Budapest Business Journal 2822

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

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BUSINESS JOURNAL BUDAPEST

VOL. 28. NUMBER 22

NOVEMBER 27 – DECEMBER 10, 2020

SPECIAL REPORT Christmas Shopping

SPECIAL REPORT

Customers Spending Generously During Black Friday

Extreme Digital and eMAG discuss their hopes and plans for their seperate Black Friday events in a season that appears to offer mixed messages as to how shoppers will respond.  12

SPECIAL REPORT

Shopping Malls and Christmas Under a COVID Cloud Ernő Koncz, of Gránit Pólus Management Zrt. and Attila Madler, of CPI Property Group discuss how the shopping malls they own and manage are preparing for what should be this’s year’s peak shopping period.  13

Diligently Building a Budapest Dream

SOCIALITE

Winter Warming Reds From the Top 100 As we move into winter, big red wines are just the ticket for warming winter cockles, and there are plenty of sophisticated rubycolored Hungarian wines to smooth the seasonal transition, as our wine columnist Robert Smyth explains.  23

NEWS

Despite Promising Data, ‘W’-shaped Recovery Lies Ahead A slow recovery from the pandemic crisis started in the third quarter of the year, latest data from the Central Statistical Office shows. Performances in most industries were up from the previous quarter; however, analysts unanimously warn that the crisis is far from being over.  3

N EW

S

Diligent Corporation CEO Brian Stafford talks exclusively to the BBJ about why the SaaS company singled out Hungary from a global search for its HUF 11.3 billion investment to create a Center for Global Product Innovation.4

BUSINESS

Mitigate COVID-19 Effects with Investments Living in extraordinary times, it is important to pass regulations that will help Hungary in a new global economic era that will see increased competition, Minister of Foreign Affairs and Trade Péter Szijjártó says.  7

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Budapest Business Journal | November 27 – December 10, 2020

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THE EDITOR SAYS

EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Kálmán Béres, Zsófia

Czifra, Kester Eddy, Bence Gaál, David Holzer, Christian Keszthelyi, Gary J. Morrell, Nicholas Pongratz, Gergely Sebestyén, Robert Smyth, Zsófia Végh.

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BBJ-PARTNERS

To be honest, it is more a tale of two methods of vaccine development, but that doesn’t scan nearly so well as a headline. Equally, to borrow Charles Dicken’s words and suggest “It was the best of times, it was the worst of times,” might be over egging things, but after the personal tragedies and economic woe this COVID-dominated year has wrought, the news that vaccines appear to be just around the proverbial corner is welcome indeed.

We already knew about the U.S.-German PfizerBioNTech vaccine, of course, as well as the American Moderna jab. The week this issue went to print brought news that a third vaccine, from Oxford University and the U.K. firm of AstraZeneca, had also been found to work. Had it come first, with its reported 70% success rate, it would surely have been lauded to the skies; following on from Pfizer (more than 90%) and Moderna (94.5%), some might be a little disappointed. But that would still be on a par with the flu jab in most years, and ignores the bigger picture that there are now three viable vaccines that could soon be on the market.

One source vaccine alone was never going to be enough.

There was actually some even better news buried away in the Oxford-AstraZeneca results: most people got two full doses of the vaccine, one month apart, but one group received a half dose, followed by a full dose, and amongst those, the success rate rose to 90%. The suggestion is the smaller initial dose better prepared the body for the follow up. If so, it means there will be far more doses to go around.

There is yet more potential good news. The two earlier vaccines are remarkable, using a groundbreaking approach with synthetic material made in the lab. But they are relatively expensive and somewhat unstable, requiring storage in deep freeze, before they are moved into an ordinary fridge for use. After five days in that

fridge, they lose their efficacy. The Oxford approach uses another virus to do its work. It is relatively cheap; importantly, it is also more stable, and can apparently be stored and transported at 2-8°C (35-46°F) for at least six months, making it much easier to distribute.

The reason everyone is so excited about these vaccines is not only that they bring hope an end to the pandemic is closer, and with that a welcome injection (pun intended) of business confidence; they also report on the back of properly measured late-stage clinical trials. That is not something that can be said of the Russian Sputnik V vaccine, which has been approved by Russia’s authorities, but no one else, and is effectively doing its so-called phase III trials in the field.

Even the choice of name, echoing that of the first artificial satellite placed in space, suggests this was more about the glory of the race than anything else.

It uses a similar approach to Oxford-AstraZeneca, and may well be effective and safe, but the truth is we don’t know, as it lacks the rigorous testing the others are going through before they get EU or U.S. approval. It makes it all the odder that Hungary has been championing the fact that it has received samples of the Sputnik vaccine to investigate. Hungarian experts can look at it all they like, but without the evidence of the clinical trials results, they cannot say whether it is safe. That’s why we have the trials in the first place.

Put another way, would I want my 90-year-old mother, who is in the highest risk category, to get a Sputnik V vaccine? I’m no anti-vaxxer, but no, not until there are some transparent, peer-reviewed trial results behind it.

Robin Marshall Editor-in-chief

Photo by MTI/Péter Lakatos

Photo by Fortepan.hu/Erzsébet Vizsnyiczai

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A TALE OF TWO VACCINES

THEN & NOW

The country’s Christmas Tree is set up in front of the Hungarian Parliament on November 24. The 17-meter, four-tonne tree is from Székesfehérvár (64 km southwest of Budapest). In the black and white image from the Fortepan public archive, a Christmas tree is set atop a building in Szombathely (222 km west of the capital) in 1978.

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Budapest Business Journal | November 27 – December 10, 2020

News///macroscope

Despite Promising Data, ‘W’-shaped Recovery Lies Ahead

A slow recovery from the pandemic crisis started in the third quarter of the year, latest data from the Central Statistical Office shows.

Performances in most industries were up from the previous quarter; however, analysts unanimously warn that the crisis is far from being over.

General Government Balance in Hungary (January-October 2020) Balance of central budget

2020 I–X

-534.3

2019 I–X

2020 I–X

-575.4

-2140

-2604.2

Source:

ZSÓFIA CZIFRA

Hungary’s economic performance in the third quarter of the year exceeded analysts’ expectations: GDP grew by 11.3% compared to the previous quarter but decreased by 4.6% from a year earlier. That still represents a slowdown from the 13.6 year-on-year drop in Q2, the first estimates of Q3 data released by the Central Statistical Office (KSH) show.

The seasonally and calendar adjusted year-on-year setback came to 4.7% in the given period. In the first three quarters of the year, the economic performance was down by 5.6% compared to the corresponding period of the previous year, according to the raw data.

The government’s protection measures had been successful in restarting the economy after the first wave of the pandemic, the Ministry of Finance said, commenting on the data. It emphasized that the

Q3

figures

were better than expected, and that shows that the government is on the right path in carrying on with its economic policy based on tax cuts and job protection.

Growth was mainly driven by the infocommunications and financial services sectors in the third quarter and spurred on by a jump in home loans, given a boost by the government’s home creation scheme, the ministry’s statement said. It also highlighted that the third-quarter growth rate indicated that, even after a strict lockdown in the spring, the economy was able to rebound quickly.

The ministry said Hungary’s economy could again make a quick recovery after the November lockdown. It said a contraction of 6.4% of GDP projected for this year could be followed by a growth rate of 3.5% in 2021.

Long Road

Analysts pointed out that although Q3 data had, indeed, been better than expected, a long recovery lies ahead.

In their statements, most focus on the risk the second wave of the coronavirus pandemic carries for the growth of the economy.

Another downturn is unavoidable due to the second wave, says Gergely Suppan, head analyst at Takarékbank.

The bank has therefore modified its growth outlook for this year; it now expects an annual 5.4% contraction

As for the economic performance of the fourth quarter, he thinks that a lot depends on consumer demand and whether there will be additional government measures impacting manufacturing and services.

All in all, he expects an approximately 6% decline in 2020, while there might be a 4% increase in 2021. However, he added that the course of the pandemic can easily overwrite GDP forecasts for both years.

General government balance, excluding local governments

billion forints 2019 I–X

Additional Measures?

instead of the earlier projected 4.7% drop.

As for next year, Suppan maintains his

7.2% annual

growth rate target. The “W”-shaped recovery is likely to span into the beginning of 2021, he said.

Péter Virovácz, of ING Bank, also warns that promising third quarter data does not mean the crisis is over: the newly introduced measures and lockdowns will weigh on fourth quarter data. According to him, the services sector is the most likely to hold back the performance of the economy in the fourth quarter, but industry, on the other hand, will likely to be able to balance the setback.

ING Bank calculates with a 2% annual GDP contraction in the fourth quarter of 2020, which indicates a “W”-shaped recovery. The annual drop in the GDP could be nearly 6% this year, but the bank forecasts a growth rate of above 4% in 2021.

Services, industry and external trade all contributed to the relatively good GDP data in the third quarter following the steep drop in the second. However, the construction industry has not improved that much in a quarter-onquarter comparison, says K&H Bank head analyst Dávid Németh.

When compared with economies in the V4 countries, Slovakia leads the way with an 11.7% quarterly growth rate (albeit this is unadjusted data), followed

by Hungary at 11.3%, Poland at 7.7%, and the Czech Republic on 6.2%.

The Q3 contraction of the Hungarian economy was, however, marginally above the EU average: in the third quarter of 2020, economies in the euro area contracted by 4.4% and the EU 27 saw an average drop of 4.3% in the third quarter, compared to the same period of 2019, calendar-adjusted data released

by Eurostat reveals. All economies in the European Union showed signs of recovery in the third quarter of the year.

As for quarterly growth rate, Hungary is a hair below the EU and euro zone average: in the European Union, the average growth rage was 11.6 in Q3 compared to Q2, while it came to 12.6 in the euro area.

When compared with economies in the V4 countries, Slovakia leads the way with an 11.7% quarterly growth rate (albeit this is unadjusted data), followed by Hungary at 11.3%, Poland at 7.7%, and the Czech Republic on 6.2%.

Numbers to Watch in the Coming Weeks The Central Statistical Office was due to publishes third quarter investment data on November 26, the day after this issue went to print, followed by a detailed analysis of the labor market between August and October on November 27. The second estimate of Q3 GDP figures will be released on December 1. October retail trade figures will be out on December 3, and the KSH will release its first estimate for industrial production on December 4.

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Budapest Business Journal | November 27 – December 10, 2020

Diligent to Build Center for Global Product Innovation in Budapest Diligent Corporation, a leading U.S.-based modern governance company whose tools are used by nearly 700,000 board directors and leaders, has announced it will establish its new Center for Global Product Innovation in Budapest.

The Budapest Business Journal asked CEO Brian Stafford about the key aspects behind the decision to bring the development to Hungary.

“The team that we are going to build in Budapest will perfectly complement the great talent we currently have at Diligent. Our goal is to be the next billion-dollar revenue SaaS [software as a service] company. We know the people that join us in Budapest will be a big part of achieving that aspiration.”

BENCE GAÁL

The new center will create hundreds of jobs in the capital, as a result of which Diligent’s HUF 11.3 billion investment is being supported by the government through the Hungarian Investment Promotion Agency.

Speaking at a virtual press conference on Monday, November 23, Minister of Foreign Affairs and Trade Péter Szijjártó noted the government will provide Diligent with a HUF 2.8 bln grant, according to a report by state news wire MTI. He said Hungary had faced “stiff competition” for the center, and Diligent’s eventual choice is an acknowledgment of the country’s environment for investment and for doing business, as well as of Hungarians’ creativity and the performance of local institutions of higher education.

Szijjártó noted that cumulatively U.S. businesses are the second-biggest foreign investors in Hungary after German companies, with

about

1,700

American-owned companies employing more than 100,000 people in the country “As we begin this new chapter for Diligent, we look forward to joining the ranks of successful, global, technology companies that count Budapest as a key operational hub. We are grateful to the government of Hungary, HIPA, and Minister Szijjártó for their assistance,” said Diligent CEO Brian Stafford.

Long-term

“Opening our new Center for Global Product Innovation will help facilitate Diligent’s efficient, scalable long-term global product growth for our customers through greater collaboration between our product and technology teams.”

“Budapest has not only a first-rate, globally competitive workforce, but it is also supported by a rich, technologyfocused educational system. At the heart of everything we do is product innovation for our customers and Budapest has the talent and skills we need to do that. That is why we are positive that Budapest will be a core location of innovation for Diligent,” he said.

While the exact location of the Center for Global Product Innovation is not yet known, the company is currently in advanced negotiations with a preferred site in Budapest’s city center.

“Diligent intends to offer its staff an outstanding new facility with first class location and amenities. It is important for us to offer our talented team a workplace that meets their need for being part of a community and provides the services which help the most creative ideas come to life,” Stafford added.

Brian Stafford Stafford himself told the BBJ that plans for a new technology center in Europe have been in consideration for some time.

“We began planning for a technology center in Europe prior to the pandemic, which did not in any way affect our conviction that it would facilitate more effective and agile creation of software solutions on behalf of our clients,” he said.

One of the key reasons behind bringing the center to Budapest was the quality of the available Hungarian workforce.

Stafford noted that Diligent has done its research before settling on Budapest as its host for the center.

“We learnt that Hungarian employees are hardworking, talented, focused, and creative, so we are positive that they can build products that our customers will love. The team that we are going to build in Budapest will perfectly complement the great talent we currently have at Diligent. Our goal is to be the next billion-dollar revenue SaaS [software as a service] company. We know the people that join us in Budapest will be a big part of achieving that aspiration,” the CEO explained.

Still, as Szijjártó had earlier acknowledged, Budapest faced fierce competition for the center, and not only regionally. Stafford told the BBJ that Diligent looked at more than 20 locations around the world before making its final decision.

Stand out

“Hungary stood out, being consistently ranked among the top countries in the world in which to invest. It is a place where the cultures of Eastern and Western Europe come together.

Budapest, known for being one of the most stunning cities in the world, has a lot to offer with a very strong talent base, a great success record of multinational corporations and a high quality of life, including excellent healthcare, education systems, and employment standards,” Stafford explained.

According to the company’s plans, the center will open in the first quarter

of

2021,

creating a number of jobs in different positions in the capital.

“We are already hiring people for positions in Hungary, and we will continue to hire our team in the year to come.

Diligent plans to create more than 300 technology jobs in Budapest including product management, software engineering, quality assurance, security, research, infrastructure, and production operations.”

He added that a list of vacancies for those interested can be found at https://hays.hu/diligent

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Budapest Business Journal | November 27 – December 10, 2020

News | 5

GTC Completes Sale of Spiral Office Development GTC has completed the sale of its 30,500 sqm Spiral office center just off the Váci Corridor on Dózsa György út.

The successful disposal of the fully leased, single tenant building, delivered in 2008, will provide the funds for further development projects and acquisitions, according to GTC, which is currently constructing the 29,000 sqm Pillar office complex, on Váci út.

GARY J. MORRELL

The sale was concluded amid uncertainty over pricing in the office market in the current market environment, in the view of many analysts. The buyer has not been revealed, though several real estate websites said the deal would generate EUR 41 million in free cash.

“That being said, if you have an exceptional product because of its prime quality or a very long lease with a good

Spiral Budapest by GTC. covenant, core money is keen to secure such opportunities. Hungary has seen a significant supply of new offices this year so there is potentially more product than on the Czech market,” said Rita Tuza, now headof capital markets at JLL Hungary.

Office investment volumes for the first half of 2020 reached a

recorded

EUR 400 million,

driven by the acquisition in June by Optimum Ventures Private Equity Fund (owned by Optima, the fund manager of the National Bank of Hungary’s foundations) of a majority shareholding (61.49%) in GTC. While the third quarter was moderate in terms of deals, there are several transactions still proceeding and expected

Mass Testing Launched for Social Institutions Prime Minister Viktor Orbán said the launch of targeted, mass COVID19 testing would be the “biggest task of the week” in a video message posted on his Facebook page on November 23. The government is launching mass coronavirus testing of staff in schools, hospitals and social institutions such as nursing homes.

NICHOLAS PONGRATZ

“We’re fighting in our schools and in our kindergartens so we won’t have to close them,” Orbán said after a meeting of the Operative Corps,

the body coordinating Hungary’s response to the coronavirus pandemic.

Other social developments regarding the coronavirus include the reintroduction of dedicated shopping times for the elderly.

The decree designates the periods between 9-11 a.m. on weekdays, and between 8-10 a.m. on weekends, as dedicated to people 65 and over in supermarkets, pharmacies and stores that sell fast-moving consumer goods. Pensioners are allowed to shop at other times, but no one under 65 can shop during the reserved hours.

Addressing the matter of a proposal by the Hungarian Chamber of Commerce and Industry (MKIK) to suspend the local business tax and reduce the corporate tax rate, Orbán told Kossuth Rádió in a weekly interview on November 20, that the climb would be steep but necessary. He said financing central government or local government expenditures is “secondary” to preserving jobs.

“We have to cut taxes in any case, because if we don’t cut taxes there won’t be jobs,” he said. Currently, the government has exempted companies operating in the hospitality and leisure sector from paying the employer’s tax burden, which, in addition to providing about HUF 5 billion

to be closed in the remainder of 2020, Cushman & Wakefield says.

In a further development, the Belgian developer Atenor has placed Building “F” at its 123,000 sqm Váci Greens property on the market. The whole complex consists of six buildings, five of which have been leased and subsequently sold to various domestic and international investors.

Atenor has a policy of developing, leasing and selling assets onto investors.

EUR 1 bln Ballpark

Colliers predicts the total Hungary investment volume turnover to be just

below EUR 1 billion, in line with its conservative flash figure of EUR 800 mln.

Given the current pandemic environment, JLL has adjusted downwards its estimate of annual investment volume for Hungary to EUR 1.3 billion.

For its part, CBRE argues that there is a lingering uncertainty as to how the COVID19 situation will play out, although a late boost to the market could bring the annual Hungary investment volume for 2020 up to the EUR 1.2 bln-1.3 bln range.

In one significant deal for the year, GalCap Europe, a real estate asset and investment manager specializing in Austria and Central Europe, acquired the earlier generation Rumbach Center (Rumbach Sebestyén utca 19-21, in District VII) for the portfolio of a German pension fund.

The office class has proved to be the asset sector of choice in CEE, closely followed by industrial, according to Colliers International, who brokered the Rumbach deal.

Another notable transaction was the purchase by Allianz of the Eiffel Square office complex (Teréz körút 55-57, District VI), making it the largest office investment by a foreign investor

sine

2016,

according to CBRE. The 23,500 sqm complex was purchased in a deal structured off-market by JLL. Colliers put yields at 5.25% for prime Budapest office. The theoretical yield level for prime Budapest offices is set to grow to 5.5% by the end of 2020, according to Bence Vécsey, head of capital markets at JLL Hungary.

Coronavirus ///roundup in tax relief to those affected in November, also ensures the retention of their work and the payment of their November wages, said State Secretary for Taxation Norbert Izer, of the Ministry of Finance.

Take Away VAT

Additionally, the government has decided to reduce the VAT rate on takeout food to 5%, level with the rate for dining-in at restaurants. This certainly serves to benefit food delivery services, for which, according to the forecast of the national food order portal Falatozz.hu, the number of food orders will increase significantly during the second wave, writes Világgazdaság.

During the initial quarantine period, the number of new subscribers to the portal increased by 59%, and although the trend slowed during the summer decline, the number of new users has increased by an additional 10% in the past five months.

Online commerce also saw a 40-50% surplus in online commerce measured as an almost immediate temporary effect of the restrictive measures, Balázs Várkonyi, managing director of eMAG Hungary and Extreme Digital, told Világgazdaság (Global Economy).

A sample of 10 doses of Russia’s COVID-19 vaccine arrived in Budapest so Hungarian experts could start studying the vaccine in order to make the best decision on its possible use and licensing, Minister of Foreign Affairs and Trade Péter Szijjártó said on his Facebook page on November 19.

The next day, Russian news agency TASS said Hungary could become the first country in the European Union where the Russian COVID-19 vaccine is produced, citing a statement by the Ministry of Trade and Industry.

Hungary has also pre-ordered about 12 million doses of COVID-19 vaccine from AstraZeneca, Janssen and Pfizer, according to Gergely Gulyás, the head of the Prime Minister’s Office.

Meanwhile, another one million tablets of favipiravir, used to treat COVID19 patients, arrived in Hungary from China, Minister of Foreign Affairs and Trade Péter Szijjártó said in a video message posted on his Facebook page on November 25.

Hungary has so far taken delivery of 4.8 million tablets of favipiravir, including 2.8 million from China and 2 million from Japan, Szijjártó said.

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WHO’S NEWS

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Budapest Business Journal | November 27 – December 10, 2020

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

Zsófia Lendvai

the exhaustion of IP rights in the online environment and on abusive IP-based legal proceedings.

She is ranked in Chambers, Legal 500, IP Stars and Word Trademark Review, and is one of five Baker McKenzie lawyers who have been featured in Managing Intellectual Property’s Top 250 Women in IP. She is taking a leading role in coordinating the Budapest office’s pro bono activities.

Csaba Vári is head of privacy in Budapest. He has data privacy expertise from a legal career spanning two decades. He represents Hungarian and multinational companies in a broad range of data privacy and cybersecurity issues, including the preparation and implementation of corporate policies and the conduct of compliance investigations.

Baker McKenzie Budapest Announces 3 Promotions Baker McKenzie has promoted three senior associates to counsel position in the fields of industrial and intellectual property rights, data protection and competition law in Budapest, raising the total number of counsels to five.

Zsófia Lendvai co-heads the IP/Tech Practice in Budapest and advises on a range of trademark, patent, copyright and know-how issues relating to various activities and industries, at both the national and European level. She specializes in national and EU intellectual property matters, including trademark, patent, copyright and know-how.

Lendvai is a member of the Board of the Hungarian Trademark Association, the Copyright Experts Council and the Board of Experts on Industrial Property attached to the Hungarian Intellectual Property Office. She also headed the LIDC working groups on

Csaba Vári Vári has authored many articles on data privacy law. He was involved in the firm’s Legal Atlas for Street Children project and regularly advises a Hungarian foundation committed to enforcing and promoting children’s rights.

CCO Kam Jandu to Leave BUD

András Horváth András Horváth has been a member of Baker McKenzie’s competition law team for five years. Prior to joining the firm, he worked at another international law firm, and also gained experience at the European Commission’s DirectorateGeneral for Competition. He is a seasoned lawyer advising in cartel and dominance cases, unfair commercial practices, merger control, and compliance.

Horváth has represented clients from the retail, travel, HR, automotive, pharma, tech, and bank sectors. He obtained an LL.M degree and gained his PhD in the field of antitrust damages. As a member of the Hungarian Association of Competition Law, he regularly speaks at competition law conferences, on university courses and also publishes articles in the field of competition law.

“With the new appointments, there are now five counsels in our office. We have strengthened our expertise in the fields of IP law, data protection, and competition law, and as a consequence, we can provide higher quality services for our clients,” emphasized Zoltán Hegymegi-Barakonyi, managing partner of Baker McKenzie’s Budapest office.

Kam Jandu is stepping down from his position as chief commercial officer of Budapest Airport, by mutual agreement.

He will leave the airport operator after 11 years, on December 15.

Jandu has been working at the airport since 2009, initially as aviation director, and then as CCO since 2013.

He expressed his gratitude to the shareholders, the board of directors, the management of Budapest Airport, and his team for their support during the past 11 years. Jandu says he will pursue new opportunities in 2021, following a rest.

As CCO, Jandu was responsible for Budapest Airport’s airline and commercial marketing, commercial passenger services and, as of this year, cargo operations.

Over the years, he achieved numerous successes with his team, including winning the best airline marketing title at the World

Kam Jandu Routes Marketing Awards in 2019 and, most recently, being recognized for environmental efforts at the Travel Retail Awards.

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Budapest Business Journal | November 27 – December 10, 2020

Business

Hungary Aims to Mitigate COVID-19 Effects With Investments

Living in extraordinary times, it is important to draw the necessary conclusions and make new regulations that will help Hungary in the new global economic era that we are entering due to the COVID19 pandemic that will see increased competition, said Minister of Foreign Affairs and Trade Péter Szijjártó.

CHRISTIAN KESZTHELYI

Speaking during an online business forum organized on November 18 by the American Chamber of Commerce in Hungary (AmCham), the foreign minister vowed to work on an updated regulatory framework that will support the facilitation of more investments coming into Hungary.

With the country, like much of the rest of the world, facing a second wave of the coronavirus, there are two major principles that determine the decisions of the Hungarian government relating to the protective measures.

“We do have to protect life and the healthcare situation of our citizens and we do have to keep the economy operational.

These two principles are in the background of all of our decisions,” the foreign minister said. He has been infected with the virus, and was still recovering from it at the time of the forum; he was hoping to physically return to work the following week.

With a state of emergency coming into force on November 11, the country has seen night curfews

from

8 p.m.,

a ban on all gatherings, and shops have to close at 7 p.m., among many others.

Some 71 companies have applied for the support, resulting in EUR 600 mln of investment, saving 61,000 jobs altogether among them, including seven American companies investing a total of EUR 98 mln,” the minister said.

Szijjártó also noted that the government has recently decided to allocate another EUR 430 mln to increase the financial framework of the investment incentivizing programs of the foreign ministry to avoid layoffs.

The government is ready to cover one third of the invested volume of money, up to EUR 800,000 per company.

The minister also pinpointed changes under the restructured and renewed training subsidy system. In case of implementing an investment

of

EUR 5 mln,

Péter Szijjártó joined the forum via a video link from his home.

As tourism has also been severely affected, Szijjártó noted that Hungarian hotels are allowed to receive business travelers only.

“Intercompany travel and trips motivated by economic reasons, business investments or technological development are still allowed. These types of travel are allowed without any kind of restrictions or quarantine obligations,” he explained.

Vaccine Negotiations

Hungary has been involved in vaccine negotiations “in all directions and all aspects”, the foreign minister said. Hungary is to receive 10 doses of the Russian Sputnik V vaccine, so local officials and experts can do the necessary research into its effectiveness to consider purchasing the inoculation later on (or possibly even manufacturing it under license.

“We do have to protect life and the healthcare situation of our citizens and we do have to keep the economy operational.

These two principles are in the background of all of our decisions.”

Hungary is additionally involved in European projects and has also been in touch with Chinese suppliers, and aims to make more types of vaccine available for citizens, so they can choose which ones they would like to opt for.

Economic decisions have been based on four principles, the foreign minister noted.

“First, to protect the jobs, of course the most important one; second, to incentivize investments; third, to support strategic industries; and forth, to ensure the liquidity of companies,” Szijjártó said.

The minister explained that the government believes the best way to protect jobs and ensure a predictable future is to make sure that citizens will have a job.

“So, instead of financing and encouraging unemployment, we rather wanted to fight against unemployment,” Szijjártó said.

The government has also increased support for business investment and, taking advantage of a European Commission decision, it has launched a program under which it has financed up to half of the investments, to a maximum

of

EUR 800,000,

to those companies, which committed themselves to avoid layoffs, the minister said.

Committed to Hungary

In total, 904 companies have committed themselves to EUR 1.2 billion in more than 30 industries, saving 55,000 jobs, according to Szijjártó’s tally, including 10 U.S. companies implementing investments worth EUR 12 million, saving 5,000. The Hungarian government has provided EUR 5.5 mln of cash incentives in total, he said.

“We have agreed with the European Commission that, for a temporary basis, the EUR 800,000 threshold was eliminated. We have launched a program for big investments to be financed in order to avoid layoffs.

companies have access to a EUR 5,000 subsidy per capita for training new colleagues or reskilling existing employees.

Szijjártó emphasized that the foreign ministry and the Hungarian Investment Promotion Agency (HIPA) are open to suggestions and proposals from companies to support economic growth and investment. He said they will make it a priority to attend to the needs of businesses in the country, and promised less red tape.

“First, to protect the jobs, of course the most important one; second, to incentivize investments; third, to support strategic industries; and forth, to ensure the liquidity of companies.”

Seeing how global supply chains were disrupted by the pandemic, the minister said that it appears that Hungarian small or mid-sized companies could replace foreign companies in the supply chain and his ministry, together with HIPA, is ready to support efforts in this regard.

Relating to the U.S. elections, in which the Hungarian government had openly favored President Donald Trump over now President-elect Joe Biden, the foreign minister said that Hungary has always based its foreign relations on mutual respect.

“It is only the job of the Americans to make a decision about who would lead the United States. [.…] Of course, we are interested in good bilateral relations,” he said, adding that President Trump had unquestionably been a friend of Hungary.

Nevertheless, he added that he believes political developments between the two countries do not influence the economic relationship at all.

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Budapest Business Journal | November 27 – December 10, 2020

The past week has seen two dramatic vaccine announcements, by Pfizer and Moderna, each claiming more than 90% efficacy. This is good news; some have even called it the beginning of the end of the COVID pandemic, writes Les Nemethy.

In this article I try to look at what this news means for company owners and investors, with greater granularity.

The vaccines do not constitute an

The Corporate Finance Column Photo by BaLL LunLa / Shutterstock.com

Light at the end of the COVID-19 Tunnel

for 2021 is at best making an educated guess. We are into “tierra de leones.”

Why this high degree of uncertainty?

The following list is not exhaustive, nor is it placed in order of importance:

immediate magic bullet, because of challenges in roll-out, and because economic and financial damage has already been done and will continue to be done until the vaccines kicks in; indeed, the virus will be outlived by its economic and financial effects.

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Challenges in Roll-out

It will still be many months before these vaccines have any effect. It is noteworthy that the two vaccine announcements were based on preliminary results. That means that there are still some regulatory hurdles to be crossed, in terms of obtaining final results and obtaining the relevant regulatory approvals. Pfizer, for example, has not at the time of writing released detailed data on efficacy on various age groups.

More than 30% of people may refuse to take the vaccine, due to possible side effects, or based on religious or ethical considerations. I expect a lively debate to emerge in this area, as more details on the vaccines emerge. Concerns are beginning to emerge that the vaccination could cause Antibody-Dependent Enhancement (ADE), where the ability of the virus to enter your body is actually enhanced by the vaccine, resulting in even more severe illness.

Then there are nightmarish logistic hurdles to be crossed, of manufacturing and distributing billions of doses that must be stored at -70°C in the case of the Pfizer vaccine, and 20 below for the Moderna vaccine. Not even the most advanced hospitals like Mayo Clinic have the capacity to store vaccines at -70°C. Optimistically, it will be Q2 or Q3 2021 before the vaccines will start making an impact. While there may be a light at the end of the tunnel, there is still a long and dark journey ahead. Until then, we will have a winter of exponential expansion of the virus, massive levels of sickness, suffering, and death.

• Uncertainty as to timing of fiscal relief, in the United States due to the uncertain handover of power, in Europe due to the recent veto of the EU relief plan; • Possible civil unrest of unprecedented proportions to lockdowns, or in the States, related to the transfer of power; • U.S.-Sino conflict continuing to play out; • Rapidly escalating numbers of bankruptcies as businesses and individuals use up their financial reserves; • These, in turn, may trigger bank defaults.

Potential bank exposure to CDO’s and derivatives remains opaque. Societe Generale, for example has the lowest Price to Tangible Book Value ratio of any bank in Europe, at 17%.

• A U.S. dollar crisis may be triggered by international investors dumping treasury bonds.

Even though the pandemic may begin receding in Q2 or Q3, economic and financial “surprises” may manifest themselves well thereafter, as bankruptcies and their like take time to work through the system.

There are, however, a few things that might be predicted with some degree of confidence. Governments and central banks will continue massive amounts of fiscal and monetary stimulus: globally, there has been USD 19 trillion of COVID relief to date, according to CNN, and that is still going strong. Debt will continue to soar; money supply will continue to balloon.

Assuming the aforementioned scenario, what is the advice to business owners and investors?

Firstly, this is not a sellers’ market for mergers and acquisitions: unless you have a company that is a “winner” from COVID19, or you are in a rush to sell even on a “distress” basis, it best to wait until at least Q2 before putting your company on the market. (You could, however, use the time to improve your company and prepare it for an eventual sale.)

Secondly, to help survive the upcoming tough winter, ensure you have sufficient liquidity, both at the personal and corporate level.

Thirdly, I continue to believe in gold (up to 5% of your portfolio) as an excellent hedge. While there will, of course, be price fluctuations in this environment of massive fiscal and monetary stimulus, over the long-term gold appears to have much more upside than downside.

The international political, economic and financial order is under unprecedented stress. Systems under stress are likely to produce surprises. Be prepared for the unexpected.

Economic Effects

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Although we may have some kind of visibility on the epidemiological curve improving in Q2 or Q3 next year, I will argue that we have less visibility on the curve for economic performance and financial markets. On medieval maps, at the edge of the explored world, cartographers would write “tierra de leones” (land of lions).

Any forecaster who tells you what to expect in terms of GDP or financial markets

Les Nemethy is a former World Banker, CEO of Euro-Phoenix Financial Advisers Ltd. (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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Budapest Business Journal | November 27 – December 10, 2020

Business | 9

Digitization, COVID Learnings Mold Future of Assurance Service Taking on a major new role in the midst of a global pandemic certainly adds spice to what is already a challenging time.

The Budapest Business Journal discusses the impact of COVID-19 and its economic implications with László Radványi, head of PwC Hungary’s assurance service.

CHRISTIAN KESZTHELYI

Radványi, who describes himself as a “home-grown” PwC veteran, joined the firm as a fresh graduate in 2003 and became a partner in 2015 at the age of 35; he took up his new position on July 1. Its remit includes auditing and broader insurance services, comprising consultancy services relating to cybersecurity, SAP advisory, process mining, robotic process automation, internal audit, accounting advisory and the PwC Academy, together with e-learning development.

As the pandemic hit Hungary, PwC chose not to introduce compulsory home office, although it did make homes primary work stations to safeguard employees.

Despite the difficulties, the Big4 company was able to successfully complete its audit work for

640 clients

up to the extended deadline of the end of September.

“We were able to do all our work remotely; we were very effective in transforming our way of working,” Radványi says.

He acknowledges, though, that COVID19 has created some unique challenges, not least meeting and negotiating with new clients.

“In this pandemic, what has also been challenging is keeping teams together as leaders. We have a lot of younger employees, who may be locked up alone in their rental homes and hence need special attention and support from our leaders,” he adds.

Radványi stresses that the priority in times such as this is supporting clients, rather than focusing on business development.

“We have started hosting online webinars on topics such as tax consultancy, for example, by placing our colleagues in the online space and offering free advisory sessions to help those who are interested in COVID-related challenges and changes,” he explains.

László Radványi

Regional Interest

While PwC Hungary has a primary focus on the country, the firm also has many international clients from across Central and Eastern Europe and beyond. The Hungarian unit is working on expanding its services further in international markets.

Radványi says Hungarian professionals are exceptionally well qualified and can deliver added value internationally, too, which gives the firm a competitive advantage.

On top of this, COVID-19 has shown that they can effectively work remotely.

Cybersecurity has come into special focus nowadays. When crises hit, fraud flourishes. With people relying on digital channels during these challenging times, the importance of making the cyber space safe has grown.

“We are working on several complex, global projects in this field. For example, we deliver global IT, IoT & OT network security architecture services to a UAE based international transportation and logistics company. With the expansion of IoT [Internet of Things], more devices are becoming accessible to hackers, and we are working on securing these ecosystems,” Radványi says.

Should their cybersecurity be compromised, companies could face months of work to remedy the situation, and their business operations would be disrupted and they could lose billions of . However, quality assurance and pre-launch testing, as well as continuous monitoring of a system can help significantly in avoiding harmful events.

“We can see that the clients we are supporting have

200-300 cyber-attack

attempts hourly on average. Therefore, we continually have to develop and test our systems to ensure that they are up to date,”

Radványi adds. The human factor is also an important part. Educating employees to be digitally secure and using different user levels can further enhance security to ensure that one employee does not unintentionally give access to hackers via ill-intentioned emails, for example.

Digital Evolution

It all forms part of massive digitalization processes that has completely changed the way assurance work is done today.

“When I started working here 17 years ago, we were the first or second generation to receive laptops; we did not receive mobile phones back then. We always visited our clients and had huge briefcases to have all the tools needed for manual, paper-based testing,” Radványi recalls.

“We have been undergoing a massive transformation; we have moved to the digital space, we use the cloud for information storage, and we focus on leaving repetitive testing to computers if they require no human intervention.”

“We have been undergoing a massive transformation; we have moved to the digital space, we use the cloud for information storage, and we focus on leaving repetitive testing to computers if they require no human intervention,” he says.

PwC Hungary is developing robotic processing automation (RPA) solutions to help its employees reach a better work-life balance. The firm also focuses on using big data; it has tools for auditing that can monitor, classify and analyze all the data a company generates, which is complemented by analysis of the electronic invoicing data provided by the Hungarian tax authority to our clients. Automation is a very important part of how PwC Hungary operates, the head of assurance service says.

Radványi also thinks that many of the best practices that surfaced in these unprecedented times will stay with us the post-pandemic period. Based on experience, people may work more from home: PwC Hungary employees have said they would be happy to

spend

50%

of their working time in home office.

It offers more flexibility and is more comfortable. This will change office spaces and related behaviors.

Business travel may become more limited as online meetings are in many cases more cost-effective, time-efficient and come with a smaller carbon footprint. Non-financial reporting is also gaining ground, a trend that has been sped up by the pandemic.

Environmental, social and governance reporting is set to become a very important part of our corporate culture in the future, as investors are increasingly intrigued by a company’s long-term value creation plan and are looking to receive credible, standardized information to support longterm risk assessments. This is where ESG reporting may be able to help mitigate longterm risks, Radványi believes.

“The profession went through massive transformation during the last 17 years and the next 17 will not be any less exciting,” he adds.

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Budapest Business Journal | November 27 – December 10, 2020

‘Magic Lamp’ Charity Drive Marks Expat Portal’s 20th Anniversary

From left: Stephen Linfitt, founder of XpatLoop; local celebrity Zsuzsa Demcsák; and Éva Patzauer, founder of the Csodalámpa Foundation. Photo by Russell Skidmore.

Hungary’s first online portal for expats, XpatLoop.com, celebrates its 20th birthday this year. It usually combines its anniversary with fundraising for local children’s charities and a celebration of the British Bonfire Night tradition in November, an event the Budapest Business Journal has long been happy to promote.

This year, COVID has ruled out such a party.

However, having raised HUF 30 million for good causes to date, XpatLoop founder Stephen Linfitt says he is determined local children in need will still benefit this

year from the generosity of expats and internationally minded locals, and has even won VIP support to help him do so.

“I was looking forward to attending the popular Bonfire Night’s celebration

organized by XpatLoop in Budapest; however, sadly this year it had to be called off due to the global pandemic,” said Paul Fox, the newly arrived British Ambassador To Hungary.

Fox, who only officially took up his role on October 16, has posted a video link on the embassy’s U.K. in Hungary social media feeds congratulating XpatLoop on its milestone birthday.

“XpatLoop has played an important role in connecting Hungary’s expat community, including thousands of my fellow Britons. Thank you for being our reliable partners for two decades,” Fox said in his video message.

He encouraged the community to join together in making donations to long time XpatLoop charity partner the Csodalámpa (Magic Lamp) Wish Granting Foundation.

“Let’s come together virtually […] this year by joining the team at XpatLoop in making a donation directly to the Csodalámpa Foundation,” said Fox. Anyone wishing to make a donation online to the Csodalámpa Foundation, which aims to grant 230 to 300 wishes per year to 3-18-year-old children suffering from life-threatening illnesses, can do so via this link: www.csodalampa.hu/ csodalampa/donate

Company ///news Telekom to Launch 5G in 2,100 MHz Frequency Magyar Telekom will be the first Hungarian service provider to launch its 5G service in the 2,100 MHz frequency band sold in the spring spectrum sales process, and plans to expand its 5G network coverage in the capital from 13% to 30% by the end of the year, the company says, according to economic daily Világgazdaság (Global Economy). The service provider launched its commercial 5G service on the 3.6 GHz frequency in early April this year. Currently, in addition to Budapest and Budaörs (10 km southwest of Budapest), it is available in 21 settlements on the shores of Lake Balaton and in five county capitals.

MOL Signs 5-year Agreement With Miskolc Uni Hungarian oil and gas company MOL says it has signed a five-year strategic agreement with the University of Miskolc (180 km northeast of Budapest) that will expand its existing cooperation with the institution, according to portfolio.hu.

The agreement extends to R&D, waste management, education and vocational training. Areas of research will include geothermal energy, the potential of hydrogen as a form of energy storage, and circular economy technologies.

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Budapest Business Journal | November 27 – December 10, 2020

Special Report Customers Spending Generously During Black Friday

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Shopping Malls and Christmas Under the COVID Cloud

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Enthusiasm for Sales may Light up Christmas Shopping Spirit

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Budapest Christmas Fair 2020 Moves Online

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Photo by r.nagy / Shutterstock.com

Christmas Shopping

How are Hungary’s webshops, markets, malls and stores preparing for this most unusual 2020 Christmas shopping season?

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Special Report

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Budapest Business Journal | November 27 – December 10, 2020

Customers Spending Generously During Black Friday While price cuts are not as significant as in the United States, the Black Friday promotion has become increasingly popular during the last few years in Hungary.

In many cases, retailers generated revenues in one day even higher than before last Christmas. The biggest winners, of course, were the online retailers.

KÁLMÁN BÉRES

Black Friday, officially held on the first Friday after Thanksgiving Day on November 26, is an ideal date for everyone involved in pre-Christmas shopping.

Stores can free up space in their storage facilities to prepare for the Christmas season and customers can buy presents in advance, to avoid the last-minute rush.

Some stores apply Black Friday prices for one day only, others extended the promotion through the weekend, and yet more for one or even two weeks.

The promotion has grown increasingly popular, despite problems like very limited stocks for the most

Extreme Digital does not offer Black Friday price reductions of 70-80%, as can be the case in the United States, but deals can still be significant. Extreme Digital focused on IT and electronics products, while eMAG had a much broader range in its promotion, the CEO added.

Extreme Digital said this year it focused on ensuring proper access for all customers, employing special software designed to limit access at peaks. This does not mean that some clients were excluded from the webshop. On the contrary, the aim is to allow slower but smoother access to all clients, Várkonyi explained.

Country Comparison

Catalin Dit sought-after products, fake discounts and extremely long delays in delivery.

Companies had made significant efforts to eliminate these problems as much as possible, when the pandemic stepped in.

Many lost their jobs or saw their revenues cut and reduced unnecessary purchases to a minimum, preparing for the worse.

In this situation, nobody was able to make predictions for Black Friday. Were customers still willing to spend, or to rush to take advantage of the lower prices?

Surveys did not seem to offer many reasons for optimism. According to data published by market researcher GKI Digital, the turnover of online retailers grew by 21% year-on-year in Q1, expanded by a

further

47%

in Q2, after which the growth rate slowed back to 19% in Q3.

The high growth in Q2 was fueled by sales of tech and IT devices, and also food and chemicals (disinfectants mostly). The growth of technology devices

alone registered an impressive 84% y.o.y.

Interestingly, web surfers continued to visit online retailers during the summer, but spent less than usual.

Additionally, market researcher GfK measured significantly lower purchasing power in 2020 compared to last year.

The national average of this indicator in Hungary is at EUR 6,871 per capita, EUR 545 less than in 2019. In the more affluent Budapest, the purchase power currently stands at EUR 8,627 per capita, EUR 603 lower than a year before.

In Europe similar trends were seen, but while the average decrease in purchasing power across the EU was 5.3%, in Hungary it was 7.3%. The European average in 2020 stands at EUR 13,894 per capita.

Online Merger

Last year two of the largest player in online electronics retail, Extreme Digital and eMAG, announced they were merging their businesses. While that has been completed in most areas, the two companies decided to separately participate in the Black Friday promotion. So much so that they each holds its “black” day on a different date; November 13 for Extreme Digital and November 20 for eMAG this year, CEO Balázs Várkonyi said.

The total retail market has grown this year by only 1%, but online it has ballooned by

almost

30%,

Balázs Várkonyi

which basically means that retail been stagnating and shifted towards online.

Several factors have contributed to that this year: families needed to buy devices necessary for remote work or digital classrooms.

Access to traditional stores was limited in any case due to the pandemic, and many people lost their jobs or saw their income reduced, which has impacted online sales.

This year both Extreme Digital and eMAG expected customers to be much more calculated in their acquisitions and buy strictly what they need or as a Christmas gift. Clients were also expected to be very price sensitive, Várkonyi noted.

Catalin Dit, chief commercial officer at eMAG, offered a broader view of the Black Friday promotion. The online retailer has operations in three countries: Romania, Hungary, and Bulgaria, and held its Black Friday promotion on November 13 in Romania and November 20 in Hungary.

In all countries, eMAG experienced growing sales throughout the year, Dit said. On Black Friday in Romania, eMAG registered 17% higher sales in value compared to last year’s promotion with 1.6 million more unique visitors on that day. Besides that, a positive trend seen on the Romanian market is that half of the payments have been made with debit or credit cards, indicating growing confidence in online payments.

Generally speaking, Romanian clients are oriented towards premium brands, mostly TV sets and mobile phones. They target the best available products and replace them often. By comparison, Hungarian buyers are more focused on value for money, which means they will not buy a new device if the old one is still functioning, unless the replacement has specifications that make it worth the purchase, Dit says.

Overall, Hungarians seem to pay more attention to the quality of life; for example, statistically they have more white goods in their households than Romanians. Next year, eMAG expects that the retail market will shrink overall, while online sales will grow further.

“We are optimistic regarding the online business,” Dit concluded.

So, after such mixed expectations, what happened during Black Friday 2020? At Extreme Digital, turnover was 46% higher compared to the previous year, with 16% more clients and 43% more orders. The value of one purchase was on

average

HUF 40,000.

The German subsidiary of Extreme Digital registered an average of around HUF 120,000 per purchase. The most popular product categories were daily usage items, DIY tools and toys. Mobile phones ranked only fourth.

At eMAG, customers spent slightly less, HUF 34,000 per order, and the company had 26,000 new customers on its Black Friday. Household and cleaning products sold highest, while second ranked were toys and baby products, followed by mobile phones. The total Black Friday turnover at eMAG reached HUF 6.9 billion.

This year, eMAG said it sold 293,000 products during its Black Friday event, up from 250,000 last year.

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Budapest Business Journal | November 27 – December 10, 2020

Special Report | 13

Photo by AkosHorvath / Shutterstock.com

Shopping Malls and Christmas Under the COVID Cloud The coronavirus found everyone unprepared at the beginning of this year, and it took its toll especially hard on business where a large number of people are gathered.

Cinemas were closed indefinitely, pubs and restaurants had opening hours curtailed or were closed. But how will COVID health measures affect Christmas shopping?

GERGELY SEBESTYÉN

We spoke to Ernő Koncz, marketing and communications director of Gránit Pólus Management Zrt. (the owner and manager of the Westend Shopping Center) and Attila Madler, asset management director of CPI Property Group (responsible for a number of malls, including the Pólus Center and Campona) about how they are preparing for this’s year’s peak shopping period, overshadowed as it is by the pandemic.

First and foremost, security measures are the most important, as shopping center management try to prevent the spread of the virus.

According to Madler, “Shopping malls will apply additional safety measures to assure that people can have a safe shopping experience. Christmas is normally the peak season in retail, thus it is a big challenge to ensure social distancing and hygienic measures.”

Koncz agrees, but tells the Budapest Business Journal that shoppers themselves are helping in the fight against COVID. “We find that people are also much more aware and cautious about the epidemic. They come to us visibly planned, purposefully, so it does not happen that ‘dangerous’ masses collide,” he says.

According to Koncz, this is due to the security measures adopted by the mall and the shops operating there, in cooperation with the public’s discipline and cooperation.

There has also been a decline in the number of visitors normal for this pre-Advent period, partly because, among other things, the home office work schedule has taken effect in surrounding office buildings, he believes “We will also have additional security to ensure social distancing and improved

communication to draw attention to COVID safety measures. We will draw the attention of retailers to obey the pandemic regulations and ask them to make the shopping as convenient as possible for customers,” Madler adds.

Every Effort

According to Koncz, every effort will be taken to provide safe conditions for visitors, as well as the people who work at the malls.

Advanced disinfection cleaning and fresh air are essential as well. Hand disinfection stations at multiple points will be in place in the building and in the washrooms as well.

“Most of our stores also have hand sanitizers available and you can buy disposable or textile masks,” he explains.

“Normally retailers make up to 30% of their annual turnover during the Christmas season. The shopping restrictions of recent days are challenging this target, thus now the balance of the Christmas period is unpredictable.”

Special attention is also paid to customer information: the attention of visitors is constantly called to the provisions in force, be it through posters, digital displays, floor stickers or the in-house radio station. In order to avoid afternoon peaks, GRÁNIT PÓLUS is taking action to help balance traffic within a given day.

For example, Westend offers free parking and extra discounts to those arriving in the morning. In parallel with the mandatory shortening of the opening hours, the management is encouraging stores to open earlier if they can.

Since it is currently only possible to order takeaway meals from the restaurants, food court furniture has been removed for safety reasons, and to dissuade crowds from gathering.

Safety measures, or not, it seems likely that Christmas income may be lower than expected this year “Normally retailers make

up to

30%

of their annual turnover during the Christmas season,” told Madler says.

“The shopping restrictions of recent days are challenging this target, thus now the balance of the Christmas period is unpredictable.”

Changing Trends

The trends between ordering online and buying in malls have also changed a lot.

“COVID has definitely accelerated the increase in the share of online shopping,” Madler accepts.

“However, people tend to buy goods of higher value [at Christmas], which they prefer to do personally and, more important, immediately; thus we expect that the online shopping share will not increase during the Christmas period.

“Nevertheless, people are using the stores at shopping centers as pick up points for goods ordered online, thus a significant number of visitors are going to visit the centers only to collect their goods.”

One interesting development has been noted in the case of the PlayStation 5,

released about a week ago, which manufacturer Sony has decided can only be ordered online, and is not even available instore. Such conscious behavior from a distributor is not, however, customary, Madler says.

“We find that people are also much more aware and cautious about the epidemic. They come to us visibly planned, purposefully, so it does not happen that ‘dangerous’ masses collide.”

“It is not typical that a retailer, who has an offline presence as well, sells its goods only online. Offline shopping is still very strong, and in many cases, the personal experience creates customers’ liability. This is not possible only with online shopping.”

Preferences have also changed somewhat for products: the desire to buy has decreased for some and increased for others.

“In general we expect that people will not want to buy entertainment/ experience as a gift so much, rather they are going to look for goods with which they can extend their amusement at home, like video games, computers/ tablets, books, etc. Obviously, often this is the season of investment into high-value household items as well, which will not change,” Madler says.

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Special Report

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Budapest Business Journal | November 27 – December 10, 2020

Enthusiasm for Sales may Light up Christmas Shopping Spirit Photo by Nadya Buyanowa / Shutterstock.com

Although COVID19 has hit non-food and pharmacy retail hard, shoppers’ data during Black Friday discounts could indicate a spending spree for Christmas 2020, at least online.

CHRISTIAN KESZTHELYI

10

CHRISTMAS GIFTING

Planning to give presents to

LOVED

87% BBJ infographic

Christmas spirit is also kept alight by the findings of Impetus Research’s representative survey, commissioned

by Hungarian telco Telenor. Although conditions are far from ideal due to the coronavirus, Hungarians appear to be planning to stick to their Christmas celebrations.

Giving gifts will still be an important part of the festivities, as 87% of the surveyed participants plan to give presents to their loved ones, while 77% are planning to give presents to the same amount of people as last year. Some 66% are planning to spend the same amount of money on gifts, although 36% expect to spend less than they would have done without the pandemic happening.

The spread of digitalization brought positive contributions to Hungarian online shopping as every third Hungarian makes more purchases online since the coronavirus arrived in the country.

They also are increasingly conscious: 58% of shoppers spend more time learning the desired products before physically attending stores,

while

Gift planning behavior also hints that people will not be frugal this year; however, buyers appear to be increasingly price-conscious.

These tendencies seem to be supported by the growing popularity of online shopping.

In the first half of the year, purchases As the coronavirus pandemic has pushed made via the internet grew by 35%, as people to work and learn from home, and compared to the same period a year the significance of digital communication earlier, exceeding gross HUF 355 billion, has seen rapid growth, e-commerce this according to researcher GKI Digital’s data. year has, unsurprisingly, been performing By the end of the year, pundits expect better than ever before.

“2020 has brought unprecedented growth online shopping interest to develop even further. This year, Hungary could see in online commerce. The number of accumulated online purchases of more active online shoppers and e-commerce than HUF 1 trillion, according to Unas, a providers has also increased significantly,” notes Sándor Kiss, CEO of Barion Payment, Hungarian company offering webshop hosting and maintenance services. Compared an electronic payment solutions developer with 2019, Unas says it is receiving 70% more and provider. orders for its services in the same period.

“The impact of COVID-19 on the e-commerce market is well exemplified by More all Round the strong growth in online payments in “The increase is due to the opening of many April. The market has generated numbers new stores, but the turnover of existing that it is accustomed to during the ones has also increased,” Tamás Kóczán, Christmas period,” he adds.

Unas founder and CEO, says.

Barion’s clients grew two and a half-fold According to his firm, changing habits in the first due to COVID-19 are well reflected in the numbers. Laptops, web cameras months and other items needed for working of the year, boosted by the effects of the from home are receiving increased pandemic and specifically lifted by traders’ attention, as well as sports equipment preparations for Black Friday and the prefor exercising in the house. The number Christmas period. of web stores for healthier eating, or

ones:

Traditional Christmas

ing Plann d the n to spe same nt Planning amou t as las as: to give tm presents Chris to the same number as in 2019 :

77%

66%

Planning to spend

le ss

because of the pandemic:

36%

Source: Telenor / Impetus Research

59%

ordering FMCG items, have also increased since the pandemic started.

What can we expect from the Christmas period in terms of purchases? Hungarian e-commerce retailer Extreme Digital’s data relating to Black Friday revealed that total orders grew by 43% and buyers spent 46% more money on November 13, the day of its Black Friday discount, than in the previous year.

The basket value of Hungarian buyers was almost a third more than in 2019. On one day, the total value of items purchased via Extreme Digital’s store was

around

HUF 2 bln,

an amount that is usually sold over one week.

The pandemic has also changed buyers’ behaviors. The number of people browsing Extreme Digital’s online store grew to 40%, although interestingly the number of people accessing websites via smartphones dropped to 60%. This may mean that, due to working from home, people are choosing the comfort of bargain hunting via their laptops or desktops, instead of using smartphone devices on the go.

Black Friday’s buying enthusiasm may linger on to the run up to Christmas 2020.

“For years now, the growing trend has emerged for Black Friday sales online and offline to last not just that one day, but rather for days or weeks, even up until Christmas,” research from Reacty Digital and LogiNet said.

“Half of shoppers (49%) are especially pleased to be able to avoid the ‘everythingin-one-day’ stress. Continuous promotions for longer periods of time are also necessary because not all shoppers know exactly when stores announce their Black Friday sales,” the research adds.

It found that the shadow of the coronavirus did not fall on Black Friday purchases. This brings optimism for Christmas shopping, even if the research finds that buyers are becoming more conscious about the prices of items.

pay special attention to price and try to buy cheaper options.

These findings, as well as Black Friday data, point toward a promising Christmas shopping period. The Reacty Digital and LogiNet research warns, though, that with increased online traffic this year, delays and stock shortages could taint the customer experience if stores are underprepared for the holiday season.

“The key is to think about foreign orders. The wellknown cheaper products of Chinese online stores are no longer sure to arrive in time for Christmas.

Regardless, we recommend that everyone shop in a Hungarian-owned web store and support local merchants.”

“Shoppers use their accumulated knowledge to make a decision; this is the time for webshops to implement these experiences as well. Online shops should prepare for this promotional period with improved performance, strategic resource management and testing ahead of time,” says Zsigmond Máriás, CEO of LogiNet Systems Kft. Unas’ Kóczán also has an important warning: “The key is to think about foreign orders. The well-known cheaper products of Chinese online stores are no longer sure to arrive in time for Christmas,” he says, noting international logistics and supply chains are having to cope with the difficulties the pandemic has caused.

“Regardless, we recommend that everyone shop in a Hungarian-owned web store and support local merchants,” Kóczán added.

, T R A T S H S E R F

S N O I T U L O S T S E B , T E E L NEW F

ng i s a e L al n o i t a Oper g nt n e i c m n e a g n na a m Fleet fi & ns o i t u l o Fleet s tal n e r m r e t t r Sho budgethu

budgethu

budgetflotta.hu/en budgetflotta@budget.hu +36 1 700 4864 Fuel consumption: 1,6-1,4 l/100 km, CO2 emissions: 41-38 g/km, current consumption: 18,0-15,7 kWh/100 km.

An old companion for the long run

16 | 3

Special Report

www.bbj.hu

Budapest Business Journal | November 27 – December 10, 2020

Cross & Field Cross & Field’s store is a little island in the heart of the capital, where one can find a special atmosphere and sincere care. It’s something that doesn’t really depend on the business category, but on the people who signify the soul of the business. crossandfield.hu

Make a Wish for Christmas!

Accessories that can’t be missed from her – and your - wishlist. Browse Furla’s Holiday collection and choose your favorites, such as the FURLA 1927 Mini Crossbody or FURLA Miss Mimi. A versatile accessory, designed to stand out. Check out our selection in: FURLA ANDRASSY, 1061 Budapest, Andrássy út 7. or FURLA MOM PARK, 1123 Budapest, Alkotás út 53. www.fashiondrive.hu

Wellis Wellis’ expanded sauna range provides the perfect choice of infrared, Finnish, or even combined saunas. Whether it is a cozy two-person sauna or for joint use by up to six people, Wellis products always meet the expectations. Addresses: Bp. XI. Budaörsi út 31/c, Bp. III. Pünkösdfürdő utca 52. www.wellis.com

Let it Sparkle Whether you are looking for the perfect engagement ring or a luxurious piece of jewelry for someone special, a diamond ring from Karl Ékszer makes the perfect gift. Shop online at www.karlekszer.hu, discover our collection of unique designs and surprise her with something that holds special meaning. www.karl-ekszer.hu www.1ct-diamond.hu

3

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Budapest Business Journal | November 27 – December 10, 2020

Special Report | 17

GARMIN Welcome to the place where “best gift ever” begins for the whole family.

We’ve got presents that inspire your loved ones to pursue their passion.

There’s something special for everyone, whether they run, bike, golf, explore or spend time in the air, on the water or on the road. We even offer smart watches for kids with an interactive Marvel or Disney experience. www.garmin.hu

Lanson Black Label – Freshness and Elegance The Black Label Brut owes it’s iconic name to Victor Lanson who gave it in 1937, both as a proof of openess to the world and as a tribute to the Royal Court of England, which Lanson has officially been supplying since 1900.

The authentic style of the Black Label Brut comes from a unique saviorfaire based on a selection of the finest Crus of Champagne, the original Champagne vinification method for incomparable fruitiness and freshness, a palette of reserve wines counting numerous vintages spread over 20 years and a longer ageing time in the cellar. This champagne is a balanced alliance of vitality and finesse, freshness and elegance, characteristic of the Lanson style. Pairs well with brie cheese, fish and other seafoods. www.zwackwebshop.hu

ADVERTISEMENT

FOOD AT IT’S BEST in Budapest 2020 edition

Budapest’s Casual, Business & Fine Dining

A NEW ERA IN CULINARY EXCELLENCE • THE ESSENCE OF BUDAPEST IN A GLASS • GREAT VENUES FOR CULINARY ADVENTURES IN BUDAPEST • ULTIMATE VENUES FOR SEALING A GREAT DEAL • THE BEST PAIRINGS OF FOOD AND WINE • BRUNCH SPOTS FOR A SUNDAY GETAWAY • THE BEST OF ASIAN RESTAURANTS • CEOS’ FAVOURITES • SPECIAL OFFERS • BUDAPEST DINING • COUNTRYSIDE DINING

Please forward your subscription request to: circulation@bbj.hu, or order your copy in the webshop at bbj.hu

18 | 3

Special Report

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Budapest Business Journal | November 27 – December 10, 2020

Budapest Christmas Fair 2020 Moves Online The coronavirus has taken a huge toll on tourism, with the annual Advent and Christmas Fair just the latest high profile victim, but craftsmen who have missed the opportunity to cash-in from Christmas shopping in Budapest will be compensated with a webshop.

As to the fate of the yearly event, Csaba Faix, the head of Budapest Brand Nonprofit Ltd. tells the Budapest Business Journal what can be expected in the near future and perhaps next year.

GERGELY SEBESTYÉN

BBJ: Now that there are so many precautions for COVID, what can we expect in terms of the Christmas markets?

Csaba Faix: We took the responsible decision to cancel the Budapest Advent and Christmas Fair on Vörösmarty tér very early, in the middle of October, because the effects of the epidemic were already felt and could be expected in the future as well. We could not have made this otherwise important event happen with sufficient [safety] assurance, and we did not want to expose either the vendors or the visitors to any danger. Since then, we have all agreed, that it is not possible to hold a fair (or any kind of event), which is why there will be no mass Christmas fairs and events in Budapest in the classical sense.

The traditional Advent and Christmas Fair at Vörösmarty tér in happier times last year. Photo by Savanevich Viktar / Shutterstock.com BBJ: What is “Plan B”? How are the artisans who would normally sell their wares at the markets trying to make up for lost income?

CF: Since the cancelation of the Christmas Fair, but also in the lockdown of the spring and early summer, caused a huge loss of income in the life of the craftsman, we thought that we would like to help them, and the Budapest residents and visitors as well, who have so far always been happy to come to the fair year after year. Therefore, with our team, we have started a Christmas campaign, which we will launch soon, and which will offer creations for purchase in an online space. We consider it important for traditional and handmade souvenirs to stay on the market, but we also want to create a festive atmosphere. That’s why we would like to ask everyone if you can check out budapestkaracsony. hu and choose a gift from there this year instead of Amazon.

strengthened this cooperation. But going back to the winter; the Night of Music, the Christmas Fair, and several smaller programs are all successfully migrating to online platforms now, and fortunately, we found out that the people of Budapest have received all this well and they have adapted themselves to the current strange and unique situation.

BBJ: Breaking it down into various seasons, fairs and events, what have we missed out on this year?

CF: In the first wave of the virus, we missed the Budapest Spring Festival (April 3-20), the Spring Fair (April) and the Kingdom of Pentecost (June 1), and now the Christmas Fair (November-January 1, 2021). In addition to these, many of our projects and initiatives have been kept in the pipeline for the time being, and we are trying to come up with new solutions.

BBJ: What other sectors related to you will be affected by this?

CF: In terms of the significant and perceptible, the epidemic is most radically affecting the tourism sector, as foreigners do not come, cannot come, and this has a disproportionate impact on all the domestic segments and service providers.

Also, I see that smaller businesses and services providers, for example the beauty industry etc., have also found themselves in a very difficult situation again.

BBJ: How could you cope with the fallout from COVID? How much revenue loss will it cause for the company?

CF: Due to COVID, the company is expected to have a loss of 86% of our market revenue this year, which can be offset from the profit reserve accumulated in previous years.

BBJ: What online solutions are you trying to find?

CF: Almost all of our exciting projects and events have been transferred to the virtual space, except for two: we were able to successfully organize the CAFé Budapest Contemporary Art Festival in October, and we coordinated the Hungarian and mainly the capital’s tourism organizations and we held the World Tourism Day, where we

not only our revenues related to tourism but also those to our Christmas shopping have disappeared.

Csaba Faix. Photo by Zsolt Reviczky BBJ: Has there ever been a similar case in the history of Budapest Brand that caused as much damage and loss of revenue?

CF: No. Just as the losses are unprecedented for the whole profession, so they are for Budapest Brand, because

BBJ: It is difficult, of course, to predict the timing of the final “disappearance” of COVID, but do you already have any plans for next year?

CF: I am confident that in 2021 we will be able to make up for and organize a lot of things, and tourism in Budapest will restart in a good, or even better direction than before. This period encourages everyone, including us, to be creative, and by working together, supporting and adapting to others, we can still get out of it. Budapest has not given in to this and is openly waiting for a fresh start!

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Budapest Business Journal | November 27 – December 10, 2020

Special Report | 19

Largest Shopping Centers in Budapest Rank

Ranked by total net retail space

1

Shopping CenteR WeBSite

ÁRkÁd ÖRS vezéR teRe BevÁSÁRLókÖzpont www.arkadbudapest.hu

2

3

4

aRena maLL

www.arenamall.hu

kÖki teRminÁL

www.kokiterminal.hu

mammut BevÁSÁRLó- éS SzóRakoztató kÖzpont www.mammut.hu

5

Savoya paRk

www.savoyapark.hu

6

WeStend BevÁSÁRLókÖzpont

7

LuRdy hÁz BevÁSÁRLó- éS iRodaCentRum

www.westend.hu

www.lurdyhaz.hu

8

aLLee BevÁSÁRLókÖzpont

9

póLuS CenteR BevÁSÁRLókÖzpont

10

Campona BevÁSÁRLó- éS SzóRakoztatókÖzpont

www.allee.hu

https://polus-center.hu

www.campona.hu

11

duna pLaza

www.dunaplaza.hu

FaCiLity manageR, pRopeRty manageR, addReSSS, phone, WeBSite

net RetaiL SpaCe (Sqm) net oFFiCe SpaCe (Sqm) totaL gRoSS BuiLding aRea (Sqm)

no. oF LeveLS no. oF RetaiL unitS no. oF paRking SpaCeS

majoR tenantS in 2019

addReSS phone emaiL

5 220 1,600

C&A, Zara, H&M, Van Graaf, Hervis, Media Markt, New Yorker, Interspar, Reserved, Libri, Douglas, Sinsay, CCC, Deichmann

1106 Budapest, Örs vezér tere 25/A (1) 433-1400 info@arkadbudapest.hu

2 180 2,800

Peek & Cloppenburg, Media Markt, Sportsdirect, Tesco, CCC, New Yorker, C&A, Zara, H&M, Massimo Dutti, Bershka, Stradivarius, Pull&Bear, Zara Home, Springfield, Humanic, Deichmann, Libri, Michael Kors, Nespresso

1087 Budapest, Kerepesi út 9.

(1) 880-7007 info@arenamalll.hu

3 150 1,388 parking lots + 334 P+R

Bijou Brigitte, Buono Bistro, Burger King, C&A, Cafe Frei, CCC, Costa Coffee, Deichmann, dm, Euronics, H&M, HÁDA, Hervis, KFC, KIK, Libri Könyvesbolt, Megafitness KÖKI, Müller, New Yorker, OBI, Orsay, PEPCO, Pirex Papír, Pizza Hut, Playersroom, REGIO JÁTÉK, RENO, RETRO JEANS, Sebastiano, Rossmann, Swarovski, Tally Weijl, Tamaris TESCO, Triumph, Yves Rocher

1191 Budapest, Vak Bottyán utca 75/A–C ép.

(1) 919-1300 info@kokiterminal.hu

7 330 1,200

Match, Hervis, Media Markt, Mammut Bowling, UPC, Posta, Cinema City, Mango, Spriengfield, Starbucks, Salamander, Humanic, Douglas, Deichmann, Promod, Marks and Spencer, McDonalds, Benetton, Esprit, Libri, Alexandra, Okay Italia, Bershka, Butlers, Mammut Egészségközpont, Euromedic, Bio Sétány, Lite Wellness Club, Burger King, Nordsee

1024 Budapest, Lövőház utca 2–6.

(1) 345-8000 mammut@mammut.hu

A

1 80 2,500

Auchan, OBI, MÖBELIX, ALDI, Euronics, Rossmann, New Yorker, CCC, KIK, Deichmann, Pepco, DM, OTP, Raiffeisen, Budmil, FLYING TIGER, Sport Factory, BELFRIT, FITNESS 5, FUNXIONAL GYM

1117 Budapest, Hunyadi János út 19.

(1) 887-1330 office@savoyapark.hu

51,389 16,320 194,000

4 400 1,685

Zara, Bershka, Pull&Bear, Massimo Dutti, Stradivarius, H&M, H&M Home, Hervis, Mango, C&A, CCC, Salamander, Douglas, Nike, Cinema City, Media Markt, Deichmann, Calvin Klein Jeans, HUGO Hugo Boss

1062 Budapest, Váci út 1–3.

(1) 238-7777 info@westend.hu

50,000 A A

3 400 1,930

Deichmann, Lurdy Rendezvényközpont, Galaxy Játékáruház, Hififutár.hu, dm, KIK, Lurdy Mozi, REÁL Élelmiszer, Office Depot Zoodom, Cosmos City, Háda, Saxoo London, Roland, McDonald's, Cutler Gold Fitness Center, Aegon Biztosító, OBI, Impulse Leasing, Chipcad

1097 Budapest, Könyves Kálmán körút 12–14.

(1) 456-1100 info@lurdyhaz.hu

46,600 7,000 118,000

4 150 1,200

Interspar, Cinema City, H&M, Zara, C&A, Van Graaf, DM, Douglas, Libri, New Yorker, Deichmann, Humanic, Salamander, Intersport, Jysk, CK Jeans, Pandora, Swarowski, Starbucks, KFC, Burger King, Life1 Fitness

1117 Budapest, Október huszonharmadika utca 8–10.

(1) 279 3520 info@allee.hu

44,100 58,000

1 280 2,500

C&A, CCC, Deichmann, H&M, Humanic, Libri, Media Markt, Pólus Mozi, Reno, Reserved, Sportsdirect, Tesco, Starbucks, Yoyoso

1152 Budapest, Szentmihályi út 131.

(1) 268-1288 polus@cbre.com

CBRE Kft., 1055 Budapest, Bajcsy-Zsilinszky út 78., (1) 374-3040, www.cbre.hu

41,000 – 60,999

2 160 1,746

Reserved, H&M, SportsDirect, NewYorker, C&A, Intimissimi/Calzedonia, Libri, Douglas, Marionnaud, Cinema City, Tropicarium, Humanic, Deichmann, CCC, Kockapark, Springfield, Regio Játek

1222 Budapest, Nagytétényi út 37–43.

(1) 424-3000 info@campona.hu

Klepierre Management Magyarország Kft., 1138 Budapest, Váci út 178., (1) 577-1100, (1) 577-1101, www.klepierre.com

37,000 11,000 55,800

4 146 1,200

H&M, Reserved, Mohito, Orsay, Promod, Intersport, Media Markt, McDonald's, KFC, Cinema City, Charles Vögele, Libri, Deichmann, CCC, Pirex, Pepco, Príma

1138 Budapest, Váci út 178.

(1) 465-1600 dunaplazasc@klepierre.com

ECE Projektmanagement Budapest Kft., 1106 Budapest, Örs vezér tere 25/A, (1) 434-8200, (1) 434-8207, www.ece.com

CBRE Kft., 1055 Budapest, Bajcsy-Zsilinszky út 78., (1) 374-3040, www.cbre.hu

CBRE Kft. 1055 Budapest, Bajcsy-Zsilinszky út 78., (1) 374-3040, www.cbre.hu, KÖKI EAST END Zrt., 1191 Budapest, Vak Bottyán utca 75. / A-C. ép.

Cushman & Wakefield Kft., 1055 Budapest, Deák Ferenc u. 5., (1) 266-1288, (1) 266-1289, www.cushmanwakefield.com

CATINVEST SA

Westend Ingatlanhasznosító és Üzemeltető Kft., 1062 Budapest, Váci út 1-3., (1) 238 7777, www.westend.hu

Lurdy-Ház Kft., 1097 Budapest, Könyves Kálmán krt. 12–14., (1) 456-1200, (1) 456-1209, www.lurdyhaz.hu

Multi Hungary Management Kft., 1117 Budapest, Október huszonharmadika u. 8-10, (1) 279-3520, www.multi.eu

CBRE Kft., 1055 Budapest, Bajcsy-Zsilinszky út 78., (1) 374-3040, www.cbre.hu

68,000 A A

66,000 A

180,000

58,000 7,000 200,000

56,000 A

105,000

52,000 –

A

Special Report

Rank

20 | 3

Shopping CenteR WeBSite

12

CoRvin pLaza

13

mom paRk BevÁSÁRLókÖzpont

14

ShopmaRk BevÁSÁRLókÖzpont

15

euRoCenteR óBuda BevÁSÁRLó éS SzóRakoztatókÖzpont

www.corvinplaza.hu

www.mompark.hu

www.shopmark.hu

www.eurocenterobuda.hu

16

SugÁR ÜzLetkÖzpont

17

Stop Shop óBuda

www.sugar.hu

www.stop-shop.com/hu/hu

18

CSepeL pLaza

19

CitymaRket SoRokSÁR

20

hegyvidék BevÁSÁRLókÖzpont

21

iLLa BevÁSÁRLókÖzpont

22

euRopeum BevÁSÁRLókÖzpont

NR

Stop Shop hÜvÖSvÖLgy

NR

Stop Shop ÚjpeSt

www.csepelplaza.hu

https://soroksar.citymarketgroup.hu/hu/

www.hegyvidekkozpont.hu

–

www.europeum.hu

www.stop-shop.com/hu/hu

www.stop-shop.com/hu/hu

www.bbj.hu

Budapest Business Journal | November 27 – December 10, 2020

FaCiLity manageR, pRopeRty manageR, addReSSS, phone, WeBSite

net RetaiL SpaCe (Sqm) net oFFiCe SpaCe (Sqm) totaL gRoSS BuiLding aRea (Sqm)

no. oF LeveLS no. oF RetaiL unitS no. oF paRking SpaCeS

majoR tenantS in 2019

addReSS phone emaiL

Klepierre Corvin Kft. 1138 Budapest, Váci út 178., (1) 577-1100, (1) 577-1101 klepierre.com

34,603 – 75,039

4 105 840

H&M, New Yorker, Tatuum, C&A, Libri, Euronics, CCC, Butlers, Camaieu, Deichmann, Ecco, Hervis, Müller, Promod, Pupa, Orsay, Reno, Starbucks, I'Style, Tamaris, Cropp, house, Sinsay, Reserved, DM, Mohito

1082 Budapest, Futó utca 37–45.

(1) 977-7779 info@corvinplaza.hu

MOM Park MFC Kft., 1123 Budapest, Alkotás u. 53., (1) 487-5501, www.mompark.hu

31,000 18,000 100,000

3 102 1,230

SPAR, Hervis, CCC, H&M, Paulaner, Vapiano, Salamander, Douglas, Reserved, Mohito, Griff, Pirex

1123 Budapest, Alkotás utca 53.

(1) 487-5501 info@mompark.hu

24,000

2 77 1,000

INTERSPAR, MEDIA MARKT, HERVIS, dm, Libri, Pepco, Deichmann, CCC, Reserved

1191 Budapest, Üllői út 201.

– info@shopmark.hu

35,900

4 100 400

CIB Bank, Bijou Brigitte, dm, Erste Bank, Interspar, Magyar Posta, Magyar Telekom, MKB Bank, Orsay, OTP Bank, Telenor, Vodafone, Yves Rocher

1032 Budapest, Bécsi út 154.

(1) 437-4600 info-hu@aere.com

19,540 – 39,850

4 90 400

Sugár Mozi, Sugár Fitness, Spar, Libri, Háda, EURONICS, Vodafone, Telenor, Unicredit Bank, Telekom, Raiffeisen Bank, Galaxy Játékáruház, CIB Bank, dm, SUGÁR Játszóház, SUGÁR Bowling & Pub, Magyar Posta, Extreme Digital, BÁV, Ofotért

1148 Budapest, Örs vezér tere 24.

(1) 469-5359 sugar@sugar.hu

14,307

2 21 405

Spar, Media Markt, C&A, Pearl Harbor restaurant & bowling, Mountex, Deichmann, dm, H&M, Fressnapf, Kangaboo, Libri

A A

2 54 288

ALDI, H&M, TallyWeijl, CCC, Libri, Deichmann, Cosmos City, Kultik Cinema, Telekom, Vodafone, Telenor, MKB Bank, Devergo&Friends

1211 Budapest, II. Rákóczi Ferenc út 154–170.

(30) 739-2598 info@csepelplaza.hu

CBRE KFT., 1055 Budapest, Bajcsy-Zsilinszky út 81.

(1) 374-3040, office@cbre.com

11,800 – 12,300

2 9 420

Media Markt, Mountex, Brendon, Office Depot, Eurofamily

1231 Budapest, Bevásárló utca 8.

(1) 268-1288 hungary@cpipg.com

CE LAND Management Kft., 1123 Budapest, Alkotás u. 53., (1) 785-4985, www.celand.hu

6,500 1,500 –

6 43 160

CBA Prima, DM, OTP Bank, Sportkontroll, Mészársteak, Bortársaság, Pataki Cuki, Evital Gyógyszertár

1124 Budapest, Apor Vilmos tér 11.

(1) 951-0578 info@hegyvidekkozpont.hu

Cushman & Wakefield Kft., 1052 Budapest, Deák Ferenc utca 5., (1) 268-1288, (1) 268-1289, www.cushmanwakefield.hu

5,719 – 5,719

1 9 226

ALDI, CCC, DM, Kangaboo

1095 Budapest, Soroksári út 138-142.

– –

CBRE KFT., 1055 Budapest, Bajcsy-Zsilinszky út 78., (1) 374-3040, office@cbre.com

5,500 – 6,500

3 18 300

Müller, H&M, Deichmann, Yves Rocher, Telekom, Pizza Me

1088 Budapest, Blaha Lujza tér 3–5.

(1) 225-6600 hungary@cpipg.com

A A

2 32 288

Spar, Fressnapf, DM, Deichmann, Takko, Grandvision, Libri

1021 Budapest, Hűvösvölgyi út 138.

– –

1 30 288

CCC, Spar, Deichmann, KIK, DM

1042 Budapest, Árpád út 183–185.

– –

Indotek Befektetési Zrt.

Manhattan Real Estate Management Kft., 1032 Budapest, Bécsi út 154., (1) 437-4600

Székhely 2007 Kft., 1126 Budapest, Nagy Jenő utca 12., (1) 487-3746

Immofinanz Services Hungary Kft., 1134 Budapest, Váci út 45., (1) 236-0435, (1) 236-0436, www.immofinanz.com

Mall Management Kft., 1148 Budapest, Kerepesi út 52.

CBRE Kft., 1155 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040, www.cbre.hu

CBRE Kft., 1155 Budapest, Bajcsy-Zsilinszky út 78.

(1) 374-3040, www.cbre.hu

A

30,500

22,059 A

A A

13,783

6,833

A A

8,203

1032 Budapest, Bécsi út 136.

A

–

4

www.bbj.hu

Budapest Business Journal | November 27 – December 10, 2020

Socialite Black Friday: ’Tis the day to Shop Online Photo by Ukraine / Shutterstock.com

The day this issue is published, November 27, is the official Black Friday. From now, there are 26 days to Christmas Eve, when Hungarians exchange gifts. In the past month or so, my own household’s contribution to global e-commerce has risen heroically.

The rules and regulations for shipping to the European Union from America appear to have suddenly become more byzantine. The result is that, to avoid paying some kind of Hungarian tax on items, you have to fill in a spectacularly complicated form and email it to the authorities.

DAVID HOLZER

But, as Hungary’s lockdown results in empty streets and malls, I find I’m changing my priorities.

Black Friday refers to the Friday after Thanksgiving, when the Christmas shopping season starts in the USA. The idea that Black Friday is so-called because it’s the day retailers make truckloads of money and go “into the black” has never sat right with me. I associate putting the word “black” before a day with disaster. As in 1987’s Black Monday, the worst stock market crash in Wall Street’s history.

Sniffing around online, I found Casey Bond’s 2019 Huffington Post article “Black Friday History: The Dark True Story Behind The Name.” This confirmed my suspicions.

The term Black Friday is most likely to have originated in Philadelphia sometime in the late 1950s or early ’60s.

It was coined by traffic police in the city of brotherly love who came to dread the day because of traffic jams, crowds and chaos caused by people flooding into the city to shop.

In the 1980s, the phrase spread across the United States. From there, it went global. In 2019, digital Black Friday sales alone were

up

14%

on the previous year. Salesforce, the U.S. customer relationship software company, estimated that total global digital sales were around USD 20 billion. No doubt they’ll top that this year.

But the surge in orders on Black Friday is going to put even more pressure on

Byzantine Form Filling

The rules and regulations for shipping to the European Union from America appear to have suddenly become more byzantine. The result is that, to avoid paying some kind of Hungarian tax on items, you have to fill in a spectacularly complicated form and email it to the authorities.

If you’ve ordered a surprise gift from the States and your mastery of Hungarian isn’t sufficient to wrestle the form into submission, things can get a little tricky.

Particularly if, like me, the only person you know who can complete the form is the one for whom the gift was intended to be a surprise. Takeaway: if you’re ordering from the United States, be careful.

international carriers. At a time when they’re enforcing social distancing in their distribution centers, which impacts back on efficiency.

It sounds glaringly obvious but there’s no point even considering ordering something via the world wide web if it won’t be shipped to Hungary in time, or even at all. Before you fall in love with something online, check it can actually be sent here first.

Some do, Some Don’t

If you’re ordering from Amazon, some suppliers ship here, others don’t. It may only be me but every book I’ve ordered has taken weeks to arrive.

The bulk of our online ordering is clothes and we’ve found that brands that deliver to Hungary usually take around three weeks.

Should a brand not ship to this country, we have what tech experts call a “workaround.”

This involves compiling a list of family and friends in the United Kingdom or America willing to receive a delivery from a brand inside their country, repackage it and ship to Hungary. Some people find

doing this a nerve-racking chore and respond passively-aggressively.

They’re the ones who wrap packages in so much ultra-heavy packing tape it’s as if they think something living is going to attempt to claw its way out of the package.

They’ll give you a yawn-by-yawn account of what it was like to stand in line at the post office while simultaneously insisting that sending the package was no problem.

But the unlikeliest people love sending packages to us. I have a friend in London, a spectacularly hip graphic designer, who actively encourages us to send stuff to him so he can send it on.

When his packages arrive in Hungary, they’re little works of art. Right down to the calligraphy employed to write our address.

I was going to write that it seems a shame to open them but that’s not true.

Beaming from ear to ear, my partner attacked the latest package with a pair of scissors, slashing through the artfully layered brown tape with glee to reveal the carefully positioned items inside.

You know Marie Kondo, the decluttering expert? I’m trying to persuade my pal that he should become the male Marie of parcel packaging.

Recently, I interviewed a guy who describes himself as a “serial entrepreneur.” A satisfyingly blunt dude, he believes that success in business is down to instinct and luck.

The online retailers set to make a killing on Black Friday would probably admit privately that they’ve been extremely lucky in 2020. Personally, I feel less and less inclined to contribute to their already gargantuan profits.

Yesterday, when she came back from the eerily empty mall, my partner told me that Szeged’s Christmas fair is possibly being canceled. For many people, this is the time when they make the money that will support them into the new year.

While I can’t buy something traditional and artisan made for my designer pal in London from a Christmas Fair, I can support our local shops.

Picture the scene. ’Tis the night before Christmas. In a minimalist apartment in London’s Shoreditch, a slim figure dressed all in black opens a parcel with a Hungarian postmark using Japanese Sasuke scissors crated by master blacksmith Yasuhiro Hirakawa.

Inside are a pair of classic and weirdly stylish red tin fish soup bowls with handles, a bar of pungent traditional licorice soap and a package of fine Szeged smoked paprika. All sourced from bricks and mortar stores in Szeged.

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Budapest Business Journal | November 27 – December 10, 2020

A Patriotic Hungarian Confronts his Country’s Past Through Contemporary British Eyes Chances are, if you’ve ever spent more than 15 minutes in conversation with a Hungarian, he or she will mention either Ferenc Puskás or the Treaty of Trianon.

Quite possibly both.

KESTER EDDY

Géza Jeszenszky, three of whose grandparents were born outside the present borders of Hungary, while the fourth was killed in an early battle of in World War I, was, as a result, a history buff from an early age. His latest book, published this fall, covers the period from 1894-1918, but it is really about Trianon, even if that was only signed in 1920: Puskás was born seven years too late.

The young Jeszenszky was soon pondering a truly Magyar enigma: How was it that Hungary won much admiration from liberal Western countries (especially Britain) after its 1848 revolution against its absolutist Habsburg rulers, seemingly maintained much of this kudos until the early 20th century, only to end up geographically savaged by these same powers not two decades later, after World War I? The Treaty of Trianon left Hungary bereft of two-thirds of its historical territory and with more than three million Magyars outside the newly defined rump state. And this despite the high principles proclaimed by U.S. President Wilson that self-determination would be the foundation of the post-war settlement.

Things like this don’t just happen, Jeszenszky thought: He determined to find out why. The first result, “Az Elveszett Presztízs”, (“yLost Prestige”) was published in Hungarian in 1986, only to be revised and republished again, ultimately to result in this new English-language volume.

By 1894, Hungary was feeling the positive economic effects of the stability created by the Ausgleich, the compromise reached with Vienna in 1867 that created the Austro-Hungary Empire.

Yet in the Hungarian part of the Dual Monarchy, these same positive developments were also having negative consequences; people began to take things for granted, forgetting the misery caused by political instability so prevalent in the first half of the century.

More nationalistic Magyars began to view the Kingdom of Hungary’s success as their own, and were demanding more, if not complete independence from Austria.

Yet the population of Hungary was only about 50% ethnic Magyar: the remainder saw themselves as Romanian, Serb, Croat,

Géza Jeszenszky Slovak, Ruthene and German, among others. Similarly, many of these wanted more independence from Hungarian rule.

Heady Mix

Jeszenszky takes the reader through this heady mix in some detail, mostly through the prism of British writers and politicians.

In the first decades after the Ausgleich, Hungary was viewed in Western Europe as a stable, progressive force. But as its leadership increasingly responded to the demands of its minorities with nationalistic repression, most especially from around 1905-06, while simultaneously clamoring for similar concessions for itself from Vienna, Britain and more liberal Western countries began to change their assessment.

And when Austro-Hungary sided with Germany in 1914, it proved impossible to reverse the decline. Unfair it may have been, but ultimately the result was Trianon, in part because of the need to create large successor states as a bulwark to any German revival.

Anyone reading the title of Jeszenszky’s book (“Lost Prestige: Hungary’s Changing Image in Britain 1894-1918”) might infer it is a sub-niche contribution (i.e. a study of British views) to an already niche subject, that is a mere 25-year segment of Hungarian history.

This would constitute a series of mistakes: first, Britain was, at the time, the global super power. It saw danger in an aggressive, fast-developing Germany.

London had a strong interest in seeing a balance of power in Europe, seen as essential to maintaining peace and progress, and Austro-Hungary was a crucial element in this.

British media, particularly The Times newspaper, was a revered source of information globally. Hence Henry Wickham Steed, its correspondent in the region, wielded enormous influence, well beyond the shores of the British Empire.

Similarly, the writings of R.W. SetonWatson, a British political activist and historian, had an inordinate impact on Anglo-Saxon and international perceptions of Hungary. Both sympathized with Hungary initially, only to become ardent critics later.

Jeszenszky frequently cites both throughout the book, but equally, he refers to the policies of other nations, including those of the United States, France, Germany and, inevitably, Austria, where it matters.

Perhaps more importantly, the author provides profound insights into how the Hungarian parliamentary system, or the parties within it, differed in their fundamental understanding of what democracy was about.

Hence, while many of the Magyar political elite expressed admiration of, and often sought to compare Budapest favorably to, the London parliament, in practice the comparisons were frequently superficial and Hungarian politicians’ own behavior all too often failed to imitate their Western counterpart in practice.

In the final chapter, he examines the reaction of Hungarians to the “lost prestige” of their country in Britain and the West, and its role in fashioning Trianon.

He writes: “For most Hungarians at the time, there was an obvious explanation for this change: the critics were hirelings, paid to ruin the Hungarians’ good name by the nation’s enemies [namely] certain groups in Vienna, the national minorities in Hungary, or perhaps the malevolent neighboring countries.”

Nationalist media outlets soon supported such conspiracy theories, with “lurid charges”, while Seton-Watson was branded as “the mouthpiece of influential Austrian parties and circles”. The British historian certainly had contacts with critical minorities and parties, but, says Jeszenszky, he did not become their tool or mouthpiece.

In short, most Hungarians reacted to criticism from foreigners with kneejerk, ad hominem attacks, rather than meaningful self-examination or reflection as to their veracity. Sounds familiar?

Jeszenszky certainly thinks so. He urges Hungarians today to learn from their past.

No historical study of Hungary is a light read, but Jeszenszky does a remarkably good job. Crucially, his book reads as if written by a native, rather than the many translation disasters that litter book shelves.

It certainly makes an excellent primer when meeting a Hungarian who brings up Trianon in the first 15 minutes.

Obstruction

As just one example, Jeszenszky notes (page 27): “A further notable difference [between Budapest and London] was that parliamentary obstruction, as something alien to the spirit of the parliamentary system, became confined to very narrow limits at Westminster under a series of measures (the ‘guillotine’) between 1881 and 1887, whereas in Hungary such tactics were notoriously rife and often led to grave crises, a fact that often drew British criticism on both theoretical and practical grounds.”

Indeed, the willingness of politicians to put party politics before the greater good was all too common in Hungary. As the writer notes, one of the best (or worst) examples was when the opposition insisted that the language of the army in the Hungarian portion of the Monarchy had to be Hungarian, rather than German, as elsewhere across the Empire.

This was a move the Emperor would not, and in practice could not, sanction. Thus political activity in Hungary was frozen for months and resulted in a sharp decline in the country’s image in the West.

By highlighting such abuse of parliamentary procedures, Jeszenszky illustrates the crucial element required for the success of any genuinely democratic system, which, at its core, is a compromise based on trust.

“Lost Prestige: Hungary’s Changing Image in Britain 1894-1918” Géza Jeszenszky, 422 pages, Heléna History Press, ISBN 978 1 943596 17 1 Hardback list price on amazon. com is USD 30.70 (GBP 30 on amazon.co.uk, EUR 34.37 on amazon.de). Kindle edition USD 12.69 (GBP 6.40, EUR 6.62).

The author is a historian and was foreign minister in Hungary’s first post-communist government of 1990-94. He later served as ambassador to both the United States and Norway.

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www.bbj.hu

Budapest Business Journal | November 27 – December 10, 2020

Winter Warming Reds From the Top 100 As we move into winter, big red wines are just the ticket for warming winter cockles, and there are plenty of sophisticated rubycolored Hungarian wines to smooth the seasonal transition.

ROBERT SMYTH

Hungary makes roughly one-third red wine, compared to around two-thirds white wine (with a few percent of sweet and rosé also in the mix).

Unlike the rich selection of indigenous white varietals to choose from, beyond the exciting Kadarka and Kékfrankos (for coverage of those grapes see the October 30-November 12 issue of the Budapest Business Journal), most of the reds, certainly on the fuller-bodied side, are international varietals that originally hail from France.

November is usually the month of the big red wine-related events, although Villány’s “Franc and Franc” and Winelovers’ “Bordói November”, held in Budapest, both became COVID casualties this year.

Even though there’s still more of its internationally dominant sibling, Cabernet Sauvignon, planted in Villány, Cabernet Franc has become that area’s calling card, and wine made from the grape has carried the Villányi Franc moniker since 2014.

The legendary Michael Broadbent, a Master of Wine and the long-time fine wine auctioneer for Christie’s, who passed away in March at the age of 93, proclaimed on visiting Villány in 2000 that Cabernet Franc had found its natural home there.

The top red wine in the annual Winelovers 100 legjobb Magyar Bor (100 best Hungarian wines) for 2020, which takes Hungarian wines that have won prizes in leading foreign and domestic wine competitions and then pits them against each other, was Tamás Günzer’s intense Bocor Villányi Franc 2017 (HUF 4,915 from Bareszkozok.hu), which claimed 16th position overall, oozing a gorgeous mix of tobacco, smoky, toasty and black/ red fruit notes.

The upcoming Bognár Pincészet’s 2018 Villányi Franc 2018 took 20th spot, while 19th was Csanád Cuvée 2015 (HUF 8,790 from Pannonborbolt.hu), made by the Hungarian Wine Academy’s reigning Winemaker of the Year, Csaba Koch, from his Villány cellar VinArt. This is a Cabernet Franc-based blend, with 50% of it composed from Franc, and 25% each of Merlot and Cabernet

Vineyards in the Villány wine region, Hungary.

Photo by Szasz-Fabian Jozsef / Shutterstock.com Sauvignon. Incidentally, positions 1-15 of the top 100 were taken up by botrytized Tokaj sweet wines.

Bridesmaid or Bride?

While Merlot is so often the bridesmaid but seldom the bride in Bordeaux blends (albeit with exceptions like Bordeaux’s Right Bank, where it dominates), Cabernet Sauvignon is usually the kingpin, but can struggle to ripen properly, even in a relatively warm wine region like Villány.

The legendary Michael Broadbent, a Master of Wine and the long-time fine wine auctioneer for Christie’s, who passed away in March at the age of 93, proclaimed on visiting Villány in 2000 that Cabernet Franc had found its natural home there.

Also, in Bordeaux, any rough edges of imperfect ripeness are smoothed out by a fleshy and energetic supporting cast that includes Merlot, Cabernet Franc and Petit Verdot. (For an exciting Bordeauxstyle blend that also includes some Petit Verdot, ultra-rare in Hungary but making a comeback in Bordeaux, check out Késa Birtok’s Pegasus 2017, from Balatonboglár, on Lake Balaton’s southern side, which costs HUF 8,150 from abovowine.com.)

Cabernet Franc ripens a week earlier than Cabernet Sauvignon with no green flavors, according to Attila Gere, one of Villány’s pioneer vintners. Nevertheless, he still manages to put out solid Sauvignons when the weather is warm enough.

Villány’s Ördögárok vineyard, with its great exposure that allows the grapes to ripen nicely, is also cooled down by breezes, which help preserve acidity to prevent the wines becoming cooked and jammy and keep the air circulating to prevent certain diseases taking hold.

It is from here that the Cabernet Sauvignon that provides the backbone to Sauska Villányi Cuvée 7 2017 (HUF 8,750 from Bortársaság) hails, supplemented

by Merlot and Cabernet Franc from the Konkoly and Kopár vineyards.

It is always a joy to contrast this wine with its partner in big red wine crime, Sauska Cuvée 7 Siklós 2017, which comes from the formerly white wine half of what was earlier called the Villány-Siklós region.

These two wines represent Villány’s very own version of Left Bank vs Right Bank Bordeaux. In Siklós, the calcium-rich soils yield wine of higher acidity and really suit Merlot, which takes the leading role in this blend, with its zesty fruit and freshness coming through delightfully, alongside complex herbal and floral notes.

This wine is the same price as its partner. The 2016 version was placed 86th in the Winelovers Top 100. Both wines were aged in small, firstand second-fill French barrels for 15 months.

Good Showing

The often-underrated Merlot also showed very well as a single varietal in the Top 100 ranking, with the Szekszárd

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pair of Schieber Pincészet’s Tabu Merlot 2017 (HUF 15,000 from the cellar) and Fekete Borpince’s Merlot Válogatás 2018, claiming 44th and 53rd respectively.

From the nearby region of Tolna, Tűzkő Merlot Válogatás 2013 was 78th and has aged beautifully and is a real bargain at HUF 3,790 from Pannonborbolt.hu.

Meanwhile, top-notch Cabernet Franc is certainly not exclusive to Villány as numerous examples in the Winelovers ranking shows, such as Csóbor Pincészet’s Agárdi Cabernet Franc 2017 (a give-away at HUF 1,950 from velenceiborokboltja.hu), from next to Lake Velence in the EtyekBuda wine region, which came in at #41.

It is perhaps unfair to write off Cabernet Sauvignon in Hungarian vineyards, as in warm years, when it does ripen properly, the results can be spectacular, even a bit further north of Villány, in the region of Szekszárd.

Tivald Szekszárdi Cabernet Sauvignon 2017 (HUF 8,900 from wineloverswebshop. hu and Selection.hu) from Eszterbauer Borászat (#71 in the Winelovers’ 100 ranking), which this year completed the building of a stunningly designed, stateof-the-art new winery, and the Cabernet Sauvignon 2017 by Mikóczi Pincészet, a quite unknown cellar with just four hectares to its name, both proved the point nicely.

Cabernet Sauvignon would, nevertheless, be a real challenge to ripen in the cooler climes of the Pannonhalma wine region, which is mostly associated with vibrant and aromatic white wines, so it comes as no surprise that Pannonhalmi’s Bordeauxstyle blend Infusio is made from Merlot (70%) and Cabernet Franc (30%).

This limited-release wine sells out quickly each year, and the 2018 has now hit the shelves. It comes from the locally warm Babszökő vineyard. Concentrated, yet fresh as ever, this year it is more focused than fleshy; it is still very young for a big red but all the component parts are there in good measure. It costs HUF 8,950 from Bortársaság. The previous vintage was placed #69.

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