaörs, Edison utca 4.

1) 801-1500 vip@invitech.hu, kapcsolat@invitech.hu

–

–

–







A





–

–

–

–

–

–

– China CEE Fund (99.99), other (0.01)







–





–



– S&T AG (100)

péter dezső Szabó Sándor Kulcsár –

2040 Budaörs, Puskás Tivadar út 14.

(1) 371-8000 info@snt.hu













SAP, Magyar Államkincstár, Főtáv, MOL, Boschung, BurgerKing, Tolnatej, Hungrana, Grandvision, Bácsvíz, Sopronvíz

–

–







–

A

















Bravogroup Holding Kft. (100) –

árpád kucska – –

1145 Budapest, Újvilág utca 50–52.

(1) 358-6350 info@euroone.hu

–

–

–

–

–



A

–

–



–





A

A

– IBM Ireland Product Distribution Limited (100)

péter Szalay Árpád Konc –

1117 Budapest, Neumann János utca 1.

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

–

–









MOL, NISZ, OTP BANK, Sberbank, MÁV













–



– Dimension Data Holdings Nederland B.V. (100)

István Simon Mariann Köteles László Demeter

1117 Budapest, Budafoki út 60.

(1) 482-9500 eu.hu.info@global.ntt













A







–









Deltagroup Holding Zrt. (100) –

Zoltán Csontos – –

1134 Budapest, Róbert Károly körút 70-74.

(1) 437-5200 info@delta.hu

–

–









A







–









Inter-ComputerHolding Kft. (100) –

tamás molnár – Dóra Bugnyár

1118 Budapest, Gombocz Z. utca 12.

(1) 411-3720 info@intercomputer.hu

–

–









NISZ, Magyar Posta, Állami Egészségügyi Ellátó Központ, Market Építő Zrt.







–









Individuals (100) –

István bánlaki, tibor gombos Krisztina Mikusik Kissné –

1152 Budapest, Telek utca 7–9.

(1) 470-5000 info@nador.hu

A

– Accenture International S.A.R.L.A (A), ccenture Minority I B.V. (A)

tomas volek – –

1138 Budapest, Bence utca 1.

(1) 327-3700 Info_Budapest@ accenture.com

péter Freed János Kóti –

1183 Budapest, Gyömrői út 99.

(1) 666-1600 sales@ dunaelektronika.com



–



–













–

A

A

A

A

A

A

A

A



A







–



–

–

–

Gábor Juhász (5), Starpool Holding Hungary Kft. (85) Hernádi-Freed Rebecca Lee (10)

–



–

–



–

–



Individuals (3) Qualysoft Holding Ltd. (97)

lászló gáspár Tamás Zimányi Mátyás Borbély

1118 Budapest, Rétköz utca 5.

(1) 889-9800 office@qualysoft.com

–











Ericsson Magyarország Kft., Morgan Stanley Analytics Kft., Avon Cosmetics Hungary Kft., OTP Bank Nyrt, Hydro Extrusion Hungary Kft,. ÉpGéPés Holding Kft.













A







–



–





– Techwave Infotech Private Ltd. (100)

péter Fárizs – –

1138 Budapest, Dunavirág utca 2–6.

(1) 237-1730 info@techwave.hu

–

–

–







A

A

A

A

A

A

A

A

A

Individuals (100) –

józsef béla kmetty – –

1118 Budapest, Rétköz utca 5.

(1) 424-6666 kurt@kurt.hu

–



–





–

A

A

A

A

–





A

A

Endre Nagy (50), Endréné Nagy (50) –

endre nagy, endréné nagy – –

1147 Budapest, Fűrész utca 115.

(1) 467-2060 conet@conet.hu

–











A

















Individuals (100) –

gellért jászai – –

1037 Budapest, Motevideo utca 8.

(1) 270-7600 info@4ig.hu

–

–







–

A

A

A

A

–



–

A

A

Jnr. Imre Takács (100) –

józsef pálné Steidl – –

1064 Budapest, Podmaniczky utca 57.

(1) 436-3000 info@aquis.hu

www.kurt.hu 16

Conet kFt.

17

4Ig nyRt.

18

aQuIS Innovo kFt.

www.conet.hu

www.4ig.hu

www.aquis.hu

1,363 (2018) A

897 (2018) A

516 (2018) A

4

www.bbj.hu

Budapest Business Journal | September 4 – September 17, 2020

Socialite Photo by Shutterstock/Photoroyalty

Vacation or Staycation? Wise Words From a Viral Happiness Guru David Holzer found himself caught up in the need for COVID testing towards the end of his holiday in Mallorca. Could he get back to Hungary?

What is the future of foreign vacations?

Make no mistake about it, much of Mallorca is on an economic knife edge.

For years, Mallorcans have complained – quite rightly – about the environmental devastation caused by mass tourism to the island.

But with approximately 80% of the island’s economy dependent on it, they’ve now been forced to admit that unless something changes dramatically, they need some form of tourism to survive.

Everywhere I went on the island, I was reminded of just how deeply this dependence is rooted.

The African Looky-Looky Man with hungry eyes who tries to sell you plastic crap on the beach, the restaurateur in the celebrity bolt hole village of Deià and the clinic where I got my tests all need our money.

That’s just the tip of the ice-cube.

At the moment, reconciling the economic need for mass tourism, at least in the short-term, and the appalling environmental damage it does seems impossible.

Health Boost

One afternoon at the beach, to distract myself from wondering whether I or the bronzed young couple next to me, or their cherubic child, had the virus, I pondered the question of how European governments might manage tourism in a new normal.

Countless studies have demonstrated that vacations have tangible physical and mental health benefits that save government health systems money and make employees more productive.

For example, a study by The Journal of the American Medical Association found that men who take frequent vacations are, as a Huffington Post article put it,

DAVID HOLZER

“I didn’t realize how many Hungarians there were on the island,” said the British woman at the clinic as she handed me the results of my two COVID-19 tests for the third time.

Like me, the Hungarians she was talking about had been caught out when their government changed Spain’s safety status from green to yellow.

Now the Hungarian government was demanding two tests within five days of traveling, 48 hours apart and

48 hours

before departure.

“Hungarians are like everyone else,” I said. “They love the beach. Even more so than the Brits because they don’t have their own sea.”

“Oh,” she said, “I didn’t know that. Now, just check those tests again. Make sure they’re correct now.”

It didn’t seem to bother her that she’d only given me one test at first when I’d paid for two. Worst of all, she hadn’t picked up on the fact that the tests were dated July instead of August.

As I checked the printouts again, the woman did her best to cheer me up even more.

“When do you fly?” she said.

“Tomorrow afternoon.”

“We had a woman last week waiting for her test results, kept calling us from the airport asking where they were. We sent them to her phone and they were positive. She’d got the virus. Couldn’t get on her plane anyway. Can you imagine?” I shuddered. She laughed.

Vacation Island

She presumably lived on Mallorca all year round and had forgotten how much a vacation on the island means to me or the Hungarian, German, and British

32% are

tourists who’d now suddenly discovered their government was demanding they quarantine for 14 days or pay for a test.

We weren’t talking about the simple EUR 50 blood test. To avoid quarantine, I had to go for the nasal swab at EUR 100 a pop. Twice.

If you haven’t had it, the nasal swab doesn’t hurt even though it feels like it’s tickling the underside of your brain. When I had my first, the Spanish nurse said “OK, let’s go!” as if we were about to have the most fun ever.

Anyway, having to sort out the tests put paid to most of the last week of my vacation. When I wasn’t schlepping gloomily to the clinic, I was on the beach wondering if I had the virus and scowling at anyone who looked

around

25

and came too close. (I’d read somewhere that it was 25-year-olds who believed

they were invincible that were spreading the virus.)

Despite this last week of wracked nerves, I can’t say that I regretted my decision to take a vacation in Mallorca over a staycation in Hungary.

I’d spent a long weekend in Siófok on the south shore of Lake Balaton a month or so before and quite enjoyed it. But the simple truth is nothing compares to the Mediterranean, especially Mallorca.

Half Empty

Those of us who made it to the island enjoyed beaches that were half empty and seas far cleaner than is usual for August.

We wandered down streets unthronged with pink-red-brown tourists, faces like smacked bottoms. Everyone looked happy, or at least relieved.

We enjoyed the novel experience of Mallorcan waiters and shop assistants being nice to us because they were so delighted that they had any customers at all.

“less likely to die from heart disease than their counterparts who forewent vacations.”

The Framingham Heart Study found similar results for women.

According to the esteemed Mental Floss website, the many mental health benefits include what environmental psychologists describe as a “viral happiness epidemic” when we return from vacation, spreading good vibes.

A light bulb went off in my head.

I am now officially a Vacation Viral Happiness Guru. For a reasonable fee, you can hire me to take a vacation.

I will endure airport paranoia, cancelled flights and COVID-19 tests on your behalf.

On my return, I will spend an agreed amount of time in your company or government offices. Bronzed, serene and ready to radiate viral happiness vibes for the benefit of your employees.

As I show them photos of me on a yacht or tucking into a giant lobster at a seven-star restaurant, I’m sure they’ll agree with you that hiring me was a wise investment.

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The past couple of months have seen a return to some semblance of normality, or rather the dawn of the new normality, in the wine industry, as in other areas.

After a quiet spring, wineries across the land have been boosted by staycationers thirsty for Hungarian wines, which has compensated for the lack of foreign visitors.

ROBERT SMYTH

Back in March, when most wineries were battening down the hatches, Tokaj’s Disznókő somewhat surprisingly announced it was looking for a new wine tourism manager, which in hindsight appears to have been a very smart move.

“Tourism has been going very well, and has been especially strong in July and August,” Disznókő director László Mészáros, told the Budapest Business Journal. Regarding the overall business, he noted that while sales are down compared to last year, business has nevertheless been picking up somewhat.

“It’s not as catastrophic as I expected a few months ago, but we’re still behind on numbers,” he said.

Just to try winemaking nerves further, the weather conditions this vintage have not being playing ball, with a prolonged period of virtually no rain, followed by the wettest summer since 2010.

“It will be a challenging vintage, but the good news is that after some early harvests, picking will be at more of a usual time. Ripening is later, as there’s been less sunshine than usual,” said Mészáros.

Deep and Complex

Prolonged ripening is favored by grape growers as it usually leads to the slow but steady accumulation of deep and complex flavors in the grapes.

Nevertheless, the high amount of rain has caused further problems.

Photo by Shutterstock/Mark Borbely

2020 Shaping to be a Challenging Vintage

on the Tagore sétány (promenade), from “It’s too early to give a description of the August 7-30, attracted crowds of revelers, quality, but I don’t think it will be a great who behaved quite responsibly and kept a vintage for dry wine; good, but not great perhaps. Sweet wine can still be very good.” bit of respectful distance from one another.

Among other wines, Zsolt Söptei was With the exception of the quite literal pouring his Varázslat Olaszrizling 2018, washout of the 2010 vintage, 2020 will be which recently claimed a gold medal at the year with the most rain in the vine’s Bordeaux’s Challenge International du Vin. vegetative period.

Oily and complex with good weight and “Usually a great vintage has some water body, it also has a citrus zestiness to give stress, with rain coming at the right time,” it a refreshingly sour finish, with a baked Mészáros explains. The lack of rainfall apple note. from January to the end of May did not It was vinified solely in the tank and it is cause problems, thanks to a good amount impressive how much body and mouthfeel of rain in November and December an unoaked wine can achieve in Csopak. making up for the subsequent shortfall.

It comes from three different vineyards By way of comparison, the Disznókő comprising limestone/clay, Permian director says that just 200 milliliters of sandstone and marl, respectively. rain fell in the first five months of the When I asked Söptei about eschewing year, while 220 ml fell in June. In the the use of oak and yet still achieving vineyard, the number of bunches is not very high, with millerandage (also known such a full and rounded wine, he said that the important thing is as “hen and chicken”) occurring: the harvesting at full phenolic ripeness; uneven size of the grapes, whereby some remain tiny and others develop normally. in other words, when flavors in the skins and inside the berries reach full Other clusters have larger berries than ripeness, and not only the sugar. usual, and likely will produce more Classified above Balatonbor as a diluted juice.

Hegybor, this is a real bargain at HUF 2,825 from borhazmagyarorszag. hu. When I ask his opinion of the “It will be a challenging potential of Olaszrizling as a grape in the big scheme of grapey things, vintage, but the good the ever-smiling Söptei replies: news is that after some “We grew up with this grape”.

The Figula winery from early harvests, picking Balatonfüred bottles a number will be at more of a usual of exciting spontaneouslyfermented, single-vineyard time. Ripening is later, Olaszrizlings that show as there’s been less the grape’s ability to be an articulator of terroir. sunshine than usual.”

Good Actor

There is already some botrytis, which when it comes early is the malign grey rot and not the so-called “noble rot” that comes in late fall, and helps turn Tokaji Aszú into one of the world’s great, if not greatest, sweet wines.

Responsible Crowds

Meanwhile, the 2020 edition of the Balatonfüredi Borhetek, which showcased the wines of producers from the Balatonfüred-Csopak wine region, held

“Olaszrizling is like a good actor, who can play many parts, but you always know who he is. It has an identity, but is not a big ego” says János Figula.

Broadly speaking, he is in charge of the vineyards, while his brother, Mihály, makes the wines, although all important decisions are made together. It is great experience to feel the warmth

of Lake Balaton in Figula Sáfránkert Olaszrizling 2018 (HUF 4,250 from Bortársaság) oozing through with its tropical fruit and herbaceousness, and feel the lower acidity than the other single-vineyards. It comes from a couple of hundred meters from the lake, between Csopak and Paloznak.

“Lake Balaton reflects back the sun and unlike most other lakes in the winemaking world, the comparative shallowness of the water creates a warming, and not a cooling, effect,” said János Figula.

As a contrast, Sóskút Olaszrizling is further north, from a site where there is no reflection back from the lake and is airy and floral.

Dávid Bökő, who makes wine from Tihany, Csopak, and Balatonfüred, was a new discovery for me this summer.

His rosé (made with Gellavilla) has already tickled my palate (see our previous, July 31 issue).

Now comes Tihany a Balaton Partján 2019, a spontaneously-fermented, unfiltered and unfined red wine bottled with low sulfur that both captures the vibrancy of the Kékfrankos and Zweigelt grape varieties (from 30-year-old vineyard next to Sajkod Bay, the same place as the rosé), along with a touch of volcanic basalt X-factor. It is great value at HUF 2,950 from Bortársaság.

Incidentally, at the time of going to print, the Budapest Wine Festival is going ahead in its usual setting of the grounds of Buda Castle from September 10-13, though places are limited this year, for obvious reasons.

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30 YEARS OF FREEDOM SPONSORED BY THE 30 YEARS OF FREEDOM MEMORIAL BOARD / A PROGRAMOT A „30 ÉVE SZABADON” EMLÉKBIZOTTSÁG TÁMOGATJA

1) József Antall Prime Minister of the MDF-KDNP-FKGP government from 1990-93 (died in office).

2) Péter Boross, Prime Minister of the MDF-KDNP-FKGP government from 1993-94. Seen here in August 2014. Photo by Tibor Végh / Creative Commons

3) Gyula Horn, Prime Minister of the MSZP-SZDSZ government from 1994-98. Photo taken in 2007 at the International Charlemagne Prize of the city of Aachen (Karlspreis). Photo by Aleph / Creative Commons

4) Viktor Orbán, Prime Minister of the Fidesz-MDFFKGP government from 1998-2002. Seen here in the Hungarian Parliament in 1997. Photo by Rita Molnár / Creative Commons

30 Years of Elections and the Rise and Fall of Parties In the past 30 years, Hungary has seen eight general elections. In that period, nearly everything has changed, from the electoral law around conducting the elections to the number of MPs in the National Assembly.

The history of the country’s elections has been as varied as the composition of the political parties and the governments they formed.

BBJ STAFF

Since the regime change in 1990, Hungarians have gone to the polls to elect a government eight times.

Between the first one, the first pluralist, democratic elections after more than 40 years of one-party system and the most recent one in 2018, several aspects of the elections have changed.

In the beginning, the unicameral Parliament, the National Assembly, had 386 members who were elected in two rounds. Voters cast a vote twice: they first elected single-member constituency candidates, and then chose from the regional party list.

Of the 386 seats, 176 were singlemember constituencies, won via the runoff voting system, up to 152 seats were distributed by on a proportional representation basis across the 19 counties and the capital, while at least 58 seats were allocated on a national list to compensate parties for disparities between the distribution of votes and National Assembly constituency seats.

This system was in use until 2010; a year later the then and still ruling party

Fidesz, modified the electoral law. During these 20 years, six governments ruled the country. It was a period of constant change when it came to the different parties making up the ruling cabinet. The first, the government of József Antall and his center-right Hungarian Democratic Forum (MDF) party, emerged from the highest number of contenders; prior to polling, more than 50 political parties and associations had been established.

Of these, 12 contested assembly seats at the national level, and six parties participated in the run-off elections and got seats at the National Assembly. These were the MDF, the Christian Democratic People’s Party (KDNP), the Independent Smallholders’ Party (FKGP) – the three parties that formed the ruling coalition – along with the Hungarian Socialist Party (MSZP), the Alliance of Free Democrats (SZDSZ), and the League of Young Democrats (FIDESZ).

Despite its in inexperience in democracy and the difficulties it had to deal with after the collapse of the previous regime, the Antall government had its merits. (see our earlier article in this series, The 1st Free Elections and the Formation of the Antal Government, June 19). After Antall’s

premature death in 1993, he was succeeded

by Péter Boross as Prime Minister until 1994 when the next elections were held.

First Change

This time, electors voted for the party that promised improvements on the issues the previous government could not solve.

Winning 54% of the seats, the MSZP, which had grown out of the old ruling Hungarian Socialist Workers’ Party, came back to power in a coalition with the liberal SZDSZ, although, given its majority, the former could have ruled alone.

The MSZP had campaigned on economic problems and a steep decline in living standards since 1990 and saw in a huge turnout of voters. MDF lost nearly half of its voters, but still formed the largest opposition party.

Despite the marked shift in power from right to left (in which there was an element of nostalgia towards the previous regime), little else had changed inside the National Assembly: in 1994, the same six parties achieved the parliamentary threshold, although it had now been raised from 4% to 5%.

The newly formed government was led

by Prime Minister Gyula Horn, a politician

with a questionable past during the Kádárera who pledged to pursue free-market policies. During his reign, the country became a member of the OECD in 1996.

This government was not without controversies either. It continued to introduce economic reforms, including highly criticized fiscal austerity measures, the so-called Bokros-package, named after its creator, then Minister of Finance Péter Lajos Bokros (1995-96).

The measures came after a number of ineffective attempts to put the economy back on track. The package was aimed at improving external balances and reducing the general government deficit through measures such as the drastic devaluation of the forint, the introduction of an additional customs surcharge and other measures that led to a substantial reduction in real wages and living standards.

Bokros resigned and was replaced in the finance ministry by Péter Medgyessy (who would one day become prime minister, more on him later) who followed the steps of his predecessor. He was remembered for some unpopular moves, including a cut in the number of hospital beds and the reform of the pension scheme.

Legal Changes

The government also set out to change the legislation but its efforts to get a new constitution adopted proved futile. It did, however, change the municipal electoral system from a two-round procedure to one that is based on the principle of relative majority where mayors are directly elected.

From a party point of view, internal political tensions brought division to opposition: both the MDF in 1996, and

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then the KDNP in 1997 suffered splits.

After a disputed leadership election within the MDF in 1996, the supporters of Iván Szabó (who had been Minister of Finance from 1993-94) formed a new party, the now defunct Hungarian Democratic People’s Party or MDNP, while part of the KDNP left the party and joined FIDESZ. At the same time, the previously highly popular FKGP led by József Torgyán, lost many of its supporters.

It wasn’t only the opposition that was meeting with growing criticism. The government’s popularity was declining as a result of a number of corruption scandals; indeed, corruption was seen as becoming more rampant in general.

Public safety wasn’t at the highest level either, with explosions and gang retribution occurring in the most prominent parts of the city. By the time of the next general election, opposition party Fidesz, led by Viktor Orbán, had emerged as a major force and won in May 1998.

Right after assuming power, the party introduced a number of measures featured in its campaign. Family allowances were made automatic again, the first degree in higher education was declared free.

The government also had its own stab at passing a new constitution, but it lacked the sort of majority needed to force it through, and it was rejected by the opposition. Some symbolic moves were made, however; the Crown Hungary’s first ruler, King-Saint István, seen as the embodiment of the legitimacy of rule, was transferred from the National Museum to Parliament on the first day of the new millennium.

Tension Growing

In the field of politics, tension was growing both within the coalition of Fidesz and FKGP and between the government and the opposition. The government conducted a number of investigations into the alleged wrongdoings of the previous cabinet (alleged bugging and the so-called oil scandal among them), but it also had its fair share of issues, including one involving the mining companies of Orbán’s father, and another scandal about property owned by the Smallholder’s leader, and now Minister of Agriculture, Torgyán.

8) Viktor Orbán Prime Minister of the Fidesz-KDNP government from 2010-14.

Seen here at a press conference in Budapest, Hungary, on Monday, April 12, 2010.

Photo by Northfoto / Shutterstock.com

5) Péter Medgyessy Prime Minister of the 2002-2004 MSZP-SZDSZ government, seen here in August 2014 Photo by Tibor Végh / Creative Commons

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6) Ferenc Gyurcsány Prime Minister of the MSZP-SZSDSZ government from 2004-2009. Seen here at a meeting of European Social Democrats in the Willy Brandt House in Berlin on March 24, 2007.

Photo by 360b / Shutterstock.com

7) Gordon Bajnai, Prime Minister of the MSZP-SZDSZ government from 2009-2010, seen here giving a speech on February 8, 2013 in Veresegyház, Hungary. Photo by Photoline / Shutterstock.com

With that, FKGP lost all prospects of a win at the next election so eventually Fidesz and MDF set a joint list in the 2002 parliamentary elections. The election campaign was almost exclusively about scandals, the relationship between the two political sides, and the welfare promises made by the opposition MSZP whose candidate, Péter Medgyessy, took on Orbán in the prime ministerial candidates’ debate.

Initially Orbán, a gifted campaigner, took a back seat, apparently wishing to appear above the fray. But as the polls indicated a much closer race, he became increasingly visible, talking himself hoarse by the end. Despite his best efforts, the elections were won by the MSZP-SZDSZ coalition. Fidesz claimed the elections were rigged and asked for a recount of the votes, even calling the public out into street demonstrations.

Shortly after Medgyessy took office, stories emerged that he had worked as a spy during the Communist era.

The spy-case revealed that several sitting MPs were involved in the intelligence services.

The scandal led to a loss of trust within the coalition but it did not affect the popularity of the government. Another topic that caused some conflict among parties was the country’s EU membership, but the referendum in April 2003 ended with the majority of voters saying yes to the EU. Hungary joined the bloc in 2004.

Meanwhile, economic problems and further tension within the coalition eventually led to the resignation of Medgyessy, who was replaced by Ferenc Gyurcsány, previously Minister of Sports in his cabinet. In 2005 and 2006, parties were preparing for the next elections.

As a party in opposition, Fidesz announced many popular measures but could not handle an effective and highly critical campaign run by Gyurcsány, who won the support of the voters and the elections in 2006.

His popularity was short-lived though, right after his inauguration he introduced some austerity measures he never mentioned in his campaign. His support fell even further when a leaked tape revealed that the prime minister and the party had lied “morning, noon and night” to the public about the state of public finances in order to win re-election. This caused major public uproar.

9) Viktor Orbán Prime Minister of the Fidesz-KDNP government from 2014-18. Seen here on August 10, 2014, during the stadium opening football match (Ferencváros vs. Chelsea) at Groupama Arena. Photo by Laszlo Szirtesi / Shutterstock.com

10) Viktor Orbán Prime Minister of the Fidesz-KDNP government from 2018-to date. Seen here on August 20, 2018, at Salzburg, Austria, arriving for an informal meeting of the 28 heads of state or government of the EU. Photo by Alexandros Michailidis / Shutterstock.com

Caretaker

The Socialist-SZDSZ coalition came apart in 2008, after the opposition called for a referendum over austerity measures introduced by Gyurcsány. The prime minister stayed in office until 2009, when Minister of National Development and Economy Gordon Bajnai succeeded him as a caretaker leader; shortly afterwards, Gyurcsány also stepped down as leader of the Socialist Party.

The MSZP suffered a crushing defeat in the April 2010 parliamentary election, in which Fidesz-KDNP won a landslide victory and secured an absolute majority in the National Assembly in the first round of voting.

The coalition went on to win a parliamentary majority of more than two-thirds in the runoff election, with all but three out of 176 single-member constituency seats, while MSZP saw its worst election result since 1990. Both the far-right Movement for a Better Hungary (Jobbik) and the environmentalist Politics Can Be Different (LMP) gained representation in the Parliament for the first time, but the MDF and SZDSZ failed to pass the 5% threshold.

In 2011, the Parliament approved a new Fidesz-drafted constitution that opponents said threatened democracy by removing checks and balances. The EU also expressed its concern over the law and asked, without success, for its withdrawal. In December, Parliament approved a new election law that halved the number of MPs and redrew constituency boundaries. According to critics, it tilted the system in favor of the governing party. The next two elections in 2014 and 2018 also saw landslide wins for the Fidesz-KDNP coalition, with no real contenders among the opposition.

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