Budapest Business Journal 2818

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

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 18

OCTOBER 2 – OCTOBER 15, 2020

SPECIAL REPORT Energy

SPECIAL REPORT

Nuclear Still Dominant as Renewables Gain Ground in Hungaryʼs Energy Mix While renewable energy sources produce an increasing proportion of Hungary’s energy mix, and the country is set to go significantly greener in the upcoming years, nuclear energy is still the single major power source, and will remain so for the coming decades. 14 FOCUS

Leading Korean SMEs to Hungary Keewon Park, director of the Korean Trade-Investment Promotion Agency (KOTRA), talks talks about its work and the background to how the country became the number one investor here in Hungary. 9

SOCIALITE

Enjoying ‘Stan’s’ eye View of K-pop Phenomenon

David Holzer hadn’t given K-pop much thought until he noticed that his local cinema was showing “Break the Silence”, the fourth movie by Korean pop giants BTS. It seems the phenomenon is a well established here as anywhere else, but what is the attraction? 22

Powering Ahead NEWS

Surprisingly Positive Outlook in Midst of a Crisis Much to the surprise of many, international credit rating agency Moody’s has improved Hungary’s outlook in the middle of the coronavirus crisis.

However, analysts still predict a large scale setback to the economy and a slow recovery for the country. 3

IAL R SPEC

T EPOR

György Kóbor, chairman and CEO of the MVM Group, talks exclusively to the Budapest Business Journal about building growth despite COVID, increasing renewable inputs, inter-group communication, future acquisitions and a major rebranding effort.13 BUSINESS

German Companies Moving Focus to R&D in Hungary Ahead of the October 3 National Day of the Federal Republic of Germany (also this year the 30th anniversary of the reunification of West and East Germany) newly arrived Ambassador Johannes Haindl reflects on the state of bilateral trade with Hungary. 5

News

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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, Robert Smyth, Zsófia Végh.

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For years, Hungary’s biggest foreign investor has been Germany (the subject of our Country Focus in the last issue). But that does not mean the authorities here have not been actively seeking to attract FDI from elsewhere.

While the award-winning Hungarian Investment Promotion Agency is the personification of this approach, the most obvious policy example in recent years has been the “Opening to the East”. China is the main target here, but is far from the only one, with the three governments Viktor Orbán has led since his return to power in 2010 keen to benefit from what they see as the international pivot in terms of money, trade and, increasingly, influence away from the old Western powerhouse toward the East.

There have been notable milestones along the way. Russia is financing the expansion of Hungary’s nuclear power plant in the Paks II project with a EUR 10 billion loan. Beijing is providing Budapest with 85% of the loan for a long-awaited USD 2.1 billion high-speed rail link between the Hungarian capital and Belgrade.

For all that eastward pivot, the vast majority of Hungary’s trade is still with the European Union (77% of exports were with the EU26 in July 2020, according to the Central Statistical Office, and 71% of imports came from there). And yet, top spot in the FDI league table last year did feature a new face; for the first time ever, it was South Korea (with an investment volume of EUR 2.557 bln), from Germany (EUR 808.33 mln) and Japan (EUR 526.71 mln).

While the number one investor title may be new, Korean FDI in Hungary is not. Samsung Electronics has been making TVs here since its first factory started production in Jászfényszaru (73 km east of Budapest) in 1990. Other investments represent a much more modern concept: batteries for electric vehicles.

According to Keewon Park, director of the Korean TradeInvestment Promotion Agency, a strategic decision was taken by the likes of Samsung SDI, LG Chemical and SK Innovation to invest heavily in R&D early so they could supply the European market once EV sales, and thus the growing need for batteries from the manufacturers, started to take off. Hungary is the ideal location for Korean factories looking to supply those very same manufacturers.

Links between Hungary and South Korea are not built on trade alone, though. This May saw one year since the tragic Danube River sinking in which 26 Korean tourists lost their lives. COVID restrictions meant the victims’ relatives could not make the trip to mark the anniversary, but Keewon Park says the Hungarian government has always shown “wholehearted support” and the shared experience means “this relationship deepened.”

It is a reminder that while trade may link us, it is fellow human feelings that bind us together.

Robin Marshall Editor-in-chief

Photo by MTI/Vasvári Tamás

Photo by fortepan.hu/Chuckyeager tumblr

VISIT US ONLINE: WWW.BBJ.HU

‘DEEP RELATIONS’ UNDERPIN TRADE LINKS

THEN & NOW

In the color photo, a player of the Hungarian handball team Telekom Veszprém takes aim at the goal of Croatia’s HC PPD Zagreb in a European Handball Federation Champions League match in the Veszprém Arena on September 24. Veszprém secured a straight-forward 37:25 win against Zagreb, moving joint top of their Group B table. The tie was the Hungarian side’s 200th EHF Champions League victory, making it only the second men’s team to reach that number. The black and white image from the Fortepan public archive shows goalmouth action from a very different era in 1960.

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News///macroscope Photo by Gil C/Shutterstock

Surprisingly Positive Outlook in the Midst of a Crisis

Much to the surprise of many, an international credit rating agency has improved Hungary’s outlook in the middle of the coronavirus crisis. However, analysts still predict a large scale setback for the economy and a slow recovery for the country.

GKI thought the Hungarian economy would contract by 5.7% in 2020.

The National Bank of Hungary (MNB) has also knocked back its growth expectations for this year: In its latest quarterly “Inflation Report”, it said it expected the economy to contract between 5.1% and 6.8% this year.

Moody’s forecasts a real GDP contraction of 5.5% in 2020, followed by a recovery in growth to about 4% in 2021, somewhat slower than the government’s own projection of 4.8% growth in its 2021 budget. Government debt will rise a further 10 percentage points to around 76% of GDP.

ZSÓFIA CZIFRA

Meanwhile, Hungary’s economic crisis management body has introduced a few tax reduction measures in order to tackle the difficult situation for companies.

Moody’s Investors Service changed Hungary’s outlook from “stable” to “positive” on September 25. At the same time, the international rating agency affirmed the long-term issuer and senior unsecured debt ratings at “Baa3”.

The move came as something of a surprise in the middle of a crisis, when the country’s gross domestic product fell by nearly 14% in the second quarter of the year on a yearly basis, and with the second wave of the coronavirus pandemic just around the corner, if not already here.

According to the agency, the key drivers for the change in outlook to “positive” are the strong recent and prospective performance of the economy relative to “Baa3”- and “Baa2”-rated peers, with related improvements to the domestic and external debt position.

Compared to other countries in the region, Hungary has been less impacted by the crisis, Moody’s judges. “While strong economic growth and government debt reduction have inevitably been derailed by the coronavirus crisis, the impact on Hungary’s credit profile has been more limited than elsewhere,” the ratings agency wrote in its press release.

The agency expects that the improvement in the government’s fiscal and debt metrics seen since the last rating action in November 2018 will resume from 2021, and that the reduction in external vulnerabilities since 2012 will be sustained.

Accomplishments Acknowledged

Moody’s also noted that the “Baa3” rating incorporates a number of credit challenges, such as the strong dependence of the economy on manufacturing and the related exposure to the automotive sector of Germany (which is rated “Aaa” with a “stable” outlook).

The fact that the government debt burden remains above the median of similar-rated peers and that some weaknesses in the institutions and governance framework, mainly in relation to civil society can be detected also indicates maintaining the “Baa3” rating, as does Hungary’s occasionally confrontational relationship with the European Union.

In its detailed rationale, Moody’s has acknowledged that since its last rating action in November 2018, the Hungarian government has made further progress in implementing its fiscal consolidation and debt reduction strategy, supported by sustained strong growth momentum, with average annual real GDP growth of 5% in 2018 and 2019. Over the five years till the end of 2019, general government debt fell from 76.2% of GDP in 2015 to 66.3% of GDP. But it also adds that the coronavirus pandemic has had, and will continue to

have, a significantly negative impact on Hungary’s economy, government finances and debt metrics.

Moody’s forecasts a real GDP contraction of 5.5% in 2020, followed by a recovery in growth to about 4% in 2021, somewhat slower than the government’s own projection of 4.8% growth in its 2021 budget.

Government debt will rise a further 10 percentage points to around 76% of GDP.

Forecasts Knocked Back

However, due to the second wave of the pandemic, analysts are getting increasingly pessimistic about Hungary’s economy. According to economic research institute GKI, GDP contraction will be around 7% this year, and it will be followed by a rather slow recovery in 2021. In its latest forecast, GKI also emphasizes that, due to uncertainties, the fallback in 2020 might be at a smaller or even a larger scale.

In spite of the great amount of uncertainties, GKI still expects 4.5% expansion of GDP next year; however, as it notes, such expansion can only start in the second quarter of the year.

Compared to the EU, Hungary’s GDP will most likely rise above the EU27 average; however, when it comes to peer countries in the region, only a weak to medium growth rate is expected. In its summer forecast,

In the meantime, the government once again convened the Gazdaságvédelmi Operatív Törzs (Economic Protection Operational Corps), a body for overseeing economic protection, which, in its meeting at the end of September, decided on certain tax reduction and simplification in order to ease the situation of companies impacted by the virus.

The government has also decided on extending the debt repayment moratorium that was originally planned to end on December 31. From next January, certain endangered group of people will automatically remain in the scheme: pensioners, public scheme workers and families raising children will all continue to benefit from the moratorium.

According to portfolio.hu analysts, the announced measures are not enough and they hope that the new economic protection plan, said to be introduced in the fall, will be more purposeful and will contain more efficient elements in order to tackle the current crisis situation.

Numbers to Watch in the Coming Weeks On October 5, the KSH will publish August retail sales figures. On the next day, the first estimate of industrial production for August will come out, followed by the commercial accommodation data for August and the consumer price index for September on October 7 and 8, respectively.

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Budapest Office Projects Continue to be Delivered The Budapest office market continues apace as Atenor has delivered the 20,000 sqm BREEAM “Excellent” accredited Aréna Business Campus A, the first phase of its speculative, 85,000 sqm project in the outer boulevard of Budapest.

GARY J. MORRELL

Essentially one of four phases due to be complete in each of the next four years, ground work has already started on a second 14,000 sqm phase.

Elsewhere, CPI and Skanska have officially opened the 16,000 sqm Balance Hall and the 14,000 sqm Nordic Light Trio, both located in the Váci út. All three projects have attracted substantial lettings.

“Aréna Business Campus A is currently 30% let. We are pushing forward with

Aréna Business Campus by Atenor. many ongoing negotiations and therefore we expect to let it completely within a maximum of six months,” says Nikolett Püschl, leasing and development director at Atenor Hungary.

“Ongoing developments proceed, no delays can be expected. For example, the current constructions of all four of Atenor’s office buildings are ongoing as per the original program,” she adds.

The Budapest office market has some of the lowest vacancy levels on record at 7.3%; at the same time supply has been relatively constrained in comparison with past cycles.

The market has a potential pipeline of more than 570,000 sqm with the development of large-scale, phased speculative projects by developers such as

Mask Rules Tightened, Moratorium Extended

Atenor, HB Reavis and CPI and Skanska.

Further, Hungarian developers like Horizon Development and Wing are due to deliver major single standing projects.

Growing Stock

Office stock in Budapest now stands at around 3.8 million sqm according to the Budapest Research Forum (made up of CBRE, Cushman & Wakefield, JLL, Colliers International, Eston International and Robertson Hungary). According to Cushman & Wakefield, more than 100,000 sqm of space is due to be delivered in the

Coronavirus ///roundup

commissioned by the Hungarian Hotel and As our previous issue was going to print, Hungary’s Restaurant Association.

Budapest Airport (BUD), meanwhile, government decided to extend rules on wearing said passenger traffic had fallen by masks, set a limit on the price of COVID-19 more than 90% in the first two weeks of September, after the government mandated tests and made it compulsory to take the body restrictions on entry by foreign nationals to contain the spread of COVID-19 cases temperature of all students and teachers when originating abroad. entering schools from October 1, Prime Minister PAX Numbers Plumet Viktor Orbán said on his official Facebook page.

The operator said passenger numbers are

NICHOLAS PONGRATZ

These measures were codified later that week in a decree published in official Magyar Közlöny (Hungarian Gazette).

The decree requires event venues and catering establishments to close by 11 p.m. from September 21, and extends rules on mandatory mask-wearing for people over the age of six to theaters, cinemas, museums and shopping malls, in addition to shops, where they have been required since the spring. It also specifies that masks must be worn “in a manner ensuring the nose and mouth are continuously covered.”

The Budapest Chamber of Commerce and Industry (BKIK) recommended

measures the capital can take to support the struggling tourism and catering industry in a letter sent to Mayor Gergely Karácsony, according to state news agency MTI. Acknowledging the dependency of the city’s tourism and catering businesses on foreign visitors, BKIK urged support for travel packages that target Visegrád Group citizens from the Czech Republic, Poland and Slovakia; these are exempt, with a negative COVID-19 test, from the general ban on entry into Hungary by foreigners.

For most hotels in Budapest, the loss of revenue this year may exceed 70% from last year, while hotels outside of the capital are expected to see their revenue fall by 20-40% due to the coronavirus crisis, according to a representative survey

second half of the year, of which more than 50% is already preleased.

The BREEAM “Very Good” accredited, EUR 31 million Balance Hall office development was completed at the turn of the year and forms part of the 35,000 sqm Balance Office Park; the complex is expected to be close to fully let within a year according to CPI. “Although our day-to day lives have been transformed by the COVID-19 crisis, we do believe that the domestic office market relies on firm fundamentals that will bring about an upswing in the rental market once the pandemic is over, so we can resume and continue our value creating real estate development thereafter,” Mátyás Gereben, Hungary managing director at CPI commented at the building’s opening.

Skanska EUR 29 million Nordic Light Trio, the third and final part of the WELL and LEED accredited Nordic Light complex, was sold to the South Korean investment trust JR AMC one year before its completion. The complex is close to fully let, with its major tenant being Roche Services (Europe).

Both Skanska and CPI have further developments office projects in the Váci Corridor. Skanska has started construction of a first 26,000 sqm phase of its 65,000 sqm H2Offices, consisting of three interconnected buildings. CPI is developing an office complex at a site close to Árpád Híd. Across the river, Atenor has started construction of its 18,000 sqm BakerStreet project in South Buda; the scheduled the planned hand-over is the second quarter of 2022.

expected to fall by more than 90% for the full month and to drop 80-90% in October based on indications from several airlines of reduced operations because of the drop in demand. BUD said another reduction in headcount, following one in May, is “inevitable” because of the impact of pandemic travel restrictions on passenger numbers and revenue. BUD expects the latest job cuts to affect 236 employees.

After the Czech parent company informed its Hungarian partner of another border tightening, this time between Austria and the Czech Republic, RegioJet will not launch its Budapest-ViennaPrague routes in Hungary in October after having suspended operations in September, András Szigeti the CEO of Continental Railway Solution Kft. (CRS) told Világgazdaság (Global Economy).

Replying to a question on whether the border restrictions would remain following October 1, Minister of Foreign Affairs and Trade Péter Szijjártó replied that restrictive measures on entries “will remain at our borders, given that we want to cut off the supply of the virus.”

After a meeting of the Economic Protection Operational Council, the Prime Minister said that the credit moratorium will be extended for a further six months from January 1 for families raising children, pensioners, the unemployed and the public.

Supervisory spokesperson of the National Bank of Hungary (MNB) István Binder said on the M1 news channel that since the introduction of the moratorium, HUF 2 trillion had remained with the population, affecting approximately 160,000-240,000 families, while State Secretary Csaba Dömötör said in a video message posted on his Facebook page that the six month extension would leave families and businesses with an additional HUF 400-450 billion.

Hungary’s government could consider a second, targeted extension of a moratorium on loan repayments, depending on circumstances in the spring, Márton Nagy, an advisor to the prime minister (and former deputy governor of the MNB), said in an issue of daily Magyar Nemzet (Hungarian Nation).

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development of the COVID-19 pandemic.

Any containment of the virus and the production of a vaccine will accelerate this process.

Ambassador: German Companies Moving Focus to R&D in Hungary

Just ahead of the October 3 National Day of the Federal Republic of Germany (also this year the 30th anniversary of the reunification of East and West Germany) newly arrived Ambassador Johannes Haindl gives his first interview to the Budapest Business Journal on the state of bilateral relations.

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BBJ: What are the major investment sectors for German companies in Hungary, how much has been invested and how many jobs created? Have the sectors changed over the years?

Johannes Haindl: Germany is Hungary’s most important investor. In 2018, Germany made direct investments amounting to EUR 1.2 billion. In consequence, the total amount of German direct investments rose to around EUR 19 bln. This makes up to 20 % of the total foreign direct investment.

More than a third of this sum was invested in the automotive sector. A fifth was spent in processing companies. All in all, about 3,500 German companies are doing business in Hungary, with more than 250,000 employees.

Nowadays, German companies focus increasingly on research and development projects rather than on sole production.

Bosch, as an example, invested EUR 120 million in its engineering center in Budapest two years ago in order to expand R&D with regards to autonomous driving

Johannes Haindl and electric mobility. Besides this, German companies have increased their cooperation with Hungarian universities and schools.

One success story was the introduction of the German concept of dual vocational training, including theoretical education in schools and practical learning on the job.

BBJ: Most people will know about the heavy German investment in the automotive industry (Audi, BMW, Bosch, Mercedes etc.). Are there other less high profile sectors that it might surprise our readers to learn about?

JH: One example of successful German investment is AviAlliance, currently holding a 55% stake of Budapest Airport Zrt (BUD). Within the last 12 months, BUD has invested more than EUR 100 mln in various development projects for the international airport. Recently, with the completion of Pier 1, a modern boarding gate has been established, as well as BUD Cargo City with new and efficient facilities for freight handling.

Another example is the construction of “Lajtania Park”, established near Hegyeshalom by the German companies FAKT AG and E.ON SE, together with KÉSZ group from Budapest. On an area covering 330 hectares, one of the biggest horticultural centers in Central Europe with a future-oriented agricultural concept shall be constructed. The investment volume amounts to EUR 1 bln.

BBJ: What is the picture for Hungarian investment in Germany? What sectors are involved and what are the figures?

JH: Hungarian investments in Germany, mostly in industrial production and

energy, have decreased over the past years. In 2017, EUR 3.2 bln was invested, whereas this figure shrank to only EUR 1.75 bln in 2019. A good example is MOL Group’s 2019 acquisition of Aurora, a medium-sized German company, recycling plastic and producing high-level technical plastic compounds in its facilities in Baden-Württemberg.

BBJ: How badly affected has bilateral trade been by the COVID-19 pandemic, and how long do you think it might take to recover?

JH: The COVID-19 pandemic has had a negative effect on the bilateral trade.

In comparison to the same period of the previous year, Hungarian exports to Germany have sunk by around 25%.

German exports to Hungary fell by more than 30%. In the long-term, the numbers will surely rise again. The recovery time depends on the further

Speaking Diplomatically Johannes Konrad Haindl presented his credentials as the Ambassador of the Federal Republic of Germany to Hungary's President János Áder on July 3. He has previously served as Ambassador in the Czech Republic and, from 2015-19, in Austria. According to the Eurasia Review website, Haindl, a former journalist, has enjoyed a diplomatic career of

BBJ: Hungarian Prime Minister Viktor Orbán and German Chancellor Angela Merkel have not always agreed with one other. What are the biggest challenges in bilateral relations right now?

JH: Germany and Hungary have a long common history. We are both members of the European Union.

Currently, Germany holds the [sixmonth rotating] Presidency in the Council of the European Union. The way the EU has managed the COVID19 pandemic so far gives me confidence.

No region in the world has shown as much solidarity as we have in the European Union. Because the virus doesn‘t know any borders, we will need European virtues to manage the crisis. As our Presidency motto puts it: “Together for Europe’s recovery”!

BBJ: Is Hungary considered to be a stable and transparent investment destination?

JH: For years, there have been continuous investments by German companies in Hungary, showing the general trust in Hungary as an investment destination. However, according to the German-Hungarian Chamber of Commerce’s fall 2019 figures, more than 40% of the interviewed companies expect the medium-term economic development of Hungary to deteriorate. Only 22% expect it to enhance. This is certainly a development which requires a thorough analysis.

BBJ: Clearly, Hungarian laws are the responsibility of Hungarian legislators, but are there any areas where you are lobbying for change?

JH: Having been in this wonderful country only for a couple of weeks, I am still in the process of getting familiar with the peculiarities of Hungary.

BBJ: Is there anything else you would like to tell our readers?

JH: This year we celebrate 30 years of German reunification. We have not forgotten that it was here in Hungary that the first stone was knocked out of the Wall. We look back with gratitude on the past 30 years in which, together with our partners, we have succeeded in making reunification in a united Europe a reality. At the same time, we want to look ahead and help Hungarians and Germans continue their lives in a strong Europe of peace, freedom and prosperity.

more than 30 years. He previously worked at the German embassy in the former Yugoslavia, and also led the German foreign ministry’s department for southeast Europe and Turkey. In 2016 he was appointed by the German foreign ministry as that country's special envoy, working alongside European Union and United States' representatives to help resolve the then political crisis in what is now North Macedonia.

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Photo by Besenyei Gergely

Showcasing how Live Events can Work Under Today’s Conditions In a tangible step towards a return to normality, and in front of hundreds of participants in the conference room of Puskás Arena, the #PowerOfLiveEvents initiative left the virtual space and became a day-long live conference earlier this month.

and the collaboration of the entire profession. With this conference, we have taken the first significant step in this collaboration,” she added.

A recurring theme was the benefits of live events over digital or hybrid events.

The vast majority of speakers argued for the benefits of live events.

Creating Experiences

“With their different tools, digital events may partially support some corporate goals, but they are not up to live events in terms of doing business, engaging and retaining employees, or creating experiences,” insists Zsolt Kassai, CEO of Special Effects International, one of the initiators of the event and program series.

“We also managed to prove to the professional audience and corporate partners participating in our conference that, with the appropriate precautions, a live event for hundreds of people can be held safely in the current situation,” Kassai says.

“It is in our common interest to restart quickly, as the epidemiological situation allows. In a short time, hundreds of companies from

25

countries

Hungarian and foreign guest speakers talked about reviving the market, presented crisis management “best practices” and discussed event planning in this new situation. The conference on September 10 was attended by more than 300 people with COVID-19 safety measures in place.

There was a disinfection gate with a digital thermometer where all attendees had to do was to hold their wrist in front of the display; masked, gloved hostesses helped manage elevators, among other things, to reduce the number of surfaces touched; chairs, tables and microphones were regularly disinfected; lunch packages were individually prepared; and with the right colored armband, it was possible to indicate without words if someone wanted to keep a greater distance.

Organized with support from the newlyformed Budapest Convention Bureau and the Budapest Festival and Tourism Center and with the cooperation of industry associations, the live conference proved that by creating the right conditions and involving a wellprepared organizing team, it is possible to organize MICE events for up to hundreds of people in Hungary in accordance with health-

safety rules. The event organizers insist the limit of more than 500 participants only applies to music and dance events; there is no participation cap for any other type of event.

The aim was to showcase how events can be organized under the current circumstances.

Speakers representing different segments of the industry discussed the situation, the changes, the new trends and challenges the meeting industry is facing. Additional topics were the role Budapest is playing as a key MICE destination, the strategy for helping the sector, and safe event protocols developed due to the pandemic.

United Networks of International Corporate Event Organizers research on

200 large

international companies, presented as the opening of the Power of Live Events Conference, provided an immediate eyecatching insight into the event industry’s immediate future.

Some 64% of companies surveyed said they would like to continue organizing events in the first quarter of 2021, and a third of respondents expect a pre-epidemic budget. Even if the cost of business events needs to be reduced somewhat, it Photo by Besenyei Gergely

BBJ STAFF

could affect gifts distributed to guests, entertainment add-ons, and spectacular decorations or installations. However, the total number of planned events has changed only very minimally; if that proves to be true, it promises a positive outlook for the Hungarian events industry.

Smart Data

have joined our initiative, an unprecedented collaboration in our industry. Despite the extreme difficulties, the event industry has not disappeared in Hungary. In fact, it is more unified and better prepared than ever before,” points out Szabolcs Botond, CEO of Visual Europe Group, another of the initiators of the event and program series.

Foreign speakers included Jens Oliver Mayer, CEO of Jack Morton Worldwide, who illustrated how the domestic event “We also managed to industry could benefit in the future from prove to the professional a polished user experience and the smart utilization of data. audience and corporate Jan Oršič, head of the Ljubljana partners participating in our Convention Bureau, gave professional advice on how the event industry can conference that, with the reach the right target groups during the appropriate precautions, a almost complete shutdown forced by the coronavirus, while retaining key partners. live event for hundreds of Gorazd Čad, CEO of Toleranca Marketing people can be held safely presented more life-saver best practices regarding marketing strategies for in the current situation.” overcoming the crisis.

Hungarian industry leaders said the most important task is to retain the “I believe the meeting professionals highly skilled Hungarian workforce have proved that the profession is able with internationally marketable professional knowledge. Without suitable to survive and there is a safe solution for organizing events under the current professionals, it will be much more circumstances. The initiative showcased difficult to restart the industry, and what huge energy lies in live events and in business events play an indisputable role professional industry cooperation,” adds in relaunching the economy.

Tamás Végh, COO of Bo-Live Branding “In the current situation, we all now need Agency, another of the organizers. to work together, shoulder to shoulder, to The event was the culmination of a help industry workers and strengthen 17-week online social marketing campaign our position in the international MICE that began in May titled “Power of Live market. It is in our common interest to Events”. The initiative was set up to draw bring quality tourists to a livable city, also attention to the difficult situation caused keeping sustainability in mind,” said Anna by the coronavirus pandemic. Hundreds Békefi, managing director of Budapest of companies and organizations from 25 Convention Bureau.

“We are strongly convinced that Budapest countries have joined the campaign, led

by Special Effects International and Visual and the Hungarian meeting industry Europe Group. professionals are prepared and able to Following the conference, so-called organize and conduct business events for “Get-Together” events and concerts were hundreds of people in accordance with held; at the Museum of Fine Arts, a current epidemiological rules. Delivering concert by the Óbuda Danubia Orchestra this message across borders and boosting took place, while on March 15 tér a video the business events market requires a mapping show and a concert were held. proactive, solution-oriented attitude

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An Upcoming Paper Gold Crisis?

The Corporate Finance Column Photo by Arsel Ozgurdal/Shutterstock

Les Nemethy and Alberto Scalabrini investigate the possibility of problems in the paper gold market and the impact of that for markets and investors alike.

There is vastly more “paper gold” (Exchange Traded Funds , or ETFs, gold contracts, futures, options, and the like) than physical gold. The relative values are put at some USD 200 trillion-300 trillion for the former, according to bullionstar.com, compared to about USD 11 tln of physical gold (of which central bank holdings would constitute ca. USD 1 tln), according to investmentweek.co.uk The majority of paper gold is in the form of contracts traded on the London Bullion Market and COMEX (part of the Chicago Mercantile Exchange), where bullion banks are engaged in fractional reserve bullion banking. In the same way that banks have liabilities that vastly exceed reserves, so too bullion banks issue gold contracts that vastly exceed the amount of gold they hold on deposit.

Similarly, the majority of gold ETFs only have a fraction of the gold on hand, compared to the face amount of gold ETFs in circulation. Conventional banks are quite heavily regulated, hence relatively transparent, whereas bullion banks are lightly regulated, and opaque, bullionstar. com notes.

Wherever there is fractional reserve banking, there can theoretically be a run on the bank, particularly where there is a sudden loss of confidence.

Already in March 2020, when stock

markets experienced a strong downward adjustment, several gold dealers were selling physical gold at

10-15% above

the spot price, as bloomberg.com reported at the time.

When you put your money into a bank, the money belongs to the bank, and in the case of bankruptcy will serve to pay the creditors of the bank; similarly when you buy gold from a bullion bank, chances are that this is in an “unallocated” account, which legally means you are loaning your gold to the bullion bank, and in the case of a bankruptcy of the bullion bank, you will merely be an ordinary creditor.

To protect yourself, you may choose to put your gold into an “allocated” account, but then you must pay significant storage fees and insurance. However, allocated gold will remain your gold even in the case of bankruptcy of the bullion bank.

It is estimated by the London Bullion Market Association that 95% of the

transactions in London’s precious metals markets are in unallocated metal. There is more paper gold traded in one day than all the physical reserves in the world, bullionstar.com says, confirming the predominant importance of paper gold.

Tipping Point

Given that the paper gold market is so much larger than the physical market, price formation typically occurs in the paper market, while the physical market is a price taker.

However, in the event of a major crisis, there may be a theoretical tipping point, when enough holders of paper gold wish to convert to physical gold or enough shorts wish to cover their positions, that could lead to a run on physical gold.

There is, bullionstar.com points out, a risk of a disconnect between physical and paper gold prices.

In March 2020, there was such a dislocation in the New York gold market, as bullion banks came very close to not being able to deliver physical gold against

Business | 7

contracts. While this was blamed on COVID-19, and the lack of ability to ship in supplies from European refineries (some of which were closed due to COVID), it demonstrates the danger of thin physical gold inventories, as Bloomberg points out.

What might be a trigger for such a run on physical gold? Despite the very recent (and probably temporary) softness in gold, one doesn’t need to go too far to think of theoretical examples: a contested U.S. election, leading to major domestic violence; a Chinese invasion of Taiwan or a war in the middle east; a sudden surge in inflation, leading to higher interest rates, triggering a wave of bankruptcies and defaults, to name a few.

We are not suggesting that any of the above will happen, let alone trying to forecast the timing of such events, but neither are any of the above events to be dismissed as highly improbable “black swans”. One might call them “grey swans”.

In any of the above cases (or other extreme events), paper gold prices might collapse, and physical gold prices could go through the roof. Let us assume that half of the value of paper gold were wiped out; the evaporation of

more than

USD 100 tln

in paper gold value could theoretically in and of itself trigger a recession, or turn a recession into a depression.

So what are the “take home” messages of this article? First, there is a need for more transparent regulation of bullion markets.

Second, from the perspective of you, the investor, if safety is the objective, we recommend holding physical gold (bullion bars, gold coins, etc.) or, if you choose paper gold, at least be aware of the risks.

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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The coronavirus pandemic caught the world unawares, with a large part of the business community forced to switch to a home office setup overnight. For some, the transition presented near-unsurmountable difficulties while others – like Budapest-based Tungsram – sailed on smoothly, as we explore in this last installment of our mini-series with the innovation company.

BBJ STAFF

Photo by fizkes/Shutterstock

Navigating Uncharted Waters: Overcoming the Challenges of Remote Work

Going into 2020, the world was already embracing the spread of remote work, with companies offering ‘work from home’ days, co-working spaces popping up everywhere, and digital nomads travelling the world and working from wherever there is an internet connection.

That trend was given a turbocharged boost overnight in March 2020 with the onset of the COVID-19 pandemic.

Global Workplace Analytics, a research and consulting firm, estimates that 25-30% of the workforce will be working from home multiple days a week by the end of 2021.

Workflow automation company Zapier found in a poll

that

66%

of knowledge workers believe the traditional office setting will be obsolete by 2030.

In this environment, a corporation’s IT background and general foresight is key to not only success, but survival as well, says Márta Majtényi, CIO at Tungsram.

The Hungarian multinational company has an integrated IT solution that stood the test of the COVID-19 crisis, as the

platform worked perfectly in a home office environment.

All corporate devices run on the same platform, and joining a video call or accessing a work-related file is possible from any kind of device.

“Our system proved COVID-resilient even though we installed it way before anyone heard about the coronavirus,” Majtényi says.

Eye-opener

From a human resources perspective, the pandemic has proved an eye-opener, according to Katalin Bárány, Tungsram Group HR director.

“Hungary has a lot of catching-up to do when it comes to employers offering a modern workplace, especially with regard to home office,” Bárány says.

The latest statistics show that a mere 3.7% of employees in Hungary worked in a remote work setup, according to 2018 data from the Central Statistical Office. Where an employee lives will cease to be a key hiring factor in an increasing number of cases, Bárány says. Trust will also undergo significant changes as managers will have to learn not to micromanage.

In manufacturing, the trend is quite the opposite, as the current environment calls for heightened oversight. Tungsram implemented entry checks, contact tracing and increased reporting obligations for employees working in manufacturing to prevent the spread of the virus.

There are also complex protocols in place concerning the evacuation and the disinfection of premises in case an infection is detected.

Hungary Sees Economic Opportunity in COVID Crisis

BÁLINT SZŐNYI

Undoubtedly, automotive and tourism were the two sectors of the Hungarian economy most affected by the lockdown. Automotive has since recovered, though, and it’s back to previous highs with the potential to trigger a positive domino effect. However, foreign tourism won’t recover until a vaccine is available.

The labor market suffered far less than in many other countries, György said. In August, some 4.5 million Hungarians were working, only 20,000 less than the record number employed in the country.

In fact, some companies even reported a labor shortage that left some growth potential untapped.

In the medium run, supply chain structures will change. “As production will move closer to consumers, that’s a big chance for the CEE region. V4 countries will have a chance to increase their value added,” said György alluding to the Visegrád group of Czech Republic, Hungary, Poland and Slovakia.

Photo by Lázár Todoroff

AmCham Hungary’s Virtual Business Forum with State Secretary László György of the Ministry of Innovation of Technology featured an assessment of the current state of the economy, the government’s response to the first wave of the pandemic and how innovation policy was affected by the COVID crisis.

The state secretary added that the biggest danger in the short-term is if lockdowns are reintroduced. “We are an open economy,

90% of

GDP is export-driven, so lockdowns on export markets would make us suffer,” he said expressing hope that not all countries are interested in such drastic restrictions.

The medium-term is a lot rosier. The 2021-2027 EU programming period foresees unprecedented resources for SMEs and large corporations alike.

As far as adaptation to the COVID crisis is concerned, AmCham recommended an expansion of remote work, an item that has been on the agenda for years now. György assured AmCham members that they would continue to be part of the legislative process. With many details pending, partial telework will be allowed, there will be less administration, costs will be accounted on a lump-sum basis, and employers will be granted onlinebased work control rights.

László György

An Opportunity

When it came to job protection, the government decided to follow a unique approach to the COVID-19 crisis. “We looked at it as an opportunity early on,” said György.

“We spent 10 times more on CapEx subsidies than direct job protection measures because we want to safeguard jobs via investments.”

Not surprisingly, innovation policy was also affected by the pandemic. An initial COVID research fund of HUF 3 bln was twinned with a

HUFfund7 bln

to finance related innovative projects.

Part of the funds are funneled into local COVID-19 vaccine development.

COVID-neutral programs include cooperative PhD programs that move universities closer to markets. A new management model should allow them to deepen cooperation with companies with less stringent procurement rules. In addition, university professors won’t be public servants, in order to attract talent, and PhD programs will be brought closer to practical knowledge.

“Our intent is to say goodbye to the so-called ivory tower concept; we’d rather move towards the Anglo-Saxon model that builds on vibrant cooperation between universities and the corporate world,” said the state secretary, urging AmCham members to be proactive and turn to HIPA or the ministry with any ideas or questions regarding their operations.

The government is also dedicated to expanding its Modern Factory Program.

VALI, the main Information Portal for Businesses will serve as a key platform by offering state-of-the-art solutions and providers broken down by area of specialization and geography to increase overall competitiveness.

The health industry will be treated with priority as it receives the biggest investment subsidies from among the sectors. A total of HUF 85 bln has been earmarked for that purpose, from which HUF 50 mln is contracted out by the Ministry of Finance, with the rest managed by the innovation ministry. Simultaneously, a Health Innovation Agency has been set up to foster the local value-added health industry, added György.

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Country Focus South Korea

KOTRA: Matchmaker for Korean SMEs and Hungary Not only those who have already invested in Hungary, but also those would-be investors in Hungary are all focused on the electric battery sector.

Keewon Park, director of the Korean Trade-Investment Promotion Agency (KOTRA), the commercial arm of South Korea’s embassy in Budapest, talks to the Budapest Business Journal about KOTRA’s work and the background to how the country became the number one investor here in Hungary.

ROBIN MARSHALL

BBJ: What are the goals of KOTRA? Keewon Park: Our main goals are mentioned in our mission statement, which is leading the way for SMEs to explore overseas markets and to create global jobs. In order to fulfill this, we have several programs in terms of trade, investment and recruitment. For trade, we do market and buyer research, organize delegations and trade fairs, offer the Jishawha program (in which the KOTRA Business Center (KBC) acts as a local branch and supports marketing), and others to help Korean SMEs to export. The Budapest KBC offers most of the mentioned programs and has strength in industries such as cosmetics and pharmaceutical elements. For the investment, we provide clients with overall business environment information, which includes basic taxation, labor law, local regulations and even governmentrelated activities like incentives. We occasionally prepare seminars so that Korean investors can obtain new insights or updated news about Hungary. In the process of helping investors, when they have successfully established a business in Hungary, we help them recruit Korean job seekers, mainly in Korea, which is creating global jobs.

BBJ: When were the first South Korean investments made in Hungary, and by whom?

KP: The first South Korean company to enter Hungary and invest was Samsung Electronics. This happened after Hungary opened the economy in 1989. Samsung Electronics moved its mid-large size color TV production, which was originally located in Wynyard, England. Since then, Samsung Electronics has engaged in further investment around 2007 and 2014. Due to its successful investments, this has enabled other companies like Hankook Tire and Samsung SDI to invest in Hungary.

BBJ: What is the total FDI from South Korea in this country, and what are the main sectors?

KP: According to the Hungarian Investment Promotion Agency (HIPA), the investment volume from South Korea recorded EUR 2.557 billion. And from the Korean Exim bank statistics, the direct investment in Hungary was recorded at USD 740 million in 2019. The numbers have been showing a sharp increase from 2018. The main sector is absolutely manufacturing of electric devices, which includes battery manufacturing.

Keewon Park

BBJ: How many South Korean-owned businesses operate here, and how many people do they employ.

KP: Currently, it is estimated that more than 200 businesses operate here in Hungary.

Mostly these are manufacturing business but some are local service providers like accommodation and catering services.

Unfortunately, the number of people they employ overall hasn’t been counted, but as far as I am concerned, huge companies like Samsung Electronics, Hankook Tire, SK Innovation and some others do employ lots of Hungarians. They have also created jobs for Korean job seekers which, by successfully helping them to settle in Hungary, enabled us to achieve our goal to create jobs for those in Korea.

KP: Korea has been preparing to embrace the electric vehicle trend for some time. In the early 2010s, South Korea’s government not only provided a tax subsidy for early EV purchases, but also started to build electric related infrastructure such as charging stations. Also, companies like Samsung SDI, LG Chemical and SK Innovation predicted that future automobiles would run on electric batteries due to sustainability issues and enforced the R&D so that they could produce safe and high energy efficiency batteries. On the other side, the importance of climate change has been a hot potato worldwide and many countries, including EU nations, have been implementing environmentally friendly policies. Since several policies including the 2050 carbon neutral strategy have been announced, it has become an inevitable market trend and the early R&D into which many Korean companies have been pouring effort is starting to pay off.

BBJ: Recently, there have been many investments connected to EVs, especially batteries. Is this a case of following the market trends, or is this a deliberate policy?

BBJ: What other new trends in FDI might we see soon from South Korea in Hungary?

KP: I would say that the electric battery investment would continue for a while.

‘Hableány’ Danube Tragedy

people were rescued at the scene, a total of 28 others died. All except two On May 29, 2019, a 27 meter (89 feet) Hungarian nationals (the captain and tourist boat called the “Hableány” a crew member) were South Korean (“Mermaid”) was involved in a collision tourists. It was the worst accident on with the much larger 135 meter (443 the Danube in more than 50 years. In ft) “Viking Sigyn” cruise ship near March of this year, the trial began of Margaret Bridge at around 9 p.m.

64-year-old Yuriy Chaplinsky, from in heavy rain. The “Hableány” sank Odessa, Ukraine, the captain of the within seconds and, although seven “Sigyn.” He is charged with misconduct

BBJ: Is the Hungarian government a good partner? What would you change to improve the investment climate here?

KP: I would say that the Hungarian government is a good partner to Korean clients. The government not only provides a favorable environment for businesses by reducing corporate tax and providing investment incentives, but also enables the entry of Korean investors in the coronavirus border closure situation.

In the recent first wave of COVID-19, thanks to the Hungarian government and HIPA, many essential business personnel were able to enter Hungary and do their duties, which enabled most of the Korean companies to operate according to schedule. Also, both governments have a good relationship, in which they regularly engage in a Joint Commission on Economic Cooperation. This relationship deepened after the Danube River accident (see separate box), in which the Hungary government showed wholehearted support.

Some Korean clients have complained of delays in the residence permit administration procedure. If this could be processed a bit quicker, I would say that the satisfaction of Korean investors will be highly increased.

BBJ: Do you have any involvement with Hungarian companies investing in Korea? What is the picture here?

KP: Actually, this is the weak part of our KBC. As KOTRA is both a trade and investment promotion office, other KBCs engage in promoting Korea’s business environment in order to bring foreign investments to Korea. Since the volume of Hungary companies investing in Korea has been relatively low (or none), that goal has not been given to our office. But if there is any Hungarian company willing to invest in Korea, the Budapest KBC is open and willing to provide any help needed, so please knock on the door!

leading to mass casualties and 35 counts of failing to provide help in a disaster. Chaplinsky, who has said he is devastated by the tragedy, denies that he was at fault for the accident. If found guilty, he could face a prison sentence of between two and 11 years. Cruise company Viking’s operating headquarters are in Basel, Switzerland.

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PRESENTED CONTENT

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Will new Companies and Reinvestments Keep South Korea at the Top? The Budapest Business Journal speaks with the Hungarian Investment Promotion Agency (HIPA) about the rise of South Korea, which for the first time became this country’s number one foreign direct investor in 2019.

ROBIN MARSHALL

BBJ: How important is South Korean FDI to the Hungarian economy, where does it stand in the international table?

HIPA: In 2019, HIPA handled 101 positive investment decisions, out of which 11 projects arrived from Korea and 10 were automotive industry and/ or electric mobility related investments.

These 11 projects account for EUR 2.56 billion in FDI from the total of EUR 5.35 billion FDI of HIPA-related positive investment decisions last year. This, for the first time ever in a calendar year, ranks Korea as the number one foreign investor in Hungary.

BBJ: How many jobs have been created

by Korean companies?

HIPA: Looking at the numbers, we can state again that Korean investors have had a major contribution to job creation: 4,371 new jobs were created by Korean investors in 2019 alone. We are happy to say that HIPA has had a very active role in this by operating as a one-stop-shop and

providing full support to Korean investors from the very first contact, throughout the implementation period and beyond.

Last but not least, Korean companies are currently employing more than 15,000 people in Hungary.

BBJ: There seems to be a strong concentration around EV batteries.

What other sectors are represented?

HIPA: The EV battery manufacturing industry has emerged rapidly throughout the globe, as the course is set by the booming e-mobility trend. Large Korean companies and their supply chain performed outstandingly in the last decade in this field, and we have put huge efforts into attracting not just the battery manufacturers, but their suppliers, too.

Apart from the e-mobility sector, we are happy to host investors from other industries as well, such as the automotive and the medical devices sector. To give a few examples, Hanon Systems started

a comprehensive development program concerning three Hungarian locations, including a newly constructed plant in Pécs. And just recently Samyang Biopharm, specializing in medical devices, has selected Hungary for its first production unit in Europe, which will produce synthetic suture materials.

BBJ: South Korea is a relatively new arrival as a large investor. Do you see a likelihood of further companies choosing Hungary?

HIPA: As we witnessed lately, a large boom in e-mobility has restructured the automotive and electronics industry investments in Hungary. Korean companies have conducted numerous greenfield investments. Samsung SDI and SK Innovation indicated the path for their Tier-1 suppliers, who have also decided to establish manufacturing business here.

For further investments we see two main paths: on the one hand, HIPA’s services, the currently available industrial sites

South Korean FDI in Hungary (2019)

11

HIPA-handled Projects

10

EUR 2.56 bln Automotive and Emobility Projects

Total Investment

4,371

New Jobs reated

and the government’s incentive policy remain open to new Korean companies, that consider settling down in Hungary.

On the other hand, we see an even more significant likelihood of reinvestment from the already established companies, which could result in a high value-added activity such as advanced manufacturing, engineering or R&D activities.

BBJ: Are you able to offer South Korean investors any special incentives, as they are not part of the EU? HIPA: Investors from South Korea can profit from the same wide range of state incentives as any other country, be it EU member or not. The beneficiary is going to be a Hungarian legal entity of the Korean company which is carrying out the investment.

“As we witnessed lately, a large boom in e-mobility has restructured the automotive and electronics industry investments in Hungary.

Korean companies have conducted numerous greenfield investments.

Samsung SDI and SK Innovation indicated the path for their Tier-1 suppliers, who have also decided to establish manufacturing business here.”

State subsidies can play an important role in the competition for investments.

The system of incentives is quite structured in Hungary, the different state aid schemes must be in line with different levels of rules: (i) As an EU member country, Hungary, first and foremost, has to ensure compliance with EU state aid regulations. (ii) The domestic rules set the forms and detailed conditions on which the incentives for the companies can be granted.

In order for Hungary to achieve its main economic goals, namely to increase the value added of the economy and to increase the competitiveness of large enterprises and also SMEs, Hungary can offer various subsidy opportunities: (i) Regional Investment Aid: For investments in the less developed areas of the country. This can be provided in the form of non-refundable aid (such as a VIP cash subsidy, which is based on an individual government decision), tax benefits (such as a corporate tax allowance), and also loans with preferential interest rates. (ii) R&D Aid: since Hungary’s aim is to turn the country into an “innovation hub”, we are prepared to support R&D centers with cash incentive schemes for R&D projects, besides tax allowances. (iii) Training Subsidies: by providing nonrefundable training incentives, Hungary is committed to helping new investors to create a workforce suitable for their needs.

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Focus | 11

Hungaryʼs Hankook Plant a key to European Operations Hankook Tire began construction of its first (and only) tire making plant in Europe in the village of Rácalmás, near Dunaújváros, 75 km south of Budapest, in 2006. Considered at the time to be “the most technologically advanced facility in the world”, according to Seong Hak Hwang, the current managing director, the plant has since more than tripled in size, with a capacity of 55,000 tires per day.

KESTER EDDY

BBJ When did production begin?

Seong Hak Hwang: Production started in June 2007. The Hungarian plant is a key part of Hankook’s European strategy, as it is the only production unit within the region.

BBJ: To date, what is the total investment?

SHH: Since laying down the foundation stone in July 2006, the factory has been continually expanded and updated, representing a total investment of around EUR 900 million. Production capacity has reached up to 19 million tires a year.

BBJ: How many employees are there today? Of the top management, how many are non-Hungarian?

SHH: Hankook Tire has around 3,000 employees at the Rácalmás facility. Already half of the top managers are Hungarian and this proportion is continually growing.

BBJ: Production in 2019 was, I presume, the peak year so far? What do you expect this year?

SHH: Actual production of tires varies depending on the types and sizes produced. We expect to reach the planned production numbers this year, despite major difficulties presented by the pandemic, thanks to the quick utilization of thorough health and safety precautions.

BBJ: How about revenues in 2019?

SHH: 2019 revenues were HUF 197 billion.

A member of Hankook’s Hungarian quality assurance team positioning a tire for the “plunger” test, checking the indentation of the tire.

BBJ: Of production, what percentage is for export?

SHH: The Rácalmás factory serves the European market, only a very small percentage remains in Hungary. The biggest market in Europe is Germany.

BBJ: You are, of course, situated on a motorway, railway and even an international waterway. And you have an international airport 60 km to the north. How do you ship your production to the markets?

SHH: Since our factory serves the European market, we rely mostly on motorway and railway transport.

BBJ: Presumably there is a very wide demand for different types of tire, e.g. airplane, racing cars, heavy industrial, auto, lorries, etc. and all these require different performance characteristics. What is the production offering from Dunaújváros in relation to the “tire universe”?

SHH: The Hungarian plant produces almost 900 size and model variations for passenger cars, SUVs, vans and light trucks/RVs. It supplies popular automobile brands such as Audi, BMW, Fiat, Ford, Hyundai, Kia, Mercedes-Benz, MINI, Opel, Peugeot, Porsche, Seat, Skoda and, Volkswagen Group including VW, Skoda and Seat.

During the past 10 years, the company has also strengthened its position within the medium and large size truck and bus tire segment in Europe. Mercedes-Benz and MAN selected Hankook as its original tire supplier in 2014, and Scania in 2016.

Since 2013, we have also been providing tires to Schmitz Cargobull, the largest trailer manufacturer in Europe.

BBJ: That’s an impressive list. What’s behind all this success?

SHH: At Hankook, technological innovation drives tire development. For example, we have created our own Kontrol Technology philosophy, which we apply across the entire research, development and production process for all Hankook Tire products. The ‘K’ of Kontrol stands for “Kinetic” or, in other words, “movement.”

Kontrol is based on the basic concept of being able to fully command the interaction between car, driver and the road.

planned process continuity practices, we are able to swiftly overcome issues in such a way that supplying our customers is not affected.

BBJ: Well, safety has to be high on any tire manufacturer’s list of priorities.

SHH: In this regard, Hankook also developed Sealguard, an exclusive selfsealing tire technology, designed to increase safety. Since the self-sealing tires allow continued driving in the event of a puncture, this eliminates the need to change tires on the road side, and vehicles equipped with these advanced tires no longer need to carry spares, which frees up extra space.

BBJ: If I remember correctly, you had some labor disputes a few years ago.

How were these solved?

SHH: Labor market turmoil caused difficulties at several major automotive companies at the beginning of last year.

Fortunately, we managed to resolve the dispute through agreement.

Seong Hak Hwang, MD of Hankook Tire Hungary, began his career as an engineer, and has headed Hankook’s sole European plant since January 2017. He has been with Hankook since 1987, and previously managed the company’s plant in Jiaxing, China.

BBJ: Not counting coronavirus, could you describe the two biggest challenges that had to be overcome in recent years and how you found a solution?

SHH: Challenges, small or big, present themselves constantly. However, due to our streamlined, inter-departmental communication channels and meticulously

BBJ: How has coronavirus impacted the company? Presumably production has declined. Have you had to make job cuts?

SHH: Our production is always based on market demand. We did experience a slight decline in the first half of the year, but presently we are running at full capacity in order to be able to meet all the requests of our customers. In terms of workforce, we do not plan any job cuts.

BBJ: You obviously have other plants around the world. Have any Hungarians been chosen to fill management posts in any of these companies?

SHH: There has been no permanent transfer; however, several of our colleagues worked in other plants of the company, supporting the set-up of new production, or participated in training programs in the R&D centers of the company.

We constantly focus on developing the talents of the best and brightest in every region. This is why we implement both short- and long-term training trips to our facilities around the world. Usually, the recipients return and take on positions in their native countries.

BBJ: What can you say about future plans?

Are you prepared to expand production facilities, or are there constraints to expansion such as labor availability?

SHH: Hankook Tire, as all automotive companies in Europe, has been affected first by labor market shortages, then the pandemic, thus our expansion plans have been suspended.

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30 Years of TV Production in Jászfényszaru Samsung Electronics Hungary, which is celebrating 30 years in the country this year, makes the technology usually associated with the Samsung brand: smart phones, smart televisions, refrigerators and washing machines. The Budapest Business Journal spoke to Keunha Hwang, the president of Samsung Electronics Hungary, and head of its production plant in the city of Jászfényszaru (73 km east of Budapest).

GERGELY HERPAI

BBJ: Why did you choose Hungary?

Keunha Hwang: Samsung Electronics was one of the first companies with mixed ownership to break through the Iron Curtain and it happened right here in Hungary. We are proud to be a pioneering company in technology and in Hungarian business history, too. After

employee satisfaction survey. Moreover, on Randstad Employer Brand Research 2020, our factory was the second most attractive company in Hungary.

an initial investment of more than USD 3 million, production started 30 years ago, in 1990. Ever-growing and with a commitment to the country and the people, the factory completed its 100 millionth TV last November. The plant is focused on televisions and we are proud to be sole producers of unique Lifestyle devices like Serif, Frame and Terrace.

Hungary has proved to be a great choice as we could expand gradually, and after our 10 millionth television in 2003, we built a second and in 2014 a third assembly hall, so production is now present on more than 81,000 sqm. Last year, our total revenue was more than EUR 2 billion, and on September 24, 2020 we reached a record in export delivery with 164 truckloads of products leaving the premises in a single day.

BBJ: How much have you invested in Hungary?

KH: Being present in Hungary for 30 years gives us a deep understanding of the particularities and demands of the Central and Eastern European electronics market, which we wish to put to the benefit of our customers. In the last three decades, we have proudly invested more

than HUF 150 bln and together with our partners contributed to a culture of innovation in the country.

Samsung Electronics has put considerable assets into R&D in order to deliver meaningful innovations to customers. Our goals to advance technology is not limited to our products; we are also committed to enhancing our product lines and the work environment of our employees. We are aiming to maximize effectiveness and maintain the high quality of our products in our factory in Jászfényszaru.

BBJ: How many jobs you created, what are your plans in Hungary?

KH: Ever since the first television was assembled in Hungary, we wanted to achieve more, and the plant was expanded accordingly. The number of employees at Jászfényszaru has also increased over the years and has reached around 2,300; that has been stable in the last couple of years. Most of our workers are local to the Jászság area. With our modern and innovative production processes, we contribute to local and domestic economic growth as well. Considering our extensive supplier network, the factory indirectly provides a living for another 4,500 people.

We are proud to produce top of the line products for Samsung Electronics. We are faced with challenges in production constantly, for example, this year we had to adjust to screen sizes growing by 20% compared to last year.

BBJ: Are you happy with the workforce?

KH: We are honored to provide a livelihood to more than 6,800 people in this country, including our suppliers.

Following our long-term organizational goals, we are emphasizing the training and progression of our colleagues and employees. We are providing opportunities for them to learn and advance their careers so they can continue to grow in their professional life.

In 2019, among all Samsung Electronics production plants, our subsidiary had the highest scores on our global internal

BBJ: Are you happy with government support?

KH: We have been developing and enhancing our relationship with the Hungarian government and local authorities in Jászfényszaru and JászNagykun-Szolnok County as well. We entered into a strategic partnership with Hungary in 2013 as we were expanding with our third building at the facility. The factory can say “Thank you!” to the city of Jászfényszaru, as they have supported us since the beginning.

We are trying to give back to this community and support local activities and festivities and we have projects to make this city safer and a better place to live. As a company vested in technology, education is really important to us and we are aiming to help the local youth. In cooperation with Liska József Catholic High School, we plan to open a Samsung workshop to help professional education locally.

BBJ: What are you unhappy about?

KH: Unfortunately, we had to face more challenges this year than expected due to the pandemic that still has a serious effect on the global economy.

Keunha Hwang In addition to its financial implications, the situation brought about a series of changes in the factory’s safety rules and it has had unexpected effects on most of our workflows. As the factory celebrates its 30th anniversary this year, we wanted to celebrate it more widely, but the global situation did not let us do so. The health of our colleagues and their families is our top priority, so we try to do our best to keep them safe in the current situation.

BBJ: Is there anything you would change?

KH: We hope that we can switch back to our normal working method soon with fewer safety measures, but until that we are continuously working on solutions that make users’ life easier. Samsung is a company of the future; therefore, we are not just adjusting to the new normal but we provide innovative products and services that help users to adapt, find new possibilities and be more effective in a new lifestyle and routine.

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Budapest Business Journal | October 2 – October 15, 2020

Special Report Energy

MVM: Growing the Group, Building the Brand staff for carrying out their work with exemplary composure and discipline, even in the midst of the shock-like changes caused by the pandemic.

György Kóbor, the chairman and CEO of the MVM Group, talks exclusively to the Budapest Business Journal about building growth despite COVID, increasing renewable inputs, developing inter-group communication, future acquisitions and a major rebranding effort.

BBJ: What sort of year are you expecting – in light of the above?

GyK: The pandemic has had a number of effects that have negatively impacted the group’s profitability, such as a significant decline in electricity consumption during the first wave.

However, based on the financial data for the first eight months, these effects were offset. Therefore, we are confident that, at the end of the year, we will be able to report that we have been able to achieve at least the planned results, even if the uncertainty caused by the second wave poses a risk for us as well.

BBJ: What has the group done to further sustainability and digitalization?

GyK: Let me highlight three sustainability programs. On one hand, we would expand our portfolio both in Hungary and abroad as part of our renewable program. On the other hand, the carbon transition in connection with the Mátra

ZSÓFIA VÉGH

BBJ: What sort of year did the Group close in 2019?

György Kóbor: Both from a professional and a financial viewpoint, 2019 was successful for the MVM Group. We have generated more than HUF 1.8 trillion in revenues, which is a record. The group ended the year with a profit after tax of HUF 60 billion, significantly exceeding the previous year’s HUF 22 bln. Being a state-owned company, we are proud to have contributed to the budget with taxes and other fees of nearly HUF 270 bln. The increase in turnover and in results is, to a large extent, due to the fact that in 2019 the figures of energy trading and distribution companies belonging to the Nemzeti Közművek were included in the balance sheet of the MVM Group. Other companies of the group performed very well; for example, the Paks Power Plant closed a record year in electricity generation.

BBJ: Which areas have seen progress?

GyK: Important developments of last year are related to the group’s internal transformation. We managed to consolidate our technical services business, which had previously accumulated significant losses, and thus were able to show a positive result in this area as well.

We continued the reorganization of the MVM Group, initiated by the integration of the retail and distribution businesses

György Kóbor into the group. That process will not stop this year either, and I am confident that by the beginning of 2021 we will see a more modern and flexible group than at the beginning of 2018. Another important internal development has been the preparation of a new medium-term strategy, the most important goals of which are carbon-neutral energy production, the development of network infrastructure, international expansion and reaching a level of being able to be listed a company: that is, we want to catch up with the leading Hungarian blue chip companies.

Important photovoltaic elements have been added to the group’s renewable business: by the end of 2019, we had a total of 140 MW of solar energy capacity at more than 100 sites, in addition to the 23 MW of wind energy and 8.5 MW of hydropower in Romania that had already been added to the portfolio. With these, 97.7% of our gross energy production came from carbon-neutral energy [sources] last year. Currently, our entire renewable capacity is close to 200 MW (of which 165 MW is solar capacity).

BBJ: What areas would you say need improvement?

GyK: The profitability of the group is still below the level I consider desirable and what is confirmed by international benchmarks, but we have some reserves in the system.

BBJ: How has the coronavirus impacted the group’s activities and plans?

GyK: When the pandemic started, the management’s primary task was to maintain continuity of supply while protecting the health of employees.

The MVM Group operates critical infrastructure, so we introduced a number of special work organization procedures at our power plants, electricity transmission network operator MAVIR Zrt., and at distribution and natural gas storage companies. In a matter of a few days, we reorganized our customer service activities so that our partners could handle their deals with us as smoothly as possible. We have not modified our business plans adopted at the beginning of the year, nor have we withdrawn the goals set for this year. I am proud of my

“In addition, we wish to continue to play an active role in “greening” transportation. In this area, we would further strengthen our leading Mobiliti brand in the e-mobility market, which has more than 600 filling stations and 20,000 registered customers covering the entire country.”

Power Plant is a high priority. Third, we will be investing significant resources in building our energy efficiency business to provide turnkey solutions to our corporate and residential customers. We have been testing the latter since last year, implementing about 40 energy efficiency projects, 35 of them in ESCO [energy services company] constructions, worth more than HUF 400 million. In the future, we would like to scale this up to a level similar to our other business lines. In addition, we wish to continue to play an active role in “greening” transportation.

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Special Report

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Budapest Business Journal | October 2 – October 15, 2020

Nuclear Still Dominant as Renewables Gain Further Ground in Hungaryʼs Energy Mix While renewable energy sources produce an increasing ratio of Hungary’s energy mix, and the country is set to go significantly greener in the upcoming years, nuclear energy is still the single major power source, and will remain so for the coming decades.

CHRISTIAN KESZTHELYI

In 2019, Hungary’s energy mix consisted of 49% nuclear, 23% gas, 15% coal and 12% renewables, the latter growing in accordance with EU directives relating to green electricity.

An International Atomic Energy Agency (IAEA) report last year tagged

Minister for Innovation and Technology László Palkovics speaking at the opening of the GreenTech - Green Energy and Sustainability exhibition and conference at the Dezső Keresztury City Cultural Center in Zalaegerszeg on September 25, 2020. Photo by György Varga / MTI the mix as “well-balanced” and noted that green energy production is expected to rise “steeply” in the next few years as various forms of renewable energy sources receive generous support.

Hungary’s energy production is heavily reliant on the country’s nuclear power plant at Paks with four blocks with a nominal capacity of 500MW. Currently,

the Paks II expansion project is adding two further blocks.

Minister Without Portfolio János Süli, who is in charge of the nuclear plant upgrade, said at the end of June that Hungary had applied for an implementation license for the two new blocks at the plant to the National Atomic Energy Office (OAH).

The minister said the license, the application for which will be reviewed by the OAH in

12

months,

certifies that the additions meet all relevant safety requirements.

With the expansion of Hungary’s nuclear power generation capacity, and

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Highly Challenging

It will be highly challenging though, as many factors are at play. Becoming carbon-neutral would mean that all coal activity, as an energy source, needs to come to an everlasting halt. However, departure from this source is not as simple to execute as it is to say.

Regions where coal mining is prominent are economically heavily reliant on activities relating to coal, both directly and indirectly. In Hungary, where coal mining supports 15% of the energy mix, total conventional energy resources comprised about 10.5 billion tonnes of coal, 4.1 trillion cubic meters of fossil gas and 0.8 billion cubic meters of oil, according to data from the European Association for Coal and Lignite (EURACOAL) in 2018.

If coal mines are to be closed down, that can only be done with proper planning and a just transition to ensure that families and regions who depend on the activity are well prepared.

“We will need to work together across different levels of government and across party lines to provide enough opportunities, secure jobs and bring investments where they are needed most,” Frans Timmermans, one of three senior commissioners in the European Commission responsible for the European Green Deal and the EU’s climate policy, said during a discussion panel at the Katowice European Economic Congress via an online conference.

Poland, most of whose power comes from coal and which is Europe’s second largest coal producer after Germany, is the only country not to have signed up to the EU’s 2050 carbon neutral aims, yet, though international news wire Reuters has reported in the past few days that Poland’s government struck a deal with trade unions on September 25 to gradually close its coal mines

by

2049.

Although the EU’s Green Deal has no concrete roadmap yet, countries in the bloc are increasingly showing greater commitment towards a greener future.

In Hungary, Parliament approved a bill on climate protection in June to reduce greenhouse gas emissions and increase the ratio of renewable energy sources.

By 2030, Hungary aims to reduce greenhouse gas emissions by at least 40%, compared to the levels measured in 1990.

The ratio of renewables is set to creep above 21% by 2030. The act says Hungary will reach full climate neutrality by 2050, in line with the EU’s vision.

Solar Panel Subsidies

The Hungarian government is planning to launch subsidies that will cover 30-40% of solar panel installation costs on detached homes, Minister for Innovation and Technology László Palkovics said at the GreenTech exhibition and conference in Zalaegerszeg on September 25.

The subsidies will be financed from the national central budged and EU funding. The minister added that the government is planning to support the use of renewable energy with credit and grants.

In his speech at the Zalaegerszeg expo, Palkovics identified four conditions as prerequisites for carbon neutrality.

First, those countries and businesses whose activities excessively pollute the environment will need to add more to the financing of the transition to climate neutrality.

Second, the transition must happen without causing spikes to energy and food prices. Third, Palkovics finds it “unacceptable” that the poorer and developing countries lose out on cohesion funds that would support the transition.

Fourth, the minister stressed that there is no climate-neutral economy without nuclear energy, therefore, he believes nuclear energy use should not to be banned, as many Green politicians demand, but supported on the European continent.

“We will need to work together across different levels of government and across party lines to provide enough opportunities, secure jobs and bring investments where they are needed most.”

As renewable sources deliver an increasingly larger slice of the energy mix for Hungary, anticipation hints at a busy market in the near future. The National Bank of Hungary (MNB) in mid-September published a collection of proposals and initiatives to promote environmentally sustainable economic growth, based on a consultation with NGOs, environmental scientists, climate protection and energy experts.

The MNB proposed “green taxation” for vehicles and transportation to improve air quality, lowering taxes for energy efficiency investments, extending the carbon taxing system and raising environmental charges and fees, among many other ideas.

As solar panels are springing up in fields across Europe and silent electric vehicles roam our roads in increasing numbers, it is safe to assume that today, economies and individuals are well beyond the brink of transition towards a greener, and hopefully healthier, energy mix.

INSIDE VIEW

2nd Metár Tender Opens, Bringing Marketable Green Electricity Production Within Reach in Hungary László Kenyeres

Ádám Lukonits

Partner

Associate

WOLF THEISS BUDAPEST

WOLF THEISS BUDAPEST

The pilot METÁR tender in Hungary led to a huge drop in electricity prices. Now, during the second tender, there is even stronger competition, making privately funded green electricity production a viable option for the future.

In Hungary, state subsidies for producing green electricity are available through the METÁR (or Premium) system. As opposed to the former KÁT (or feed-in tariff) system, which was open for applications until the end of 2017, green electricity producers are not entitled to the mandatory offtake of their electricity (except producers with a net installed capacity of less than 0.5 MW); that means they have to sell their electricity on the market.

However, they can apply for a so-called “green” (or, in case of certain biomass or biogas products, a “brown”) premium.

The green premium is granted through a tendering process (save for those between 0.5 MW and 1 MW, which can apply for the green premium at a state-approved fixed price of HUF 25/kWh as of 2020).

The pilot METÁR tender was launched in September 2019. The green premium was available in two categories: first, producers between 0.3 MW and 1 MW could apply with a maximum of 33 GWh electricity or for a maximum of HUF 333 million per year; or secondly, producers between 1 MW and 20 MW could apply with a maximum of 166 GWh electricity or for a maximum of HUF 667 million per year.

In both cases it was for a 15 years span.

The green premium was awarded to those who offered the lowest purchase price for their electricity. For them, the Hungarian state guaranteed to pay the difference between the support price (the bid purchase price) and the reference price (the average purchase price of electricity available at the Hungarian power exchange, HUPX, as calculated by the Hungarian transmission system operator, MAVIR).

During the first METÁR tender, only HUF 229 million was allocated between the bidders under the HUF 1 billion cap, whereas 193 GWh from the available 199 GWh overall yearly capacity was distributed, showing the actual bid purchase prices were below the anticipated tender prices.

The average bid purchase prices were HUF 21.69/kWh and HUF 24.81/kWh, respectively, with the lowest bid purchase price set at HUF 20.2/kWh. This is a 24-33% drop in the price of electricity as compared to the fixed HUF 32/kWh price under the KÁT system, which comes from the fact that the costs of construction and operation are lower with each year (for example, the solar panels are now cheaper and more efficient than a few years ago).

The second METÁR tender, which is open from September 15 to October 15, recalls the improving investment climate: the maximum figures have been raised from 33 GWh to 40 GWh and from 166 GWh to 350 GWh, and up to 49.99 MW in the larger category.

Although the tender is open to foreign investors from EU, EEA or Energy Treaty member states, power generators above 0.5 MW must apply for a license at the Hungarian Energy Authority, which is available for Hungarian business entities only, making strong local legal support necessary right from the beginning of the project (starting with the establishment of an investment vehicle).

The administrative parts of tendering have been causing serious problems since the first tender: Almost 30% of applications were declared invalid. It is easy to make a critical mistake; therefore, proper technical, financial and legal input is essential for investors.

Regarding marketability, it is visible that the first METÁR tender has already erased much of the difference between the last fixed price of electricity being HUF 32/ kWh and the average market price of electricity being HUF 17/kWh. However, certain factors may cause some delay.

The price of balancing energy is higher (around HUF 3-5/year), and must be paid, at least in part, by the producers as of April 2020. Construction has increased in costs due to the solar boom at the end of 2016. Greenfield investments require strong land-related legal support and complex contracts. Privately funded green electricity producers must pay a special 31% income tax (the so-called Robin Hood tax). Thus, as of now, it is not viable to produce green electricity in Hungary without state support; however, this will inevitably change in the foreseeable future.

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by further increasing renewable energy sources in the national mix, energy policy-wise the country should see more stability, says Károly Kovács, project leader of the GreenTech Zalaegerszeg Green Energy and Sustainability Conference.

In the upcoming decade, if nuclear and renewable energy production together can increase above 75%, Hungary may be in a position to export its surplus, which would increase its energy sovereignty, he says.

In the foreseeable future, Hungary’s energy mix, as well as that of the 26 other EU member states, will move away from non-renewables towards greener sources.

European Union decision-makers are currently working on the EU’s “New Green Energy Deal”, aiming to reach climate neutrality, better known as carbon neutrality, which means having a net-zero carbon footprint, by 2050.

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Budapest Business Journal | October 2 – October 15, 2020

Photo by Viktoriia Hnatiuk/Shutterstock

Factors Need Tackling Before EV Mass Adoption can Occur Electric vehicles sales are picking up and the hunger for this green transportation is real. However, technologywise, EVs need some further development to reach mass adoption and become a worthy competitor of the internal combustion engine.

CHRISTIAN KESZTHELYI

While the coronavirus left a dent on new car registrations in the first half of 2020, numbers dropping by 25% year-on-year to 67,725, EVs saw an electrifying start to the year, according to data by the Hungarian Association of Vehicle Importers (MGE). The number of new electric car registrations was up 22% to 1,183 in January-July 2020, compared to the same period a year earlier.

Publishing its data early in September, MGE pointed out that government support for buying electric cars proved so popular the HUF 5 billion it had set aside ran out within 15 minutes on the first day of the scheme on May 30. Hence, the association underlined that the extension of the scheme could further boost the electric vehicle market.

Attending a conference organized by German truck maker MAN and Hungarian vehicle importer Porsche Hungaria in Zalaegerszeg on September 10, Minister for Innovation and Technology László Palkovics acknowledged the demand.

He said the Hungarian government is planning a vehicle subsidy program similar to the one it ran in spring when, in less than a quarter of an hour, 662 private individuals and

738

companies

(including taxi drivers), applied for the subsidies that were capped at HUF 2.5 million for EVs up to HUF 11 mln, while those priced between HUF 11 mln and HUF 15 mln were eligible for just HUF 500,000 of support.

Palkovics said that the funding had recently been topped up by HUF 882 mln

before the cut-off date to make sure all who applied and were eligible could get the subsidy. The minister tagged electromobility as a key area for Hungary to achieve its climate change goals.

In 2019, when new passenger car registrations in Hungary finally returned to levels last seen before the global economic crisis of 2008-2009, 2,900 new electric vehicles were registered, according to Central Statistical Office (KSH).

Environmentally-conscious

The interest of motorists in Hungary has increasingly moved towards electric vehicles in recent years. This positive attitude is largely driven by the spread of environmentally-conscious thinking, subsidies for electric cars, and the benefits and incentives coming with a vehicle that sports a green license plate, such as free parking in certain areas or cheaper insurance fees.

Nevertheless, electric vehicles need to overcome three objections before mass adoption can become a reality. First, it appears unsustainable in the long-term that electric vehicles are so pricey that people can only afford to buy them with the help of government subsidies and support schemes, an argument supported by all allocated funds being exhausted in a mere 15 minutes.

Second, the range of electric cars still lag far behind anything equipped with an internal combustion engine. As a rule of thumb, an average electric car today can run for somewhere between 200-300 kilometers on one charge.

Should the person behind the wheel drive in a sportier manner, have the lights on and use the radio, draining the battery heavily, and the range narrows

drastically. Limited mileage makes an extensive recharging infrastructure all the more important.

And that is the third issue: Hungary’s existing infrastructure currently makes charging a challenge. On average, there are 1.5 chargers per every

100

kilometers

in Hungary. That is not enough, especially when you factor in the scarce availability of fast chargers, which can fully juice up an electric car in a maximum of one hour as compared to slower units that need require about six hours. Furthermore, charging plugs are not standardized.

While standardizing and making the charging infrastructure denser, with more fast chargers, is a task that Hungary could handle in-house, the batteries themselves need to be tackled globally.

A large element of an EVs high price is down to the battery, as research, development and manufacturing of this key part are all expensive. As long as car manufacturers cannot solve the conundrum of cheaper batteries that can power cars for longer journeys, electric cars will remain pricey and less appealing to those who travel long distances.

Battery Progress

There is progress in this regard in Hungary, though. South Korean-owned SK Battery Manufacturing Kft. has started recruiting and training staff for its EV battery plant in Komárom at the end of August.

Trial production at the plant, which was started in February 2019 through a HUF 239 bln investment, is scheduled

to start in Q4 2020. Total headcount is set to reach 1,400 by 2022 in the factory that will turn out third-generation EV batteries keeping a charge for 500 kilometers (due to a combined capacity of 10 GWh) for more than 140,000 cars a year.

SK Battery Manufacturing Kft. is a unit of SK Group, South Korea’s biggest energy and chemicals company. The group CEO, Kim Jun, told journalists at the CES in Las Vegas in January 2020 that the capacity of the Hungarian plant would be expanded further to

16 GWh

to meet demand from Volkswagen, according to state news agency MTI. Recent developments in EV batteries show positivity for the market. When Fitch Ratings affirmed Hungary’s “BBB” sovereign rating with a stable outlook at a scheduled review in mid-August, Fitch said it expects capacity expansions in the automotive sector related to electric vehicles and EV batteries would “largely remain on track”.

Micromobiliy, the use of bicycles, situp and kick scooters, can also bring new verticals to electric transport.

As electric bikes and scooters are increasingly becoming fashionable, they can become a valuable addition to the 21st century’s transport mix, especially in urban areas where distances are short and charging is easy.

However, this is also dependent on a reliable legislative framework, where liability is sorted and safety is ensured. Electric scooters may look like techy toys, but they can be capable of speeds of 40 km/h, and need to be regulated accordingly.

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Budapest Business Journal | October 2 – October 15, 2020

Digital Transformation

In this area, we would further strengthen our leading Mobiliti brand in the e-mobility market, which has more than 600 filling stations and 20,000 registered customers covering the entire country.

Like other companies, the pandemic has significantly accelerated the digital transformation at the MVM Group. As a result, our employees have an everexpanding digital toolbox for remote working. When it comes to device exchanges, we also prefer mobile devices.

The introduction of digital signatures has also begun.

With the help of our digital platforms, used by an ever growing circle, our customers can also manage their utilities more efficiently and securely.

Our e-invoice campaign was extremely successful; by now, 1.4 million customers are taking advantage of this opportunity.

New solutions are constantly appearing on our web interfaces, allowing our customers to report their meter readings with a photo, pay their bills or initiate contract changes from home.

BBJ: What plans do you have for the upcoming period?

GyK: A vital task for us in the coming period is to launch and scale up international expansion. With the imminent acquisition of Innogy Česká Republiká, we have reached a crucial milestone here this year. Our goal is to be able to build 25% of group-level EBITDA from foreign activities by 2025.

To this end, we are planning significant acquisitions in the countries of the region in the near future.

The acquisition of Mátra Power Plant at the beginning of the year was a very important development in the domestic market. We have given Hungary’s last operating lignite power plant a new vision that will ensure a decarbonized transition.

This will remain a top priority for us in the near future.

Our renewable program does not stop, we want to expand further our production portfolio; our goal is to reach 1000 MW of solar capacity in the medium term. We consider the systemlevel integration of renewables to be equally important: we plan to integrate energy storage and flexible power generation units in the portfolio.

Last but not least, we want to focus on transforming and preparing the

group to appear on the capital markets in order to raise the funding needed to carry out our tasks.

To achieve our strategic goals, I would like to highlight two very important things. One is the corporate culture that we need to improve continually. After all, this group with more than 80 member companies covers a wide range of jobs over 15,000 employees, from gas fitter to nuclear physicist, to customer service to controller. Organizing effective internal communication between these groups is essential for our progress so that everyone can identify with our vision, understand where we are going, and so we can effectively contribute to achieving marketability.

“With the imminent acquisition of Innogy Česká Republiká, we have reached a crucial milestone […] this year. Our goal is to be able to build 25% of group-level EBITDA from foreign activities by 2025.

To this end, we are planning significant acquisitions in the countries of the region in the near future.”

Another strategic point is our image.

In line with the group’s strategy and business objectives, transformations have taken place in almost all business areas: we envision the future of the group with a new, unified image. This also means that the entire group of companies will adopt the MVM name and brand (with a few special exceptions), on the other hand, we will also renew the MVM brand. The MVM brand has reached an important milestone, by becoming a customer brand from 2021 by introducing MVM in the retail market to replace the NKM brand, with a new logo that can be used flexibly on all platforms, is close to people and is also appropriate on foreign markets. The introduction of this new image will start early next year.

The MVM Group delivered what was at the time Hungary’s largest capacity solar power plant at Felsőzsolca in November 2018. The installed capacity of the Felsőzsolca Solar Power Plant, built with an investment of nearly HUF 9 billion and utilising purely renewable energy is 20 megawatts (MW). The companyʼs goal is to reach 1000 MW of solar capacity in the medium term.

INSIDE VIEW

New Guest Arrives at Hungary’s Party Thanks to COVID: LNG Dr. Daniel Varga Attorney at Law SCHOENHERR HETÉNYI ATTORNEYS AT LAW

The coronavirus has gravely affected the life of businesses and private persons alike, and the energy sector is no exception.

Although the focus in recent years was placed mostly on the spread of renewables, it is also worth paying attention to the most recent developments in the Hungarian gas sector where a significant milestone in the diversification of Hungary’s gas supply was passed.

In the beginning of September 2020, MVM’s gas trading entity purchased a total of seven billion cubic meters of natural gas from Shell that will be supplied over seven years starting from 2021.

It will come in the form of liquified natural gas via the LNG terminal at Krk Island in Croatia. In order to put this landmark deal into perspective, this means that approximately 1/10 of Hungary’s gas consumption will be covered for seven years from LNG sources that are supplied from sources other than Russia.

Such diversification of Hungary’s gas supply is made possible by the LNG technology, where natural gas is cooled to -1620C at high pressure. In this state, natural gas is liquified and occupies 600 times less space than in its gaseous form.

In addition to its economical use of space, the other advantage of LNG over traditional natural gas is that it can be transported in seagoing and inland vessels without the need for constructing costly pipelines.

These characteristics have enabled LNG to be traded worldwide, allowing countries such as the United States and Qatar to become gas exporters that are now capable of competing with Russia in supplying Europe with natural gas.

In order to receive LNG, regasification terminals are required. There are approximately 30 LNG terminals operating in Europe at present. The new LNG terminal at Krk Island, which is of strategic importance for Hungary, will become operational on January 1. MVM managed to book sufficient capacities in this terminal for the next seven years to cover the gas supplies coming from Shell.

Falling Prices

Before coronavirus hit the global economy, the price of LNG gas supply (including the regasification and transit to Hungary) was remarkably higher than conventional natural gas. However, the joint effect of the economic fallback that followed the coronavirus and a massive global overproduction of natural gas resulted in a massive drop in LNG prices. That allowed MVM to seal a deal and diversify the Hungarian gas supply to an extent never seen before.

Apart from the use of LNG as a gas supply, it must also be noted that LNG in its liquid form may be used as a fuel by seagoing and inland ships as well as heavy-duty motor vehicles (i.e. trucks).

Realizing the potential of LNG as an alternative fuel, Directive 2014/94/EU on the deployment of alternative fuels infrastructure requires member states of the European Union to ensure that, by the end of 2030, an appropriate number of refueling points for LNG are put in place at inland ports.

One of the aims of the directive is that LNG inland ships must be able to freely circulate throughout the TEN-T Core Network, that is the collective of the most important transportation routes in the European Union. The Rhine-Danube corridor is one of the centerpieces of this network, therefore LNG refueling points are expected to pop up along river Danube until 2030.

In addition to inland ships, trucks may also use LNG as an alternative fuel. The directive also instructs member states to ensure that, in case there is demand, an appropriate number of LNG refueling points are put in place for trucks by the end of 2025, at least along the TEN-T Core Network. However, member states may escape this obligation if they can prove that the costs of deployment of such LNG truck refueling points are disproportionate to the benefits.

It is, of course, yet to be seen how many ships and trucks running on LNG will populate the Danube and the main roads of Hungary. However, the arrival of LNG to Hungary is a significant landmark that will diversify both the gas sector and the transportation sector for the benefit of all.

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Continued from page 13 ► ► ►

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Budapest Business Journal | October 2 – October 15, 2020

Electricity Traders Ranked by total net revenue in 2019 (HUF mln)

gas

Coal

yEaR EsTablisHEd

oil

Emission CERTiFiCaTEs

oWnERsHip (%) HungaRian non-HungaRian

mvm paRTnER EnERgiakEREskEdElmi ZRT.

673,065





–

–



2002

MVM Zrt. (100) –

kornél Czinege – –

1031 Budapest, Szentendrei út 207–209.

(1) 304-2000 info@mvmp.hu

2

E.on EnERgiakEREskEdElmi kFT.

419,858



–

–

–

–

2013

E.ON Hungária Zrt. (100) –

Tibor istván Fejes – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@ eon-hungaria.com

3

ElmŰ-ÉmÁsZ EnERgiasZolgÁlTaTó ZRT.

184,338



–

–

–

–

2015

Budapesti Elektromos Művek Zrt. (100) –

lászló szabó – –

1132 Budapest, Váci út 72–74.

(1) 238-1223 elmu@elmu.hu

4

bC-EnERgiakEREskEdő kFT.

61,855





–

–

–

2004

BorsodChem Zrt. (100) –

sándor varga – –

3700 Kazincbarcika, Bolyai tér 1.

(48) 511-816 energiaker@borsodchem.eu

5

isd poWER kFT.

45,869 (2018)





–

–

–

1996

ISD DUNAFERR Zrt. (100) –

norbert siládi – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 581-186 isdpower1@isdpower.hu

6

Jas budapEsT ZRT.

29,083





–

–

–

2002

Ferenc Arató (50), Mónika Edit Arató (25), Thália Theoharidis (25) –

Ferenc arató – –

1141 Budapest, Mogyoródi út 168.

(1) 460-9300 jastitkar@jas.hu

7

budapEsTi EnERgiakEREskEdő kFT.

1,544



–

–

–



2003

Péter Takács (100) –

péter Takács – –

1061 Budapest, Liszt Ferenc tér 5.

(1) 240-7504 ptakacs@energiakereskedo.hu

A











2009

– Invidivuals (100)

georgios peponis – –

1085 Budapest, Kálvin tér 12.

(1) 886-3400 admin.hun@alpiq.com

NA



–

–

–

–

2019

NKM Nemzeti Közművek Zrt. (100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

Rank

ElECTRiCiTy

ToTal nET REvEnuE in 2019 (HuF mln)

TypEs oF EnERgy TRadEd

1

Company WEbsiTE

www.mvmp.hu

www.eon.hu

www.elmu.hu

NR

www.bcenergia.com

www.isdpower.hu

www.jas.hu

www.energiakereskedo.hu

alpiq EnERgy sE magyaRoRsZÁgi FiókTElEpE www.alpiq.ch

NR

nkm EnERgia ZRT. www.nkmenergia.hu

Top loCal ExECuTivE CFo maRkETing diRECToR

addREss pHonE Email

4

www.bbj.hu

Budapest Business Journal | October 2 – October 15, 2020

Special Report | 19

Fuel Retail Companies Rank

Ranked by total net revenue in 2019 (HUF mln)

1

Company WEbsiTE

mol magyaR olaJÉs gÁZipaRi nyRT.

ToTal nET REvEnuE in 2019 (HuF mln)

no. oF Full-TimE EmployEEs in 2020

yEaR EsTablisHEd

oWnERsHip (%) HungaRian non-HungaRian

Top loCal ExECuTivE CFo maRkETing diRECToR

addREss pHonE Email

2,018,192

5,372

1991

Hungarian State (25.20), other (24.50) Foreign investors (34.80), other (15.50)

Zsolt Hernádi – –

1117 Budapest, Október huszonharmadika utca 18.

(1) 464-1395 mol@mol.hu

Zsolt pálinkás – –

2040 Budaörs, Kinizsi út 1–3.

(20) 827-0000 tescoglobalzrt@h u.tesco-europe.com

www.mol.hu

2

TEsCo-global ÁRuHÁZak ZRT.

602,433

13,222

1989

SPAR Magyarország Kft. (A) Tesco Holdings B.V., TESCO Overseas Investments Ltd. (A)

3

omv HungÁRia ÁsvÁnyolaJ kFT.

465,433

60

1990

– OMV Refining & Marketing GmbH (100)

Tibor balogh – –

1117 Budapest, Október huszonharmadika utca 6–10.

(1) 381-9700 info.hungary@omv.com

332,817

7,053

2004

– AUCHAN Retail International S.A.AValhungary International SCA (A)

gergely polgár, dominique andré Henry ducoux – –

2040 Budaörs, Sport utca 2–4.

(23) 886-200 info@auchan.hu

sHEll HungaRy kEREskEdElmi ZRT.

329,435

93

1989

– Shell Petroleum N.V. (100)

andrea bujdosó – –

1113 Budapest, Bocskai út 134–146.

(1) 436-3200 info-hu@shell.com

mabanaFT HungaRy kEREskEdElmi kFT.

80,736

9

2001

– MABANAFT GmbH & Co. KG (100)

lajos alács – –

1016 Budapest, Mészáros utca 58. B (1) 450-2960 mabanaft@mabanaft.hu

RÜk REpÜlőTÉRi ÜZEmanyag kisZolgÁló kFT.

37,319

39

2005

Budapest Airport Zrt. (100) –

Timothy Christopher dinsdale, péter Huszka, Tamás dékány – –

1185 Budapest, Liszt Ferenc Nemzetközi Repülőtér – (1) 296-5107 companysecretary@bud.hu

8

mpH poWER ZRT.

18,072

7

2009

Individuals (100) –

anna papp lázárné – –

1095 Budapest, Ipar utca 2 A (20) 400-6373 info@mobilpetrol.hu

9

mo-To '95 kFT.

16,901

48

1995

Individuals (100) –

attila Hoffer, gyula Zsolt Hoffer – –

9028 Győr, Őrhely út 7.

(96) 437-029 mo-to95@freemail.hu

10

Full-sopRon kEREskEdElmi És sZolgÁlTaTó kFT.

10,563

4

2004

Individuals (100) –

béla andrás magyar – –

9400 Sopron, Ágfalvi út 2 B (96) 595-250 fullsopron@t-online.hu

11

J und J kFT.

10,214

94

1996

Individuals (100) –

János pajkos – –

4030 Debrecen, Galamb utca 2–4.

(52) 470-519 jundj@t-online.hu

12

gRovi kFT.

7,596

44

1994

(100) –

Tibor vizler, andrea vámosi vizlerné – –

4300 Nyírbátor, Szentvér utca 41.

(42) 510-288 postmaster@grovi.t-online.hu

13

EnviRoCHEm kFT.

7,077 (2018)

5

1995

Gábor Egri (65), Adrienne Bakos (35) –

gábor Egri – –

1225 Budapest, Nagytétényi út 221–225.

(1) 391-0570 mail@envirochem-ltd.com

14

Tabol kFT.

3,132

26

1996

Individuals (100) –

Ákos kocsis, györgy kocsis – –

8600 Siófok, Vak Bottyán utca 34.

(84) 320-720 kocsisgyuri@tabol.hu

A

2

2003

– Oleg Tolochko (100)

Tomas Ribanszky – –

1138 Budapest, Népfürdő utca 22.

(1) 465-7600 Oleg.Tolochko@lukoil.com

4

www.tesco.hu

www.omv.hu

auCHan magyaRoRsZÁg kEREskEdElmi És sZolgÁlTaTó kFT. www.auchan.hu

5

www.shell.hu

6

www.mabanaft.hu

7

–

www.mobilpetrol.hu

–

www.full-sopron.hu

NR

www.maxiline.hu

www.grovi.hu

www.envirochem.hu

www.tabol.hu

lukoil lubRiCanTs EuRopE gmbH magyaRoRsZÁgi FiókTElEpE www.lukoil.hu

20 | 4

Special Report

www.bbj.hu

Budapest Business Journal | October 2 – October 15, 2020

gas Traders Rank

Ranked by total net revenue in 2019 (HUF mln)

Company WEbsiTE

ToTal nET REvEnuE in 2019 (HuF mln)

yEaR EsTablisHEd

no. oF Full-TimE EmployEEs in 2020

oWnERsHip (%) HungaRian non-HungaRian

Top loCal ExECuTivE CFo maRkETing diRECToR

addREss pHonE Email

1

magyaR FöldgÁZkEREskEdő ZRT.

665,400

2000

100

MVM Magyar Villamos Művek Zrt. (100) –

györgy kóbor – –

1138 Budapest, Váci út 144–150.

(1) 354-7000 info@mfgk.hu

2

E.on EnERgiakEREskEdElmi kFT.

419,858

2013

93

E.ON Hungária Zrt. (100) –

Tibor istván Fejes – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@eon-hungaria.com

3

mET magyaRoRsZÁg EnERgiakEREskEdő ZRT.

146,056

2007

84

– MET Holding AG (100)

gergely szabó – –

1068 Budapest, Benczúr utca 13/B (1) 464-1111 info.methu@met.com

4

TigÁZ ZRT.

32,294

1987

1,020

MS Energy Holding Zrt. (100) –

balázs gábor lehőcz – –

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

5

pRímaEnERgia ZRT. www.primaenergia.hu

20,580 (2018)

1991

279

Cambria Befektetési Kft. (100) –

Zoltán szirmai – –

1117 Budapest, Budafoki út 56.

(1) 209-9900 vevoszolgalat@primaenergia.hu

6

Flaga HungaRia kFT.

15,208

1990

157

– Zentraleuropa LPG Holding GmbH (100)

bálint Ézsiás – –

2040 Budaörs, Puskás Tivadar utca 14.

(23) 507-600 balint.ezsias@flaga.hu

NA

2019

619

NKM Nemzeti Közművek Zrt. (100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

www.magyarfoldgazkereskedo.hu

www.eon.hu

https://hugas.met.com

NR

www.tigaz.hu

www.flaga.hu

nkm EnERgia ZRT. www.nkmenergia.hu

4

www.bbj.hu

Budapest Business Journal | October 2 – October 15, 2020

Special Report | 21

universal Electricity providers Ranked by total net revenue in 2019 (HUF mln)

Rank

Company WEbsiTE

ToTal nET REvEnuE in 2019 (HuF mln)

yEaR EsTablisHEd

no. oF Full-TimE EmployEEs in 2020

oWnERsHip (%) HungaRian non-HungaRian

Top loCal ExECuTivE CFo maRkETing diRECToR

addREss pHonE Email

1

E.on EnERgiakEREskEdElmi kFT.

419,858

2013

93

E.ON Hungária Zrt. (100) –

Tibor istván Fejes – –

1134 Budapest, Váci út 17.

(20) 459-9600 ertesites.eker@eon-hungaria.com

2

ElmŰ-ÉmÁsZ EnERgiasZolgÁlTaTó ZRT.

184,338

2015

A

Budapesti Elektromos Művek Zrt. (100) –

lászló szabó – –

1132 Budapest, Váci út 72–74.

(1) 238-1223 elmu@elmu.hu

ElmŰ-ÉmÁsZ EnERgiakEREskEdő kFT.

174,788

2002

226

ELMŰ Nyrt., ÉMÁSZ Zrt. (100) –

lászló szabó – –

1132 Budapest, Váci út 72–74.

(1) 238-1150 kapcsolat@elmu-emasz.hu

NA

2019

619

NKM Nemzeti Közművek Zrt. (100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

www.eon.hu

www.elmu.hu

3

www.elmu-emasz.hu

NR

nkm EnERgia ZRT. www.nkmenergia.hu

universal gas providers Ranked by total net revenue in 2019 (HUF mln)

Rank

Company WEbsiTE

ToTal nET REvEnuE in 2019 (HuF mln)

yEaR EsTablisHEd

no. oF Full-TimE EmployEEs in 2020

oWnERsHip (%) HungaRian non-HungaRian

Top loCal ExECuTivE CFo maRkETing diRECToR

addREss pHonE Email

45,869 (2018)

1996

293

ISD DUNAFERR Zrt. (100) –

norbert siládi – –

2400 Dunaújváros, Vasmű tér 1–3.

(25) 581-186 isdpower1@isdpower.hu

1

isd poWER kFT.

2

TigÁZ ZRT.

32,294

1987

1,020

MS Energy Holding Zrt. (100) –

balázs gábor lehőcz – –

4200 Hajdúszoboszló, Rákóczi utca 184.

(52) 558-100 titkarsag@tigaz.hu

3

alpiq CsEpEl kFT.

19,392

2001

3

– Alpiq AG (100)

gábor briglovics, Csaba varga, balázs bene – –

1085 Budapest, Kálvin tér 12.

(1) 429-1030 info.csepel@alpiq.com

4

oERg óZdi EnERgiasZolgÁlTaTó És kEREskEdElmi kFT.

110

1993

20

Ózd Industrial Park Kft. (A), Fémiksz Kft. (A) –

imre kovács, péter miksztaj – –

3600 Ózd, Gyár út 1.

(48) 574-399 oerg@oerg.hu

nkm EnERgia ZRT.

NA

2019

619

NKM Nemzeti Közművek Zrt. (100) –

gábor Hiezl – –

1081 Budapest, II. János Pál pápa tér 20.

(1) 474-9999 ugyfelszolgalat@nkm.energy

www.isdpower.hu

www.tigaz.hu

www.csepel.alpiq.hu

www.oerg.hu

NR

www.nkmenergia.hu

5

www.bbj.hu

Budapest Business Journal | September 18 – October 1, 2020

Socialite Photo by Featureflash Photo Agency/Shutterstock

Enjoying a ‘Stan’s’ eye View of the K-pop Phenomenon I hadn’t given Korean pop, better known as K-pop, much thought until I noticed that my local Cinema City was showing “Break the Silence”, the fourth movie by K-pop giants BTS, for three nights in a row. And you had to buy tickets in advance.

It turned out that the movie was being launched simultaneously across Europe.

DAVID HOLZER

“Break the Silence” promises to bring fans the “untold story” of BTS as it follows the band on its first international tour. It features interviews with the band’s seven members.

While I had no desire to see the movie, I am fascinated by the K-pop phenomenon.

It began in the early 1990s when the South Korean music industry combined elements of all the flavors of contemporary Western pop (R&B, hip-hop, electro and so on) with traditional Korean music and started putting together boy and girl bands. It, and the bands, became a global musical force to be reckoned with when social media exploded around 2010.

In 2018, K-pop revenue grew by 17.9%.

According to the International Federation of the Phonographic Industry’s “Global Music Report 2019”, Korea ranks sixth in the world’s top 10 music markets worldwide.

K-pop basically takes the elements that have defined pop music since at least the late 1950s: cute boys and girls, garishly colored outfits, frenetic dancing and catchy music, and makes them even more cartoonish.

But I’m sure K-pop fans have no interest in or knowledge of Frankie Lymon and The Teenagers, The Archies, The Osmonds, NSYNC or The Spice Girls, to name just a few of the thousands of manufactured pop bands of the last 60 or so years.

The great thing about being a teenage, or even preteen, pop music fan is that you have no idea of pop’s rich history. Your band is yours in that moment. And it’s even better if no-one over the age of 16 has any idea why you love your band so much.

What do you care if cute, cuddly band members have danced over the backs of countless hopefuls to get to the spotlight,

K-pop band BTS at the 2017 American Music Awards at the Microsoft Theatre LA Live on November 19, 2017. Photo by Featureflash Photo Agency/Shutterstock

“BTS cover themes of mental health, sexual orientation, discrimination, suicide and so on. These are all things many, many teenagers relate to and to find comfort in artists who actually care about what they talk about in their music is incredibly inspiring.” signed slave labor contracts and submerged their real personality in one created for them by shadowy management Svengalis?

I’m not being facetious here. As a teenage pop fan, I only cared about the music, the image and the persona of my idols. Why should K-pop fans be any different?

Why BTS?

In 2019, BTS was worth more than USD 4.65 billion to South Korea’s economy.

Remarkably, they were the reason one in 13 tourists visited the country.

To give you some idea of BTS’ global popularity, the band’s latest single “Dynamite” debuted in the U.S. Billboard Hot 100 at number one in late August of

So much so that Lili seeks out translations for the band’s Korean lyrics online.

The BTS story of overcoming ridicule from the K-pop scene and becoming a family after butting heads appeals to Lili.

She also believes the band to be “genuinely nice and caring people.” But she’s really a fan of their music.

“BTS cover themes of mental health, sexual orientation, discrimination, suicide and so on,” she said.

“These are all things many, many teenagers relate to and to find comfort in artists who actually care about what they talk about in their music is incredibly inspiring. For example, their “Love Yourself” series of three albums and tour resulted in a campaign with UNICEF that built on the band’s belief that ‘true love first begins with loving myself’.”

This dimension to BTS’ appeal does put them in a different league from the bands I was in love with at roughly Lili’s age.

I was 15 when punk exploded in the United Kingdom in 1976, times as tough as today’s but for different reasons.

Although I thought the music and clothes were fantastic, I really responded to the ferocious anger of bands like the Sex Pistols and the fact that my liberal, tolerant parents hated them.

Fan View I’m not sure if the sensitivity of BTS is Lili became a fan, or “stan” (“an overzealous a step up from righteous anger, especially maniacal fan” according to the Urban when I think of the world Lili and her Dictionary) of BTS in 2018. Especially the generation are going to inherit. But, as visuals and choreography. “BTS spoke to me her father says, “I’m just grateful she’s not in a way no other artist ever has,” she told me. listening to music urging her to wage war!”

this year; a first for an international band and an astonishing achievement.

BTS was also a major factor in music sales worldwide growing to USD 19 bln in 2018.

I’d assumed that BTS’ appeal was down to their androgynous, unthreatening image, the fact that fans have seven boys to choose from and, I guess, the music and the dance choreography.

So I was surprised to discover that BTS co-write and co-produce a fair amount of their music. If you’re willing to translate from Korean, their lyrics are also socially aware, going beyond the time-honored themes of troubled youth into things like mental health.

BTS’ seventh album “Map of the Soul”, released in February of this year, faced up to the band’s own existential concerns after its astonishing success. As RM, formerly Rap Monster, the band’s leader said, “One day, we woke up and we were like, ‘Where are we?’”

The cynic in me wonders whether the band does in fact write these lyrics. But does that matter if the songs make their fans feel less alone and help them find a way to cope with being a teenager in tough times? But this is all me speculating. To understand BTS’ appeal I needed to speak to a Hungarian fan. I found one in Lili.

5

www.bbj.hu

Budapest Business Journal | October 2 – October 15, 2020

Juliet Victor now Taking off From Tokaj It may have been a torrid time for anyone who’s running an airline, but the CEO and co-founder of Wizz Air, József Váradi, has found that his fledgling winery, Juliet Victor, is not only taking off, but also landing some great prizes.

ROBERT SMYTH

Juliet Victor Sweet Szamorodni 2017 became the first Hungarian wine to make the Best in Show category at this year’s edition of the Decanter World Wine Awards (DWWA).

This seriously hard to attain gong is awarded to the top 50 wines of the DWWA, which represents just 0.3% of the total of 16,518 wine tasted. The lucky few to be selected have been re-tasted three separate times by the esteemed judges, including many Masters of Wine.

Not only skilled in sweet wines, in which Tokaj in general excels on a worldwide scale, the Juliet Viktor winery also claimed the top dry white wine (23rd position overall) at the Winelover’s 100 legjobb Magyar Bor (100 Best Hungarian Wines) awards, as well as

96

points

and a gold medal at DWWA. Juliet Victor’s single-vineyard Bomboly Furmint 2017 was praised by Winelover’s judges for its appealing spiciness from the barrel, along with golden delicious apple and Williams pear, plus exotic nuts like pecans and Brazil nuts, and its remarkable concentration and acidity that will enable this wine to age beautifully.

This all marks remarkable progress for this young winery that has plots in prime vineyards around Mád.

Incidentally, “Juliet Victor” is a play both on Váradi’s own initials, and aviation’s phonetic alphabet of: ‘J’ is for Juliet and ‘V’ is for Victor.

The 100 legjobb Magyar Bor took in Hungarian wines that have won prizes in leading foreign and a few domestic wine competitions. The judges, including myself, then tasted those wines blind using a 100-point system and then ranked the best from 1-100.

Socialite | 23

Tokaji Aszú has serious history and is made from a centuries-old process (yet is boosted and made fresher by modern technology that is so well utilized by the likes of Disznókő), which is unique compared to the other botrytized wines of the world.

The botrytized berries are picked one-by-one in several sweeps of the vineyard, and are steeped in a base wine made of regular ‘healthy’ lateharvest grapes that have not been hit by botrytis. To add to the historical aspect, a lot of aszú comes from the first vineyards to be officially classified in the world.

Szamorodni (like the aforementioned Juliet Victor wine) from Tokaj is made in the same way as other great sweet wines like Sauternes (from Bordeaux), with the bunches comprising both regular and botrytized grapes picked together, and then pressed, and fermented.

Interestingly, the highest placed Szamorodni took 12th position, and came from the Bomboly vineyard (as did Juliet Viktor’s top-placed dry wine), and was made by István Balassa.

The highest placed dry wine in the Winelover’s 100 best Hungarian wines list was a red from Villány, which has become Cluster of botrytised Furmint aszú grapes in Mád, Tokaj- the Hungarian epicenter of the originallyhegyalja, Hungary. Photo by Szilard Csaki/Shutterstock French Cabernet Franc grape; so much so that Cab Franc wines from this warm southwestern region now carry the Villányi Essencia can act as a trump card in Tokaj’s botrytized wines are considered Franc moniker. blind tastings, as it did here, blowing by many wine critics as the best sweet Tamás Günzer’s Bocor Villányi everything else out of the water, although wines in the world, so it comes as no Franc 2017 took 16th position, while its steps so far out of the usual wine surprise that positions 1-15 were taken the upcoming Bognár Pincészet’s 2018 spectrum with its very low level of alcohol Villányi Franc 2018 took 20th. Reigning up by these wines, which took in different and incredibly high residual sugar that styles of Tokaj’s sweet blend.

Winemaker of the Year, Csaba Koch, who it could be debated as to whether it is mainly makes good value, easy-drinking Number One actually wine. wines, mainly in the lesser-known region Top spot was claimed by Royal Tokaji Last year, the British-owned Royal of Hajós-Baja at his eponymouslyEssencia 2008 (HUF 120,000 for a 0.375Tokaji winery made a splash in the wine named winery, showed he can also make liter bottle from wineloverswebshop.hu), trade when it launched what it claimed complex red wine, with Csanád Cuvée which is only the sixth vintage of Essencia to be the world’s most expensive wine – 2015, from his Villány cellar called released by the winery since it was a 1.5 liter bottle of 2008 Essencia – that VinArt, taking 19th place. founded in 1990. cost a mere USD 40,000 Essencia is made solely from the freedollars a pop. run juice of noble-rot afflicted aszú It was even more berries, whereby the grapes are picked concentrated than its one-by-one and then stacked on top of smaller sibling from each other. the same vintage, with The raisin-like, shriveled aszú berries some 181kg of botrytized have been attacked by the Botrytis grapes going into each cinerea fungus, which is activated and of the 1.5 liter decanters. encouraged in the fall by morning fogs Just 18 magnums were caused by the unique humidity in the made of this Tokaj region, partly due to the rivers wine, which is of the Tisza and Bodrog converging in often served in the area, and the sunny days. Botrytis a dessert spoon cinerea greatly concentrates the sugar, rather than acidity and flavor in berries, as the a glass. water diminishes.

Second Pick Royal Tokaj used Furmint and The number Hárslevelű grapes to make this winning two selection wine. The weight of the grapes results of Winelover’s in the extraction of a slow but ultra100 best concentrated flow of must that is put Hungarian wines into glass demijohns to ferment for was a rather several years. more affordable It is so sugary that it only ferments 5 puttonyos aszú to 4% alcohol as the yeasts cannot work (a style that efficiently and to full capacity in such a strikes a lovely sugar-rich environment, leaving residual between acidity sugar content of a minimum 450 g/l. and residual Approximately 20 kg of botrytized aszú sugar that peaks berries are usually used to make a at 150 g/l) from the 2011 vintage liter by the everbottle of this extraordinary, nectar-like, reliable Disznókő sumptuously sweet stuff that coats the (HUF 10,910 from inside of your mouth like honey. the same website).

0.375