Budapest Business Journal 3121

VOL. 31. NUMBER 21 | NOVEMBER 17 – NOVEMBER 30, 2023

HUF 2,100 | EUR 5 | USD 6 | GBP 4

HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BUDAPESTBUSINESSJOURNAL.COM

SPECIAL REPORT INSIDE THIS ISSUE

Business Services Sector

BSS Continues to Flex its Muscles Across Hungary One of the most crisis-proof segments of the economy, business service centers are thriving in this country, as evidenced by data from the Hungarian Investment Promotion Agency. They also help shift the focus from the workbench to higher added-value activities.  14

An Essential Part of the Office Market Hungary has successfully promoted itself as an advanced but costeffective business destination for international companies looking to establish business services centers. That trend has helped make BSCs a core driver of the developer-led office market.  18

Growing From Success

SOCIALITE

Outpost of Filmic Heaven in Buda

The satisfyingly scruffy Bem Cinema on the Buda side, just over Margit híd, is the kind of movie house cinephiles like David Holzer dream of. It specializes in “the best (or sometimes the worst) pop-cult cinema of the last decades of film history” with English subtitles.  21

NEWS

BUSINESS

Having served as COO of the Penny network in the Czech Republic, Mathias Mentrop took over as CEO of Penny Hungary on July 1. He tells us about his first five months in charge and future plans for the retail chain here. 8

Recession is Over, Slow Recovery Ahead

October finally brought the longawaited single-digit inflation figure; the Q3 GDP data was also good news.

For all that, 2023 might be considered a “lost year.” As for 2024, analysts’ opinions vary greatly. They agree, however, that while the worst is behind, a lengthy recovery is still ahead.  3

BUSINESS

Shoppers Promise Budget Discipline for Black Friday

Customers want discounted prices and focus strictly on necessary items; impulse purchases have plummeted to near-zero. That is the prediction of the surveys ahead of what was once the preChristmas shopping bonanza of Black Friday.  9

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News

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Budapest Business Journal | November 17 – November 30, 2023

IMPRESSUM EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Luca Albert,

Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz.

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

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

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Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14, Building B, 7th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu

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

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

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

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THE EDITOR SAYS

SOMETHING TO RAISE A GLASS TO Finally, there is good economic news to acknowledge, although now may not yet be the time to crack open the champagne. As our Macroscope report makes clear on page three, inflation has dropped below the singledigit milestone, if only just, at 9.9%. That is a long way from its eye-watering January peak of 25.72%. To put that into some context, this is the first time Hungary’s inflation has been in single digits for 18 months, according to Bloomberg. If anything, the drop has come quicker even than the government (never shy of championing the most positive of views) expected.

In July, Minister of Finance Mihály Varga told Reuters, “By December for sure, but if we are lucky, inflation will be below 10% already in November. I can say that inflation will be around 7-8% by December.”

But while the market accepts that the disinflationary processes are happening faster than expected, there is still plenty of hard work ahead. Analysts have mixed views about how this will feed into economic growth, with a range of suggestions for this year and next.

All agree 2023 will have been a recessionary rightoff, with the best prediction being a -0.1% contraction.

For 2024, the range is from 2.1-4%. This subject also came up at our latest BBJ Boardroom Meeting roundtable discussion on Nov. 7, with our speakers hovering around the 2-3% mark. The problem is the variables: projections for growth in the EU, particularly Germany (Hungary’s most significant trade partner), are anemic. The latest economic forecast for Germany from the European Commission, updated on Nov. 15, is 0.8% growth in 2024 and 1.2% in 2025. The EU itself does little better at 1.3% and 1.7%, respectively.

And then there is the question of Hungary’s missing EU funds. Most analysts think Hungary will get at least some of the money (one of our speakers suggested it might be released via economic salami tactics).

The worst-case scenario is it gets nothing at all.

Most don’t think that is likely, but if that does happen, expect all growth scenarios to be rounded down.

The seemingly ever-optimistic Minister for Regional Development, Tibor Navracsics, hopes for a positive resolution by the end of November, but he thought the same this time last year. We will see, but in what has been a “lost year,” to quote one of our analysts on page three, this economic news is to be welcomed, and is perhaps worth celebrating with a wee dram of something.

Talking of celebrating, and I realize there is a danger that this borders on the self-indulgent, but I trust you will allow me to note our own significant milestone: Thursday, Nov. 9, was the 31st anniversary of the publication of the first issue of the Budapest Business Journal in 1992. Our inaugural front page promised “Business News That Works.” We have always looked to find ways not simply of reporting accurately and fairly what is going on, but also to add value. That may be one reason why we remain Hungary’s oldest English-language publication in continuous circulation.

The annual BBJ Book of Lists also turns 31 this year, and the latest print version of that went to the presses on Friday, Nov.10. Do feel free to pre-order your copy now!

Robin Marshall Editor-in-chief

Why Support the BBJ? • Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be.

• Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.

• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.

For more information visit budapestbusinessjournal.com

The color photo by state news agency MTI, taken by a drone, shows a landscape of snowcovered trees on Kékestető (about 100 km northeast of Budapest by road) after the first snowfall of the season, taken on Nov. 12, 2023. In the black and white picture from the Fortepan Photo by Péter Komka / MTI

• Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities.

Now, more than ever, factual business reporting is vital to good decision-making.

Photo by Márton Kurutz / Fortepan

THEN & NOW

public archive, dating from 1960, two friends stand next to the snow-covered stone marker on Kékestető, Hungary’s highest point.

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Budapest Business Journal | November 17 – November 30, 2023

News

• macroscope

Recession is Over, Slow Recovery Ahead

October has finally brought the muchawaited singledigit inflation figure, and the third-quarter GDP data was also good news. For all that, 2023 might be considered a “lost year.” As for the 2024 outlook, analysts’ opinions vary greatly. They agree, however, that while the worst has been left behind, a difficult and lengthy recovery is still ahead.

ZSÓFIA CZIFRA

In the third quarter of 2023, Hungarian GDP increased by 0.9% compared to the previous quarter, thus ending the recession of the economy. Performance was 0.3% lower than a year earlier, however.

Analysts had previously expected that the growth would be 1.1% on a quarterly basis and the decline would be 0.1% annually; compared to these expectations, the Central Statistical Office (KSH) data proved slightly disappointing.

Analysts agree this year cannot be considered a good one (one even called 2023 a “lost year”). KSH stated that, measured on an annual basis (seasonally and adjusted for calendar effects), industry and market services (and within the latter primarily trade) and scientific,

Hungary’s Economic Performance (European Commission Fall 2023 Forecast) Change in economic performance (GDP) compared to previous year, percentage (2020-2025)

IC PRED

TION

not improving, and the ability to draw on EU funds, which are vital for investments, keeps being postponed.

“The slow recovery, lower-thanexpected inflation and the stable forint may lead the central bank towards a greater easing than expected; however, according to our expectations, there may be a serious chance of a change of pace only at the beginning of next year,” he noted.

Commenting on the data, ING’s chief economist Péter Virovácz says, “On the whole, despite the rather limited information available, our idea of the structure of the economy was confirmed.

This means that, essentially, the sectors producing for export can drive the Hungarian economy,” he writes.

The volume of GDP decreased by 1.2% in the first nine months of 2023, Virovácz recalls, saying that although the fourth quarter could still improve the overall picture for 2023, it can already be stated that it will be a “lost year.”

Despite the recent favorable data, ING has not changed its growth outlook for this year. It expects a GDP decline of 0.5% for the full 12 months.

Inflation Milestone

Source:

technical and administrative activity played the biggest role within the

0.3% decline.

The good performance of agriculture moderated the decrease.

Overall, the fresh data indicates that the Hungarian economy has come out of the technical recession that started in the summer of 2022.

“Consumption was restrained in the first half of the year by falling real wages, but in the second half of the year, due to the easing of inflation, real wages are expected to show growth again, so consumption can gradually pick up and help the recovery of growth,” MBH Bank senior analyst András Horváth comments.

According to the analyst, domestic and European prospects are supported by energy prices that have stabilized significantly lower than before. Still, they are overshadowed by slowing internal and external demand due to the war in Ukraine and high global interest rates.

“It is favorable that the order book for industry continues to show growth, and new processing industry capacities are gradually contributing to that. The growth prospects are also supported by net exports,

as the import volume continues to decrease due to lower domestic consumption, among other things, while exports represent a moderate positive factor despite the weakening of external demand,” Horváth says.

MBH Bank expects a 0.1% decline for 2023 and a dynamic 4% growth next year.

Worst is Over

“The worst is already over, but the recovery will be long and difficult,” says Péter Kiss, investment director of the Amundi fund management company.

“Household consumption is expected to reach its lowest point in the second quarter, and a gradual improvement is expected due to falling inflation and positive real wage growth as a result. With a stable forint exchange rate, continued monetary easing can strengthen positive economic expectations for both households and companies,” Kiss comments.

Amundi’s base scenario now predicts a 0.8% decline for this year and

2.1% growth

for 2024, which is lower than the current consensus. According to Kiss, the prospects for the external environment, especially for German industry, are still

Inflation reached a significant milestone in October, if only by a hair, when it dropped below 10%, commented Gábor Regős, head economist of the Makronóm Institute, on the latest data from the Central Statistical Office. On Nov. 10, KSH said that consumer prices were 9.9% higher on average in October 2023 than a year earlier and had decreased by 0.1% on average compared to September.

Within that, motor fuels became 3.8% cheaper and food 0.1%.

Regős emphasized that the disinflationary processes are happening faster than previously expected: at the beginning of the year, many doubted that single-digit inflation could be achievable

by December; getting there by October was not even certain in recent months.

Achieving single-digit inflation does not mean that the target has been reached; work still needs to be done to suppress monetary deterioration further, and from this point of view, the extent of the price increases in January will be the main issue, Regős warns. Looking at the year as a whole, inflation may amount to 17.7-17.8%, while it could drop below 7% by December, the Makronóm analyst says.

Based on the fresh data, the central bank can be expected to continue to loosen monetary conditions in November, noted Regős. According to him, the rate of easing could again be a strong 75 basis points cut.

GDP Growth Predictions Organization

2023

2024

MBH Bank

-0.1%

+4%

Amundi

-0.8% +2.1%

ING

-0.5%

+3%*

MNB (Central Bank) -0.5% +3-4% * Dependent on agreement with the EU being reached this year and Hungary having at least partial access to the Cohesion Fund. Without this, the prediction is 1-2% GDP growth.

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Budapest Business Journal | November 17 – November 30, 2023

AstraZeneca, Semmelweis Uni Announce Strategic Collaboration AI and data science have revolutionized many areas of healthcare in recent years. Still, real breakthroughs can be hindered because developments are often made in isolation. A new strategic collaboration between AstraZeneca and Semmelweis University’s Faculty of Public Health hopes to overcome that.

BENCE GAÁL

The cooperation focuses on preventive medicine, processing a wide range of patient data to improve patient pathway management, prevent and treat public health and other diseases

effectively, and expand the national and international medical knowledge base.

“A multifaceted analysis of larger samples, based on or comparable with international experience, could open up new perspectives for developing datadriven health policy in the country,” says Deputy State Secretary for Professional Management of Health Judit Bidló.

“The analysis of available data on chronic obstructive pulmonary disease and COVID-19 complications will contribute significantly to the effective management of these diseases,” she notes.

Semmelweis University’s Faculty of Public Health and AstraZeneca announced the signing of the strategic framework agreement to decisionmakers and medical partners at a professional event in November.

“Semmelweis University’s Faculty of Public Health is a professional workshop for the domestic data-driven healthcare paradigm shift,” says Miklós Szócska, dean of the Faculty of Public Health at Semmelweis University. “The primary goal of the expert team is to enhance the systemic capability of data-driven healthcare and artificial intelligence technologies in our country,” he explains.

Health Matters A monthly look at health issues in Hungar y and the region

“This can enable Hungary to develop data-driven solutions at the national strategic level, in public benefit partnerships with strategic partners willing to invest in developing this knowledge base, to implement an internationally applicable model,” Szócska says.

Strong Support

“We are working to develop this system capability as part of the National Laboratory’s data-driven health division, which is now receiving additional resources thanks to AstraZeneca’s domestic and international background and extensive research experience. Strong decision-maker support will help us to put the results into practice as soon as possible for more effective patient care,” he adds.

The collaborating partners have already begun the first joint research projects focusing on the early diagnosis of patients with chronic obstructive pulmonary disease (COPD) and severe asthma, identifying factors and patterns of deterioration and appropriate therapeutic interventions. In Hungary alone, COPD affects around half a million people. The symptoms can easily be mistaken for asthma, and it is usually diagnosed when the damage is irreversible.

Another new area of research is screening immunocompromised patients with increased exposure to the COVID19 virus and its complications and grouping them based on risk factors and the degree of vulnerability.

“AstraZeneca has a very broad portfolio and global presence, allowing it to share its experience and database in oncology, cardiovascular, renal and metabolic diseases, rare diseases, respiratory and immunology,” explains Kuuno Vaher, director of AstraZeneca’s Central European Cluster.

“Our core mission is to develop innovative new medicines that make a real difference to patients’ lives. Today’s clinical practice requires extensive collaborations, including not only scientific research but also medical and social education, to implement complex treatment regimens and introduce new therapies,” he says.

“Hungary has a strong basis for data science projects, with a professional scientific base, a high level of digital literacy and innovative thinking.

We believe that by working together, we can move closer to a more successful treatment of many common diseases of civilization,” Vaher adds.

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Budapest Business Journal | November 17 – November 30, 2023

Issues Swirl Around Education, Roundup Crisis EU Accession, and Funding Ukraine

Prime Minister Viktor Orbán has said he would oppose European Union efforts to continue providing financial support for Ukraine when the bloc is expected to vote on a EUR 50 billion package. It would help the beleaguered country pay salaries and meet other expenses needed to maintain its repulsion of Russia’s invasion, at a summit in Brussels on Dec. 14-15.

NICHOLAS PONGRATZ

“Hungary hasn’t supported the sending of weapons, and I also don’t support sending Hungarian taxpayer money to Ukraine,” Orbán told Kossuth Rádió on Nov. 10.

At the summit, the EU may also decide whether to release funds for Hungary, hitherto frozen due to concerns over the government’s adherence to the rule of law.

This has led to speculation Orbán might leverage his veto power to get the EU to resume payments he says are owed to Hungary. However, that claim has been denied by both Brussels and Budapest.

According to a report from Bloomberg News, if Hungary proceeds to block the expansion

of the EU budget to support Ukraine, which requires unanimity from all 27 member states, officials may try to get national guarantees to raise funding in the markets.

“Of course, you can make things more complicated, more cumbersome if you need unanimity, but we have seen in the past, being crystal clear, that you cannot stop us doing things,” EU Budget Commissioner Johannes Hahn told lawmakers on Nov. 7. A pair of EU officials told international news wire Reuters that the bloc could request participating member states establish bilateral aid packages with Ukraine.

“We’d prefer to have them on board, but there comes a point when people get fed up with Budapest holding everyone hostage,”

Viktor Orbán, one of the vice presidents of the Christian Democratic International, talks with Yulia Tymoshenko (left), former Prime Minister of Ukraine, and Hrihoriy Nemiria (center), vice chairman of the Foreign Affairs Committee of the Ukrainian Parliament, during a board meeting of CDI in Brussels on Nov. 14. Photo by Zoltán Fischer / Prime Minister’s Press Office / MTI one EU official said. “The workaround is tiresome, but we have it if need be.”

No Bargaining

During his Nov. 10 interview with Kossuth Rádió, Orbán repeated that he opposed starting talks with Ukraine over EU membership. On Nov. 8,

News | 5

the European Commission recommended opening accession negotiations with Ukraine once it had satisfied several remaining conditions. These include the issue being pressed by Hungary of safeguards for national minorities.

In 2017, Ukraine passed an education law, due to come into full effect in September 2024, which requires minorities receive at least 70% of their education in the Ukrainian language. Hungarian officials claim this infringes on the rights of 150,000 ethnic Hungarians.

“The new laws have made the life of Hungarians in Ukraine unbearable,” said Balázs Orbán, political director to the prime minister, adding that Budapest would block the start of negotiations on Ukraine joining the EU “until the problem is solved.”

However, according to Olga Stefanishyna, the Ukrainian minister overseeing her country’s EU integration, the Hungarian minority has been adequately protected, and the issue is overblown.

“Any country that makes a conscious political decision, first and foremost, to block the decision regarding Ukraine will find a reason (to do so),” she said.

“We understand that there is such a statement, but we also understand there is a dialogue with Budapest.”

She underscored that Ukrainian and Hungarian officials were working together on legislative changes recommended by Brussels.

PRESENTED CONTENT

Yettel Promises SME Internet Problems Solved From 1 Box Buy the product, put it in the corner, and you’ll get secure high-speed internet anywhere in the country. The Budapest Business Journal spoke with Gábor Fülöp, business sales and marketing director of Yettel, about options for small and larger businesses and the general issues facing the market.

BBJ: Why introduce this service now when many of the biggest companies are trying to get their employees back to the office? Offices already have internet.

Gábor Fülöp: True, but many companies, usually SMEs, operate in locations where the internet access typical of a city is not an option. We provide a solution that can immediately function as a business internet access choice on par with wired access. This operates absolutely with the same quality as physical cabling, but you don’t have to drill holes through the walls, and you don’t need someone to fix it for you; you turn it on, and it works.

BBJ: How does it work?

GF: Imagine a router, a device that needs to be plugged in but gets its 4G or 5G signal from the air. And then, the business or household immediately has high-speed internet access that is on the same level of connectivity as if you plugged a cable into your computer. You basically place a box where you operate.

We also offer a free 30-day window to

service, and the Netpajzs security option.

Basically, a business gets everything it needs. One provider covers all services.

BBJ: What should bigger businesses expect if they become a client?

try it out and return it if it doesn’t work.

And the Wi-Fi does work; we provide a three-month charge-free trial period.

BBJ: How do you handle cybersecurity in all this?

GF: We are very aware that, as everything goes online, cybersecurity is a growing concern. We have services to address this. For SMEs, we have Netpajzs. This filters out malware and potential attacks from the dark web for a monthly fee of a couple of hundred forints. This covers phones and computers as well. We also provide security services for our corporate clientele. Besides online connectivity, they will also get online safety for their operation from the same source.

BBJ: Tell us about your current strategy. If I were a potential customer, what would I hear?

GF: We approach customers based on their size and market position, differentiating whether you’re a small

Gábor Fülöp business or a corporation. Following this line of thought, we have just launched a product line specifically for smaller companies that will include greater data allowance, improved customer

Yettel’s IrodaNet service for SME businesses responds to real user needs: it offers a fully mobile-networked, portable device that overcomes the limitations of traditional cable-based internet solutions. Built on nationwide 4G and the increasingly available 5G coverage and a stable, reliable network, the package provides unlimited internet access for multiple employees via a single

GF: We can offer individualized security options, which means different fees and a more complex portfolio. This also entails different degrees of customization. If you’re a small business and want to buy a suit, we can take it in if it doesn’t fit perfectly. If you’re a corporation, we can tailor whatever you want and your business needs.

BBJ: Do you have the people for this?

A recurring issue in the Hungarian labor market is the lack of professionals.

GF: Yes. We constantly monitor customer satisfaction and are happy to say we are improving. Our customers are satisfied; we see minimal churn.

router, with the flexibility to work from anywhere, following a quick and easy set-up. By activating the free-of-charge “Anywhere Mode,” colleagues can use the company office router anywhere in the country for 10 days a month, offering considerable flexibility compared to wired internet solutions. The 10-day period can be optionally extended by two additional 10-10 days for a small fee.

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Budapest Business Journal | November 17 – November 30, 2023

WLP and RaktárAD top out Magna International Plant The Belgian-Hungarian WLP (Weerts Logistics Parks) and RaktárAD have topped out a 40,000 sqm logistics and production plant for the Canada-based firm Magna, the world’s fourth largest automotive parts supplier. WLP and RaktárAD launched their third investment in Hungary in Vecsés this year. The complex is adjacent to the M0 circular motorway and the Budapest Ferenc Liszt International Airport.

GARY J. MORRELL

“As a real estate developer, in the past eight years, we have built nearly 202,000 sqm of real estate in our country together with the Wefts Group, through which we have created more than 900 jobs and hosted many domestic

Real Estate Matters A biweekly look at real estate issues in Hungary and the region It will provide state-of-the-art production and assembly processes and initially plans to hire 300 employees,” stated Lerouge Gauthier, vice president of Magna International.

“With the investment in Vecsés, it will expand its network with a vital production capacity with which it will be able to structurally serve the growing needs of the region’s vehicle industry.

We aim to install the latest technology into the building. We are on track to install our first equipment in

March

Yves Weerts, executive chairman of Weerts Group, speaks at the topping-pit ceremony, with Ernő Hadnagy of WLP and RaktárAD behind him in the hardhat. companies,” said Ernő Hadnagy, domestic co-founder of WLP and RaktárAD, at the topping out ceremony.

“Magna has excellent experience in maintaining the standard of living of residents in close proximity of its facilities, which conditions we also wish to uphold with regards to the area near Verses,” he added.

The company has built 150,000 sqm of space in Hungary and is developing 55,000 sqm in Debrecen.

“We started investments here in Hungary almost

“Most of our investments are located on the east side of Budapest because of the overcrowded nature of the west side. We have now reached the stage of investing outside of Budapest, in Debrecen. We are delighted about this partnership and would like to thank Magna-Cosma for their trust, as this is our second joint development since we have just concluded our first development in Hannover, Germany,” he added.

Magna aims to achieve carbon neutrality in its European operations by 2025. The factory has achieved BREEAM “Very Good” accreditation and will use solar energy, for example.

ago. We have always thought positively about this country, which is why we continue investing here on a large scale,” commented Yves Weerts, executive chairman of Weerts Group.

Crucial Importance

25 years

“This project is of key importance in our growth. Magna International is investing more than EUR 50 million in the construction of the new facility.

2024,

and we aim to start production serving customers at the end of 2025,” he explained.

“It is key for us to build a positive image among people living in the neighborhood. We want to offer the best work and career growth opportunities for the locals. I am grateful that the Hungarian government was very supportive and prioritized this investment,” Gauthier added.

Csaba Szlahó, Mayor of Vecsés, is delighted with the development.

“The most important thing for Vecsés is that in the past year, a major investment started in the area that has been ready for development for 30 years.”

He was equally pleased that Magna International would be one of the first major international clients in the park.

“The company is committed to ensuring that the investment also serves the interests of the local community. [.…] Such investments are important for the country, the city, and the people who live here because they create jobs and generate profits,” Szlahó added.

MBH Bank Acquiring Majority Stake in Fundamenta Hungary’s MBH Bank Nyrt. signed a share purchase agreement with the Austrian Bausparkasse Wüstenrot AG and the German Wüstenrot & Württembergische AG and Bausparkasse Schwäbisch Hall AG this month to acquire a 76.35% stake in FundamentaLakáskassza Lakástakarékpénztár Zrt. BENCE GAÁL

The transaction is expected to close in the first half of 2024, subject to obtaining the necessary permits, MBH Bank notes.

Following closing, Fundamenta will operate as a consolidated subsidiary of MBH Bank; however, it will be a separate entity with its own brand name and management.

The bank says that Fundamenta’s customers will benefit from the solid background of a stable, wellcapitalized bank with the largest nationwide branch network and a broad product portfolio, which, in the long run, will allow customers access to a range of new investment, insurance and loan products on favorable terms.

MBH Bank said the acquisition will significantly bolster its growth plans, adding

480,000 customers, about

HUF 530 billion in loans, and HUF 570 bln in deposits. Besides a boost in the retail and residential mortgage markets, the acquisition will also add

Fundamenta’s strong distribution network to MBH Bank’s toolbox.

That means the bank’s products will be available through new channels and to an even wider audience.

The bank also notes that acquiring Fundamenta will enable it to build a comprehensive real estate lending and savings ecosystem that will further strengthen its market position in areas such as energy efficiency lending and condominium renovations.

Growth Strategy

“The purchase of Fundamenta is an important stage in the implementation of our growth strategy, but the real winners of the transaction will be the customers of the two financial institutions, who will have access to an even wider range of products through more channels,” says Zsolt Barna, president and CEO of MBH Bank.

“Due to this transaction, a new real estate financing and savings ecosystem

can be created, providing customers with unique financing options for building a home, whether it’s a property purchase or modernization,” he adds.

MBH Bank currently has almost two million retail and corporate clients, HUF 893 bln in equity capital, a HUF 6.2 trillion gross loan portfolio and

HUF 5 tln in deposits.

The bank came into being as the culmination of a gradual, three-way tie-up between Budapest Bank, MKB Bank, and Takarék Bank that was first announced in 2020.

Today, the bank has a nationwide presence in Hungary through an extensive network of branches and ATMs and is a market leader in the corporate segment, leasing, agribusinesses and the food industry, among others.

Moreover, it provides a wide range of money and capital market services, as well as investment services.

www.bbj.hu

Budapest Business Journal | November 17 – November 30, 2023

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News | 7

Bonfire Celebrations Raise Record Amount for Charity A packed house from Hungary’s international community united at the Budapest Marriott Hotel on Nov. 4 to mark Bonfire Night, celebrate organizer XpatLoop’s 23rd anniversary and #FeelGoodDoGood.

The evening raised a record total HUF of 7.5 million according to the local charities involved.

come true for thousands of youngsters with life-threatening conditions.

XpatLoop’s annual Bonfire Party has long supported her organization.

“For 10 years, we have participated as one of the main beneficiaries at this event: great people, great mood, and great organization. It’s touching how many guests stand with us to make more and more very ill children happy.”

“Oscar”-winning sponsors and supporters.

Alongside her on stage was Réka Ragi, who, as a child cancer patient, was flown

by Csodalámpa to London to fulfill her the Gunpowder Plot to blow up Parliament supporters to the stage to receive an wish of meeting Hollywood star Johnny and kill the British royal family in 1605.

Depp. Now well recovered, she helped “Oscar” along with recognition and praise In Budapest, the James Bond theme present the Oscar statuettes. for their contributions over the years. tune played in the Marriott’s ballroom VIP dignitaries attending this year Fantastic Work as master of ceremonies Hans Peterson included Ragnar Almqvist, the Irish Long-time supporter Dennis A. Diokno, kick-started the event by raising a Ambassador to Hungary; the Ambassador BBJ STAFF founder and CEO of platinum sponsor glass to the U.K.’s most iconic spy and of the Netherlands to Hungary Désirée XpatLoop. TV star Zsuzsa Demcsák then FirstMed, was presented with a Star Bonis; Matthew Kirlew, head of policy at More than 200 guests and dignitaries Award and a loyalty certificate. joined Peterson on stage to guide guests the British Embassy; Kam Jandu, the CEO gathered to bid for prizes to support “I remember speaking with Stephen Linfitt through the evening’s proceedings. of Budapest Airport; Georgina Szilágyi, local charities. A 007 theme to mark when XpatLoop.com was still a concept.

“We’re here to raise funds for charities the country director of the British Council the 70th anniversary of James Bond’s like the Csodalámpa Foundation, as well as As an entrepreneur, I greatly appreciate Hungary; chairman of the British Chamber first appearance in Ian Fleming’s book Stephen and his team’s hard work in creating of Commerce in Hungary Duncan to raise our glasses,” Arne Klehn, general “Casino Royale” gave the event an extra XpatLoop and turning it into the success it Graham; and István Kardos, the secretary manager of the Budapest Marriott Hotel, twist this year. is today. Partnering with XpatLoop for over general of the Hungarian Red Cross. said in welcoming guests. “It’s great to Bonfire Night (also known as Guy celebrate with all the stars here tonight, the 20 years, I’ve witnessed the fantastic work Fawkes Night) festivities take place on that it has done for the expat community.” many generous spirits in attendance.” He the nearest Saturday to Nov. 5. Firework Another speaker was Éva Patzauer, started the party “with a toast to the kids Visit the xpatloop.com website parties light up the skies across the co-founder and managing director of who benefit from your generosity.” for detailed reporting of United Kingdom and in many countries Event organizer Stephen Linfitt thanked children’s charity Csodalámpa / Magic the party and photo galleries. around the world to mark the foiling of everyone involved and invited kempi-BBJ-festive-season-252x158-202311:Layout 1 11/6/23 4:06 gala PM Page 1 Lamp Foundation, which makes wishes ADVERTISEMENT

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Budapest Business Journal | November 17 – November 30, 2023

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Promoting a Better Future for All by Being Penny-wise

Having previously served as chief operating officer of the Penny network in the Czech Republic, Mathias Mentrop took over as CEO of Penny Hungary on July 1. He speaks to the Budapest Business Journal about his first five months in charge and future plans for the retail chain here.

BBJ STAFF

BBJ: You came to Hungary from Penny in the Czech Republic.

How do the markets compare?

Mathias Mentrop: Of the international Penny networks, the Czech is the largest, and I have brought the experience I gained there in more than a decade to Hungary. We all have the same goal: to offer our customers a range of products that represent excellent value for money and to be a leading player in the regional market as a local discounter.

Many differences arise from each country’s characteristics, meaning the system operates in varied ways. In the Hungarian market, as with the Czech, the distribution of domestic products is exceptionally important, thereby supporting local farms and producers.

Hungary’s retail sector is changing dynamically, so responding appropriately to complex local and global issues poses a constant challenge. Nevertheless, I see a lot of potential in the Hungarian team and our business partners. My primary goal is to strengthen Penny’s market position, and I believe I can rely on the help of my colleagues in Hungary to do this.

BBJ: The Penny rebrand is now complete.

What is next for the firm in Hungary?

MM: The complete renewal of Penny stores in Hungary was finished by the beginning of 2023; all 230 units in the country’s network have been renovated inside and out and are open to customers.

We are constantly improving our selection and product categories. In our private label range, the packaging and recipes of several of our sub-brands have been

renewed to ensure their quality meets the continuously changing customer needs.

The new packaging of our own brand product family “Sissy,” and the renewal of the “Salty” product range have received professional recognition.

The repositioning of the Penny brand is still taking place, as can be detected in the company’s communication. The marketing team is striving to ensure that customers learn about our other values (in addition to the excellent range of products) and feel even closer to them.

BBJ: How many new stores do you plan for 2024? Are there any other infrastructure plans?

MM: This year, we have already opened two stores and will open more. In 2024, we intend to open at least five more stores, such as the unit already under construction in Pilisvörösvár. As the first Penny in that area, this will be a significant milestone in the company’s Hungarian history, which is already more than a quarter of a century-long, and in the lives of the local residents.

Following the expansion of our logistics center in Karcag this year, we plan to refurbish our HQ in Alsónémedi in 2024.

BBJ: Inflation is coming down in Hungary, but it is still the highest in the EU. How is this affecting your business?

MM: While the value of the FMCG market grew more than 20% during last year, the sold quantity fell by nearly 10%, which the market had to respond to. This is a challenge for all stakeholders. Of course, we have not abandoned our employees,

goal is to make the Rewe Group climateneutral at the company level by 2040.

Last year, we began installing glass doors on the wall refrigerators in our stores, ahead of many competitors.

By the end of this year, customers will find this solution in nearly all our units.

This alone will save around 10% of the total energy consumption of our stores.

We are also taking the lead in renewable energy sources, supplying electricity by alternative solutions. Customers will find EV charging stations in the car parks of nearly 70 stores, and the introduction of numerous new units is planned across the country in the near future. Using this technology, we have already spared the environment more than two million kilograms of carbon dioxide and around 12 tonnes of nitrogen oxide emissions since January 2019.

I would also like to mention shortening the supply chain, which we can achieve by involving as many local producers as possible. This aligns with our campaign to promote Hungarian products, accepting high-quality goods from local producers near our logistics center. By this means, we also save hundreds of thousands of kilometers in transporting goods each year.

BBJ: Penny has just won the “Commercial Excellence Award for Hungarian Products” again. What is the percentage share of Hungarian products, and what are the plans to grow this?

MM: We are proud that two-thirds of Mathias Mentrop our total product range is sourced from domestic suppliers. Of these, more than 500 products bear one or other of the Hungarian and at the beginning of this year, we gave product trademarks. Among these, I would them a significant salary raise, devoting a highlight our private label “Sissy” (dairy) total of HUF 3.6 billion. Additionally, we and “Kedvenc Hentese” (meat) product are giving everyone a one-off payment portfolios, which are 100% domestically in November, a further HUF 400 million sourced. Increasing the share of domestic investment. Our new, complex benefits producers has been our priority for years. package was designed considering the company’s results last year and the BBJ: Will Penny run a Christmas Hungarian labor market and economic charity drive again this year as part situation. It was outstanding compared to of its CSR program? the Hungarian market conditions.

MM: We are always glad to take initiatives that do good and help those most in need.

BBJ: Can you find enough staff for your Supporting people is close to our hearts, shops and warehouses nationwide? and we are delighted to be involved in MM: Staff turnover and labor shortages several such initiatives this Christmas. On are part and parcel of our daily lives.

Dec. 3, we will be joining the eighth Santa These mainly affect our colleagues Run as the named sponsor for the first working in logistics and sales. On the one time and will be collecting good quality hand, we are dedicating more to the well- toys with our professional partner, the being of our employees, and on the other Hungarian Red Cross, at the race venue. hand, we are continuously developing Staff at the Penny HQ will also participate our recruitment processes and improving in this, and the gifts collected at the two training programs through digitalization. locations will be distributed to needy families. For more than 10 years, we have BBJ: What are Penny’s targets for supported the International Children’s the environment and sustainability?

Safety Service “Christmas for All” program, MM: Thriftiness is a well-known aspect making the holiday preparations of at Penny, not only as regards the low disadvantaged children and their families prices of the products offered to our more special and memorable. Likewise, we customers. In the current economic traditionally collect non-perishable food climate, it is essential that our stores donations from customers at collection can manage and make good use of points in most of our stores. Last year, with the energy available. The Rewe Group, the help of almost 400 workers and about which owns the Hungarian subsidiary 1,000 volunteers from the Red Cross, we of Penny, has a climate strategy plan collected a total of 31 tonnes of donations, to reduce absolute greenhouse gas and we will strive to improve on that figure emissions (CO2 equivalents) at the this year. Nothing makes us happier than company level to 30% below 2019 levels seeing as many happy faces as possible by 2030. This applies to all countries in and helping others forget the difficulties of Europe where we operate. Our ambitious everyday life, at least for a short while.

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Budapest Business Journal | November 17 – November 30, 2023

Business | 9

Shoppers Promise Budget Discipline for Black Friday Inflation has considerably loosened its grip in Europe, but its effects will probably be longlasting. Customers are searching for discounted prices and focusing strictly on necessary items, while impulse purchases have plummeted to near-zero. That is the prediction of the surveys ahead of what was once the pre-Christmas shopping bonanza of Black Friday.

BALÁZS BARABÁS

Looking at the survey figures and at neighboring countries where big retailers have already started Black Friday, we see a paradoxical trend. While all economic figures indicate that inflation has depleted savings (see “Workers Look to Keep Existing Jobs Amid Gloomy Fall News,” from the Oct. 6 print issues of the Budapest Business Journal), planned spending on Black Friday remains healthy.

That is because customers are scheduling the purchase of highvalue but not immediately necessary products for periods like Black Friday or the New Year sales, when they expect significant price cuts, or at least greater than inflation.

A survey conducted by market research companies Reacty Digital and Shoptet indicates that three in every

10 Hungarians

have been postponing purchases, hoping for price cuts on Black Friday.

Many more, 50% of them, use price comparison sites to find the best offers and check against the previous prices of the same item.

Black Friday preparations in the eMag logistics center in Dunaharaszti, on the southern outskirts of Budapest. Photo by eMag. This year, almost half (45%) of Hungarian adults say they plan to shop on Black Friday, with a budgeted amount of HUF 43,000 (about EUR 114 or USD 124 at the time of writing), slightly more than last year. Respondents were also asked about specific items they plan to buy, and they mostly indicated clothing (35%), household and chemical goods (30%), and household appliances of all sizes (26%).

Retailers are preparing for much lower sales in Hungary compared to 2022 when income tax refunds massively boosted consumption. During a recent press event, Gábor Szilágyi, the CEO of electronics retailer Media Markt Hungary, said that since June, the technology market has collapsed, and September figures show that sales are more than 10% behind last year.

Energy-saving

The soaring energy prices forced clients to invest in energy-saving appliances.

Given that these will not be replaced for several years, Media Markt does not expect high sales in this segment in 2023, even in the Christmas period.

The company expects the market to shrink until mid-2024 or stagnate at best. That is bad for the business, given that inflation raised costs in all areas: marketing, logistics, energy, and, significantly, HR. This is forcing Media Markt to look for new income sources by expanding customer services.

In neighboring Romania, retailer eMag surpassed all previous sales records in its Black Friday event, held early on November 10. Before the action,

the company estimated sales would top around RON 680 million (about HUF 51.4 billion). The actual figure was RON 730 mln (HUF 55.2 bln).

On average, clients purchased

4.8 items

and spent RON 1,367 (around HUF 103,000) per client. This is more than double the estimate of the average spending on Black Friday in Hungary. While this might seem reckless, surveys conducted before Black Friday in Romania indicated the contrary: 17% said they knew exactly what they wanted to buy, and 28% had a general idea, representing almost half (45%) of those surveyed.

Romanians also seem to have prepared with a pre-established budget, with 42% saying they would make purchases strictly within this. In the end, the highest-grossing categories were drinks, groceries and pet food; perfumes, personal care and beauty; toys and children’s products; and home appliances of all sizes. Interestingly, the once most popular categories, smartphones, laptops, IT-related items, TV and other technology products, ranked much lower.

The Hungarian Story

In Hungary, eMAG will hold Black Friday one week later than in Romania today (Nov. 17). The company has not published sales estimates.

The Hungarian survey conducted Oct. 17-27 showed that 50% of the respondents would allocate between HUF 30,000-100,000, 19% between

HUF 100,000-220,000, and slightly above 10% between HUF 15,00030,000 and above HUF 220,000.

The most popular categories, according to the answers, will likely be clothing (30.6%), electronics and car accessories (19.9%), shoes (17%) and small home appliances (16.7%). Of all respondents, 20.4% plan to make a purchase on Black Friday, which seems a low figure, given that 91% are familiar with the now traditional sales discounts.

Boston Consulting Group also measured the visible appetite for Black Friday shopping worldwide.

Not surprisingly, the spending budgets are set significantly higher than in Hungary and Romania, at

between

USD 380-390

in the United Kingdom, Germany and Switzerland, USD 310 in Canada and Poland, and, highest of all, USD 460 in the United States.

But discipline is also the highest priority: in the past three months, more than 50% of those surveyed in these countries have cut back on non-essential purchases, somewhat fewer compare prices more frequently, while 41% buy more based on deals and promotions.

Consumer electronics are still one of the most favored product categories, but interest in these has fallen sharply since 2022, BCG says. Instead, more budget will be directed to “basic or essential products I need anyways” and “low price products because I don’t want to spend a lot of money.” When asked what would qualify as a “good deal,” consumers expect at least 30% off.

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Business

PRESENTED CONTENT

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Budapest Business Journal | November 17 – November 30, 2023

Celebrating 25 Years of Success in Moving and Relocation The Budapest Business Journal talks with Adrienne Deák, managing director of EuroMove & Relocation, about the company’s journey and the challenges and opportunities the industry faces.

BENCE GAÁL

BBJ: Congratulations on reaching your 25th anniversary. Can you share some highlights that have defined EuroMove & Relocation’s journey over the years?

Adrienne Deák: I established EuroMove in 1998 with extensive experience in the industry. My vision was to create a company offering seamless, efficient relocation services. Within the first five years, EuroMove & Relocation successfully expanded its services to cover a broader range of needs, including international moves, domestic relocations, corporate relocations, and specialized services like pet relocations and vehicle shipping. We serve practically all geographical areas. We have performed moves to Kenya, Iceland, the Dominican Republic, and even St. Helena, where Napoleon was exiled. Our traditional destinations are the United States, Asia, and Western Europe.

In the last 25 years, our headcount has grown from a couple of people to the current 14. Our focus is on the customers, and the well-being of the employees is also important to me; some people have been working for us since 2006.

We joined the U.S.-based International Association of Movers (IAM) in the year of our foundation. Since I had already worked in the business before, using my previously established network of contacts was easy. We started our relocation service in 2000 and joined EURA, the only European association of the relocation industry at the time.

We joined FIDI, a global alliance of international moving and relocation companies with members in more than 100 countries, in 2009. The FAIM Quality label, mandatory for all members, is the industry’s most stringent and comprehensive standard, regularly audited

by EY. That year, we were invited to join One-group, a European association of family businesses, where members provide moving and relocation services.

There have been many changes over the past few years: shipping companies have introduced mandatory weighing of containers, and stricter phytosanitary

Family firm: from left, Andrea Müller, her husband Gábor Csajbók, who will take over running EuroMove & Relocation, and Andrea’s mother, Adrienne Deák, the current managing director. Photo by Marton Turi Photography. regulations have been introduced for the wood we use for packing. Not to mention COVID; we introduced home office where we could, but that was not applicable for packing and loading.

As for the family, I am delighted that, in agreement with the family “council,” my daughter, Andrea Müller, will take over the management with her husband, Gábor Csajbók, our COO. BBJ: How does EuroMove prioritize customer service and ensure a smooth relocation experience?

AD: Most of our work is within the EU, but there are countries even in Europe where customs clearance applies. It is essential to know what is required: until the customs documents are available, we do not send out the shipment. You also need to know which country allows what to import. There are countries where, for example, binoculars are on the banned list, but we often have to be careful about how many books or technical articles we can pack. In some countries, the customer must appear in person at the customs office, and the list goes on and on.

Access to the given address is also an important factor and requires careful preparation. In Western countries, prebooking a parking space can be secured; getting a permit takes up to one or two weeks, but this varies from location to location. This is not an option in Hungary, unfortunately.

An international move is always a twolegged process. We are one “leg,” but we also need a partner “leg” in the other country. The annual conferences of the above-mentioned organizations provide us with a great network of contacts.

A substantial international community meets at these events, friendships are often made, and we all depend on each other.

The peaceful coexistence of people has already been realized in this community!

BBJ: Give us some examples of unique relocation projects EuroMove has undertaken.

AD: Every relocation is unique: the volume is different, the countries are different, and the client is different. The first two factors are displayed in the price, while our professional customer service team guarantees personalized customer service.

One of our clients entrusted us with the disposal of a large apartment in Budapest,

“You also need to know which country allows what to import. There are countries where, for example, binoculars are on the banned list, but we often have to be careful about how many books or technical articles we can pack.” which he inherited. We donated part of the movables, and the other part traveled to two destinations overseas. Among the objects were many old and beautiful items for which we had to obtain export permits. We also provide special services for our clients: immigration, home search, school search, driving license conversion, and various other services.

BBJ: Groupage is an interesting cost-saving option. Can you explain how this service works and the benefits it offers to clients?

AD: The shipment size depends on the amount of movable goods. The method of transport also depends on demand: air transport is the fastest, but also the most

expensive. Within Europe, road transport is the most accepted form. Small consignments are transported with a groupage truck. Since an itemized packing list is prepared for each shipment, we check the number of items placed on the truck during loading and unloading at both ends.

BBJ: How does your company handle the transportation of animals and plants for clients?

AD: The transportation of plants is relatively simple, with a phytosanitary certificate. As for the physical operation, transport by truck within Europe does not cause any problems; it just requires more space. Of course, the outside temperature dramatically affects the process, as high heat and low temperatures are not good for plants. If the shipment goes via our warehouse, we ensure the plants are watered. Transporting a pet is a much more complicated operation. We have a reliable partner to help serve our customers as well.

BBJ: What do you see as the future of the moving and relocation industry, and how is EuroMove preparing to meet the evolving needs of its clients?

AD: Our company specializes in complete moving services. So, if it is important for you not to bear the burden, leave it to us with confidence. Our focus has been and will continue to be on quality. This is guaranteed by the fact that we are a family business; we think in the long run. For us, the primary consideration is high-quality customer service, recognized by our international moving organization memberships and long-term partnerships. Our survey measures 98% customer satisfaction, also confirmed by the large number of returning clients. This will continue to be our primary goal in the future.

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Budapest Business Journal | November 17 – November 30, 2023

Inflation, Deficits and Coping With Compounding Debt At the IMF Annual Research Conference on Nov. 9, Federal Reserve chair Jerome Powell stated: “The Federal Open Market Committee is committed to achieving a stance of monetary policy that is sufficiently restrictive to bring inflation down to 2% over time; we are not confident that we have achieved such a stance.”

LES NEMETHY

According to my translation of Fedspeak, that means inflation is not under control. Hence, one of two situations is foreseeable: either there would need to be a much higher interest rate to bring down inflation (which may crash the economy), or we must tolerate higher inflation for longer.

Given that a) there is the need or temptation to inflate away the debt and b) the Fed, in my opinion, has a bias against triggering a recession, especially in a pre-election period, the higher inflation rate scenario is likelier to prevail.

The S&P immediately fell 220 points after Powell’s statement. Let’s examine»a little more closely some of the mechanisms at play here.

Deficits out of Control As a percentage of GDP, the U.S. deficit was 6.3% for the year ended Sep. 30, an increase from 5.4% in FY 2022, and is expected to remain at a remarkably high 7-8% over the coming years. The United States does not have a monopoly on this phenomenon. Italy had a deficit of nearly 8%, Hungary is at more than 6%.

Business | 11

Finance Matters A biweekly look at f inancial issues in Hungar y and the region

U.S. Federal Public Debt

Fed Must Float More Treasuries Deficits need to be financed. Central banks can print money (which is inflationary beyond a certain point) or sell Treasuries.

With the Fed trying to bring down very high inflation rates, it has chosen to sell Treasury bonds to finance recent deficits rather than print money and has sold huge quantities over the past months.

As with most markets, the price of Treasuries (in other words, interest rates) is governed by supply and demand. On the Nov. 9 Treasury sale, the Fed tried to sell USD 24 billion worth of bonds and failed due to low demand. This triggered a remarkable spike in interest rates.

The U.S. Treasury has colossal financing requirements, having financed USD 1.5 trillion in the last four months, and is estimated to require a further USD 1.5 tln in the coming six months. This surge in financing requirements comes when the primary treasury holders (China, Japan, Russia) have switched from net buyers to net sellers.

When the supply of bonds dramatically exceeds demand, there may be a loss in market confidence, causing the central bank to lose control over interest rates.

Moody’s has just downgraded its outlook on U.S. Treasuries from “stable” to “neutral,” which it justified by the rising interest rates and lack of adequate policy measures to contain deficits.

Nominal Debt Increasing To put the above numbers into perspective, in September 2023, total U.S. federal debt recently passed

the USD 33 tln mark. The national debt has grown by approximately 10% in less than a year.

Note the steepening curve on the graph. This approximates a typical curve showing a compounding effect. This curve will likely continue to steepen unless policy measures are taken to control deficits.

“The most powerful force in the universe is compound interest.”

The same is true with the curve for interest costs: according to the U.S. Congressional Budget Office, net interest payments on the federal debt were USD 475 bln in 2022 and are projected to rise to USD 640 bln in 2023. This trend is likely to accelerate further due to a combination of increasing debt levels and refinancing existing low-interest debt in the portfolio, as it becomes due, with more expensive debt.

This may result either in a debt spiral and/or the squeezing out of other spending. The latter is already happening throughout the developing world. According to the IMF, at least 100 countries must reduce spending on health, education and social protection to meet debt payments.

When low-income countries go into debt distress, this may result in “protracted recessions, high

inflation and fewer resources going to essential sectors like health, education and social safety nets, with a disproportionate impact on the poor,” according to the World Bank.

Should debt continue to grow exponentially (in other words, along its current path), such effects could also affect the United States and other developed countries. It is important to highlight the compounding effect of debt growth curves and the corresponding cost of debt service. The human mind is somehow programmed to think in linear terms; we are often surprised by the cumulative effects of compound curves and how difficult they are to reverse.

If confidence is lost and interest rates rise, the compounding effect can suddenly and unexpectedly accelerate even further. As Albert Einstein once said: “The most powerful force in the universe is compound interest.”

Les Nemethy is CEO of EuroPhoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www. businessexitplanningbook.com), and a previous president of the American Chamber of Commerce in Hungary.

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Business

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Budapest Business Journal | November 17 – November 30, 2023

Giacomo Pedranzini Wins 2023 Atlas Award Italian businessman Giacomo Pedranzini, a previous Budapest Business Journal Expat CEO of the Year, was named the 2023 Business Hero and Atlas Award winner at a ceremony on Nov. 7.

chain. He said the pressure on prices has disproportionately affected farmers, leading to the abandonment of agriculture in some regions. Recalling the recent floods in Tuscany, Pedranzini prompted the audience to think about the consequences of climate change and natural disasters, especially in areas left untended due to farmers leaving the land.

ITL Group established the Atlas Award with the primary objective of recognizing accomplished business heroes who exemplify an Ethical, Sustainable, and Creative (E.S.C.) approach and whose companies, operating within Hungary, demonstrate a steadfast commitment to fostering a more promising world.

In the grand setting of the Academy of Sciences, ITL Group hosted

BBJ STAFF

Pedranzini, founder and CEO of Kometa 99 Zrt., was also a finalist for this award in 2022. He was chosen from a shortlist of five, also including Albert Wettstein, Mónika Méhész, Éva Pálfi and Zsolt Márkus. BBJ publisher Tamás Botka was a member of the awards jury.

The Italian winner (who now also holds Hungarian citizenship) could not attend the event in person but was represented by his wife, Sabrina Guidi, and he joined the evening through a video link.

Pedranzini’s active involvement in community discussions and improvement and recognition

The Atlas Award was accepted on behalf of Giacomo Pedranzini by his wife, Sabrina Guidi, seen here with Alessandro Farina, founder of ITL Group and creator of the award. within the industry makes him an excellent example of the type of behavior the prize hopes to encourage, the organizers said.

In his long-distance acceptance speech, Pedranzini referred to ethical values that he said seemed to have been forgotten in the last few years and highlighted how family roots can inspire our collective commitment to these principles.

Fair Distribution

He emphasized that the mission of his non-profit initiative HonestFood, which currently operates in Italy but he plans to expand to Hungary, focuses on three goals: ethical food production, fair distribution of value throughout the supply chain, and environmental responsibility.

He stated that, as a food producer, Kometa is aware of its profound impact on health and more vulnerable people in the production

from Hungary’s business community for the prize-giving. Several invited speakers showcased the core values of the award and the community.

Michele Orzan, president of EUCham, shared his insights about the business world and its ethics, safety, honesty and integrity. Dr. Ervin Laszlo, philosopher, humanist, and Nobel Peace Prize nominee, sent a video in which he emphasized the importance of sustainability and leadership and supported the award and the organization behind it. Marco Veronese, phygital artist and the creator of the Atlas Award sculpture, spoke about creativity and innovative thinking.

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Bridgestone’s Topolcsik: a Female Leader in a Male-dominated Industry Bridgestone Tatabánya is the Hungarian pride of the famous Japanese tire company. Its 1,300 employees already use modern technology and environmentally friendly solutions in what is set to become a smart factory by 2030. The company has been awarded “Family Friendly Workplace” and “Factory of the Year” titles multiple times. Besides being a key player in the Hungarian automotive sector, managing director Melinda Topolcsik regularly takes a stand on social issues such as sustainability, road safety, workers’ health, and support for the local communities.

BBJ STAFF

BBJ: Bridgestone Tatabánya has been part of the global prostate cancer prevention program for years, so how is Movember going this year?

Melinda Topolcsik: Fortunately, it has become a great success. We have awareness-raising and educative programs every November, and, of course, free screening for all male colleagues. Movember has become a tradition along with B-Pink, which raises awareness of breast cancer prevention in October, as more and more women are working here, too.

These issues are important to us, and we strive to ensure that our employees are not only aware of health risks but also actively take action to address them. We recently completed another similar social commitment: we organized a Road Safety Month in September to make life safer in our wider community.

Our founder’s motto is “Serving society with superior quality,” and we also aspire to support local communities as best we can. We do something almost every month in the factory or Tatabánya and its surroundings.

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Business | 13

Many who today are team leaders started here as total beginners. They are living proof that an impressive career can be achieved here with perseverance and a bit of talent. For instance, we have an area where the manager is a talented woman. Her team, with whom she works directly daily, is almost entirely made up of male colleagues. She started as a quality engineer at Bridgestone and has had a great career path.

BBJ: Are there any general barriers that make it difficult for women to pursue a career?

MT: My experience shows that women’s values and qualities are just as conducive to leadership roles. I hope to be a positive example of this, showing young women that if someone is committed and willing to learn, opportunities are open to them even without sacrificing family for career or career for family. Either way, everyone needs support to achieve, men and women alike.

Melinda Topolcsik BBJ: Does this social commitment appear in other areas of your businesses?

MT: This is what E8 is about: it represents our corporate commitment to support the realization of a sustainable society by providing social and customer value as we become a sustainable solutions company. The eight values (Energy, Ecology, Efficiency, Extension, Economy, Emotion, Ease, and Empowerment) guide our strategic priorities, decision-making and actions throughout every area of the business and operations.

BBJ: Is it also reflected in your technologies?

MT: Of course, it is! We aspire to have the most sustainable solutions in our production technologies, as well as the most efficient. So, 100% of our electricity is from renewable sources, and Bridgestone Tatabánya is actually in the process of becoming a smart factory, which is expected to be completed by 2030.

The increasing integration of new technology trends in tire manufacturing can affect the entire production chain.

Digitalization, which has been evolving over the years, is helping to refine and optimize production processes and enables more sustainable methods.

For example, with our virtual tire development methods, Bridgestone produces much less waste. Another example is that AI is involved in quality control processes. It can detect even

the smallest defects or deviations that are hard to see with the human eye.

This reduces waste during the process and also enables better tires in the end.

BBJ: You have been in management positions for 20 years, 15 as managing director, in an industry considered very male-dominated. What motivates you in your daily life?

MT: If you love what you do, I believe it leaves a positive mark on the world, or at least on the industry you are working in. Having this positive impact is a central motivation for me.

It is a great responsibility to be the managing director of a world-famous tire company’s factory and, as you would expect, it comes with a lot of work too. But being a significant part of the noticeable, continuous improvement of the company and contributing to the satisfaction of our employees makes it absolutely worth the effort.

BBJ: How do you support female colleagues in this industry?

MT: Since I became the managing director at Bridgestone Tatabánya, four and a half times more female colleagues are working here than before. We continually try to ensure that all our employees, male or female, have equal opportunities to progress. We support the continuous career development of our colleagues through training and courses.

BBJ: Bridgestone Tatabánya has become one of the largest employers in Komárom-Esztergom County.

How do you take care of the enormous number of employees?

MT: We started production 16 years ago with 361 employees, and today we have around 1,350 colleagues. Thanks to this great team, we can produce up to 6.5 million tires annually. Employee satisfaction is one of our main objectives.

We have many initiatives through which we can show them how valued their work is, how important they are for the company. Of course, it begins with satisfactory basic pay for everyone.

Still, other benefits like meal subsidies, performance and monthly bonuses, a free bus service, and activities and healthcare programs are also part of what Bridgestone provides for their hard work.

People always need reliable leadership, but it’s even more important nowadays, as there are so many recent uncertainties in the world. Specific leadership qualities become more valuable, such as the ability to motivate colleagues, collaborate, communicate effectively, and empathize. The feedback from my colleagues means a lot to me, and I often don my work-safety clothes to visit the production lines and chat, maybe share some jokes and a smile with the workers. These meets give real meaning to my work and are appreciated by my teammates, too.

BBJ: What are your top three goals?

MT: To constantly try to improve, learn new things, and inspire the younger generations to strive to achieve their goals.

BBJ: And what do you do in your spare time?

MT: I try to spend my weekends with my family doing activities that recharge my batteries. I like riding a motorbike because it gives such a sense of freedom that you do not get anywhere else. Besides that, traveling relaxes me: discovering new places, meeting new people and cultures or visiting old favorites. After a great motorbike ride or a nice trip with my family, I usually feel recharged to begin new challenges in the workplace.

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Budapest Business Journal | November 17 – November 30, 2023

Special Report Business Services Sector

PRESENTED CONTENT

Business Services Sector Continues to Flex its Muscles Across Hungary One of the most crisisproof segments of the economy, business service centers are thriving in this country, as evidenced by data from the Hungarian Investment Promotion Agency.

They are also helping shift the focus from the workbench to higher added-value activities, a cornerstone of the country’s FDI strategy.

BBJ STAFF

Thermo Fisher Scientific Hungary recently celebrated its fifth business anniversary in Hungary. The local subsidiary of the U.S.-based firm that produces high added value medical and healthcare products provides a wide range of business services to a global clientele.

With a headcount soaring from some 100 in 2018 to more than 800 now, the multifunctional global business services center has been constantly developing since its establishment. Its success story underscores the dynamic growth of an entire sector. [Editor’s note: for more on this, see separate interview on page 16.]

When Thermo Fisher set up shop five years ago, the business services sector employed 46,000 people in 110 centers in the country. By now, the combined

Significant Investors in BSS Market Rank

Country

1

USA

2

Germany

3

Hungary

4

United Kingdom

5

The Netherlands

6

Switzerland

7

Denmark Source: Business Services Hungary 2023 Report

Hipa in the training subsidy scheme, showcasing its dedication to longterm thinking. Upskilling has become popular with other stakeholders as well. The above-mentioned Business Services Hungary 2023 Report found that seven out of 10 business services centers provide financial support to staff for external training courses.

On the other hand, between 2022 and the first half of 2023 alone, Hipa shepherded 20 projects that received training subsidies, engaging nearly 7,300 employees. The costs of those training programs totaled

some

Thermo Fisher’s Budapest GBS center has been growing dynamically since its establishment in 2018. number of BSS employees has surpassed the 100,000 mark, and there are

201 offices

scattered all over the place. The industry proved so crisis-proof that, even during the pandemic, more than 10,000 people were added to the payroll.

“This trend is of utmost importance for the Hungarian economy as the country’s new investment promotion strategy strives to secure more higher added value projects, to support reinvestment efforts, and to focus on investments that rely on highly skilled talent,” Hipa CEO István Joó stresses.

The thriving business services sector fits nicely into those investment promotion priorities, and Hipa’s BSS-related figures are telling when it comes to demonstrating the dynamic growth of the segment.

The agency says it has guided 103 projects, creating more than 19,000 jobs from 2014 to 2022. Last year alone, the sector accounted for over 8% of new jobs created and nearly 11% of total projects.

Climbing the Value Chain

As Joó adds, in the long run, the idea is primarily to attract deals that help the economy step up the global value chain so that the local talent pool stays home rather than emigrates and productivity surges.

This is not just wishful thinking.

According to the Business Services Hungary Survey 2023, which is due to be unveiled at the end of this month, more than 80% of companies running a business services center have expressed plans to relocate high-value-added roles to Hungary over the next three years.

The survey was first conducted in 2018, a joint initiative of Hipa and

24 member companies

of the American Chamber of Commerce in Hungary, including Thermo Fisher.

Operational model 57%

Captive

20%

Hybrid

23%

Business Process Outsourcing Source: Business Services Hungary 2023 Report

At the time, it was a unique cooperation that paved the way to enhance awareness of the business services sector and promote talent retention, virtues that have translated into dynamically growing headcounts nationwide.

“When it comes to BSCs, the role of American companies can’t be emphasized enough, as they were the ones that launched the most FDI projects in the BSC and ICT sectors in the past nine years,” Joó notes. “Hence, they remain our crucial partners in creating new jobs in the high-added value segment.”

Another positive trend is the consistent rise in added value in terms of BSC functions. Thermo Fisher Scientific’s project is exemplary in that respect as well since its services portfolio now stretches to cover customer care, finance, procurement, payroll, services operations, IT, and Life Sciences Technical Support.

“Bringing more complex tasks to Hungary not only promotes the creation of jobs with higher added value but also improves the perception of the entire BSC sector,” Joó notes. “This win-win situation, therefore, favors the labor market and boosts employee interest toward business service centers.”

Training is Critical

Training is a critical factor that can push companies to new heights. Thermo Fisher Scientific was among the first working with

EUR 37 million,

and subsidies worth a combined EUR 14.3 mln were granted.

Part of the business services sector market evolution is that cities in the countryside are inching into the spotlight. Debrecen, Pécs, Szeged and Székesfehérvár have become popular investment locations that provide excellent opportunities for young graduates and other well-educated professionals to succeed. Companies with existing centers in Hungary are now twice as likely to opt for a countryside location over Budapest when expanding their office footprint.

“This trend reflects a broader shift towards geographic diversification within Hungary. These regional towns that are home to prestigious academic institutions provide a steady influx of skilled graduates across various disciplines, fostering a rich talent pool that aligns perfectly with the demands of the business services sector,” Joó points out.

He adds that as Hungary continues to position itself as a competitive and attractive destination for outsourcing and offshoring, sustained growth is anticipated in the sector.

“With a skilled and adaptable workforce, robust infrastructure, and a business-friendly environment, Hungary is well-positioned to capitalize on the evolving global demand for business services,” the Hipa CEO concludes.

Evolution of the Hungarian BSS Market Year

No. of BSCs

No. of employees

2018

110

50,000

2019

120

55,000

2020

131

63,892

2021

156

70,446

201

100,898

2023

Source: Business Services Hungary 2023 Report

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Budapest Business Journal | November 17 – November 30, 2023

PRESENTED CONTENT

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Special Report | 15

Hungary is one of the leading hubs for business service centers (BSCs) in Central and Eastern Europe. The sector has shown continuous growth and a high level of maturity with resilient and flexible operations.

Increased headcounts, the complexity of the activities, and a continuously broadening scope of high value-added activities reflect the sector’s attractiveness, Tünde Kis, a director at PwC Hungary, tells the Budapest Business Journal.

BBJ STAFF

Due to the importance and strategic position of BSCs in Hungary, PwC Hungary introduced a new seminar series named “Future of Business Services Hungary” in May of this year.

The purpose of the seminars is to provide regular updates from an executive perspective about the latest trends, the key challenges and opportunities, and the future of the sector.

The events also serve as a point for exchanging views, getting insights and connecting with BSC peers. Here, Kis summarizes the key findings about the business services sector and the main messages of the events.

Improving Value Delivery The global business environment has changed significantly, prompting companies to adjust their operations and respond to evolving customer demands. Businesses must constantly adapt to the changing landscape to remain competitive and successful.

With a range of maturity among BSCs in Hungary, these organizations have differing priorities.

The majority of the companies aim to expand their scope of offering and are looking to leverage automation and smart technologies for greater efficiency in the next few years. It is encouraging that an

Image by Alexander Supertramp / Shutterstock.com

The Future of Business Services Centers in Hungary

overwhelming number of BSCs plan to use intelligent automation to meet their productivity improvement targets and believe that, within their organizations, data analytics and automation-related activities should be enhanced.

To ensure effective BSC value delivery, it is necessary to streamline business processes such as finance, HR, procurement, as well as IT, and to focus on customer satisfaction, continuous improvement, data analytics, talent management, and technology enablement.

On the other hand, BSC leaders must also strive for service optimization by constantly identifying opportunities for improvement. This can be done by tracking KPIs, discussing the options with the process owners, and then creating a mandate in the BSC organization to implement them.

As a result, organizations are provided with greater flexibility, scalability, and cost efficiency, allowing them to focus on core functions and drive growth in a rapidly changing business landscape.

Additionally, better integration of BSC services can lead to enhanced collaboration, innovation, and overall business performance.

identify new opportunities for growth and gain a competitive advantage in their respective industries.

Elevating Talent With rapidly evolving technologies being one of the critical challenges, it is essential to keep the skills and experience of their workforce up to date. To ensure talent elevation, a company needs to invest in employee development and training programs, establish a clear career path for BSC employees, and foster a culture of continuous learning and improvement, Kis argues.

To achieve a successful digital transformation in BSCs, a company needs first to assess its existing processes and identify areas for improvement. The next step is to implement digital technologies and upskill the employees with solutions that can help optimize and automate these processes. This includes cloud computing but also the use of artificial intelligence, machine learning, and other advanced analytics techniques and visualization tools to analyze data, identify patterns and trends, and make data-driven decisions, the PwC director says.

Digital transformation in BSCs enables data-driven decision-making, facilitate efficiency and accuracy, reduces costs, and enhances customer experiences.

Fostering Enterprise Growth

Becoming a Strategic Partner As a strategic partner to the business, BSCs can support overall strategic objectives. BSC teams must understand the organization’s operations and goals and leverage their capabilities to help achieve these. In this respect, the highest possible output can be achieved by ensuring the BSC functions are aligned with the broader organizational strategy.

This requires a deep understanding of the company’s goals and objectives, as well as the ability to collaborate with business units to identify opportunities for process improvement and innovation.

Aligning BSC services with business goals will accelerate efficiency, improve decision-making and consequently, boost revenue numbers and profitability, Kis believes. Furthermore, by leveraging data and analytics, BSCs can also help

Driving Digital Transformation

Tünde Kis This involves identifying the necessary skills and competencies, providing opportunities for professional development, and promoting a supportive work environment that encourages innovation and creativity. By upgrading abilities and talent within the BSC, companies can establish a highly-skilled workforce that is fundamental for efficient operations and balanced success. This can also benefit them staying ahead of the competition, delivering value to their customers and meeting their strategic objectives.

Supporting enterprise growth strategies involves developing and executing plans and initiatives that align with the company’s long-term goals and objectives. This covers identifying opportunities for expansion, improving operational efficiency, and leveraging technology and innovation, but also fostering a culture of collaboration, innovation, and continuous improvement throughout the organization. If a BSC successfully supports the needs of business units and contributes to their growth objectives, a data-driven culture can be established, and analytical talents can be nurtured, Kis says.

This approach also brings various advantages, such as increased revenue and profitability, improved market share, enhanced brand reputation, an expanded customer base, and higher competitiveness. By aligning business goals with expansion strategies, companies can, therefore, achieve sustainable growth, increase innovation, and maximize their returns on investments.

16 | 3

Special Report

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Budapest Business Journal | November 17 – November 30, 2023

Thermo Fisher Looking to Expand GBSC Despite Hiring Challenges To enable customers to make the world healthier, cleaner and safer is the mission of Thermo Fisher Scientific, which opened its global business services center in Budapest five years ago this fall. The Budapest Business Journal spoke with Konrad Bauer, senior vice president of global business services, about how the company performed during this period and local operational challenges.

BALÁZS BARABÁS

BBJ: Two years ago, the goal of Thermo Fisher’s shared services model was to be the transformative backbone of the company, and the Budapest operations would play a critical regional role in that. What has happened since?

Konrad Bauer: In the past two years, we have further expanded our footprint in Budapest from 500 to 800 colleagues and established a strong, diverse culture. From a business perspective, we extended our scope and created better end-toend processes, which I think is a unique offering. In that sense, you see business

The second piece is that shared services help manage some of our challenges. We have built a procurement segment, which helped with supply chain shortages, and we are using the project management functionality to manage topics such as the current ESG regulations in the EU. Building on our success stories from the past five years, we are looking at a future of further growth, expanding the Budapest team and the global shared services organization.

BBJ: Hungary has struggled for several years with a labor shortage, especially among skilled labor. How is your company coping with that?

KB: I think we see that, especially when hiring people for multi-language roles.

Konrad Bauer, senior vice president of global business services, Thermo Fisher Scientific.

Photo by Lázár Todoroff. services, globally and here in Budapest, move from pure execution to real valueadded business transformation.

BBJ: Do you find them?

KB: We are still finding the talent we need, but it’s getting harder. I see it in three ways. First, we as a company must ensure we have the right culture to attract talent. We have created an inclusive workplace culture, creating an environment where differences are genuinely valued. We’re also offering an environment where you can do more than just transactional back-office work because you contribute to a global mission where our colleagues make a difference

PRESENTED CONTENT

Launching Hungary’s eVAT System The tax law package brought before Parliament in the fall includes the amendments to the VAT Act, which will re-create the legal framework for introducing the eVAT system. This concept was already included in the legislation a few years ago, but the tax authority opted out at the time. The system introduced after January will be much more sophisticated and will affect all taxpayers in the coming years, says Bence Barta, director of Andersen Adótanácsadó Zrt. BBJ STAFF

The eVAT system is planned to be launched on Jan. 1, 2024. We are currently at the end of the pilot development process of the National Tax and Customs Authority (NAV), so the launch is not expected to encounter any technical barriers. Nor will there be any legal hurdles, as the tax package submitted to Parliament at the end of October contains the supplementary rules of the VAT Act and the Act on the Order of Taxation, which will lay the foundations for the launch.

From 2024, Barta says VAT returns can be submitted to the tax authority in three ways. The first option will remain the solution that has been used for years: submission through the “Ányk” (General Form

Completion Tool). However, the technology underpinning the Ányk is not expected to stay for long. In parallel with the ramp-up of the eVAT system, it is due to be phased out later (the exact date is not as yet known).

The second option will be a VAT return on the eVAT online platform made available by NAV, to be edited and submitted by the taxpayer. However, this solution will not mean a readymade VAT return offered by NAV; the submission of the VAT return will still require several decisions and declarations on behalf of the taxpayer.

The novelty of this option is that, based on the online invoice data supply, the online cashier service and the import customs decisions, NAV will display the transactions that the taxpayer can edit to submit the VAT return on the interface, Barta says.

Barta believes that implementing the eVAT system could bring significant benefits for the tax authority. The standard VAT sub-ledgers-based data pool can ease the problem of years of diminishing audit capacities and ever shorter audit deadlines at NAV. It could also help make the risk analysis and the audit process more automated and targeted.

The business benefits are not as clearcut; nevertheless, the M2M eVAT does include several simplifications. For example, using the system removes the need to prepare and submit domestic summary reports. It also reduces the amount of data that needs to be provided to tax auditors during audits. However, the main benefit of the launch of the M2M eVAT is that, with the help of the validations run by themselves or the tax Bence Barta, director of authority, taxpayers can become aware Andersen Adótanácsadó Zrt. of systemic errors that would later result in significant tax assessments at a time close to the submission of the VAT return.

Machine-to-machine Consequently, they will be able to manage Connection the errors detected by the systems The third option will be submitting directly when the problem arises.

VAT returns through a machine-toOf course, the most significant machine (M2M) connection. This is “incentive” for moving to the eVAT will expected to be the most popular option be when the Ányk form is discontinued, among taxpayers in the medium-sized and the VAT return can only be submitted enterprise category and above. When through the eVAT interface or the M2M using the M2M eVAT, the taxpayer eVAT system. This reason alone makes must upload its VAT sub-ledgers in it worthwhile to start implementation the data structure required by NAV as soon as possible, Barta suggests. and approve them as VAT returns.

During the implementation process, it will be crucial to match the company tax codes to the standard tax codes and to establish an API-based data connection for smooth communication.

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Budapest Business Journal | November 17 – November 30, 2023

in enabling our customers to make the world healthier, cleaner and safer.

Second, we will also require more support for native language speakers to come to Hungary and work here; currently, our team represents 37 nationalities. Finally, it’s investing in your people. We firmly believe that education and talent development cultivate higher addedvalue jobs. You need to invest in

About Thermo Fisher Thermo Fisher Scientific Inc. describes itself as the world leader in serving science, with an annual revenue exceeding USD 44 billion and a staff of approximately 125,000 globally. The multi-functional Budapest GBS Center, opened in 2018, is an integral part of Thermo Fisher’s global business services strategy.

The site is designed to serve customers in the EMEA region in different workstreams, such as customer care, finance, procurement, service operations, life sciences technical support and an IT Center of Excellence.

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training your people. Since we opened the Budapest center, we had more than 8,000 training sessions to help colleagues unlock their full potential.

BBJ: We seem to have forgotten COVID-19 and the disaster that it brought. Do you think that Europe is better prepared now? Is it taking measures to cope better with the next pandemic?

KB: During COVID, we saw unprecedented speed in developing tests, treatments and vaccines needed to keep the world safe. It also showed the power of collaboration between science, industry and governments.

The pandemic brought into focus the need for a more ambitious and sustained approach to preparedness.

Governments must commit to longterm investments in public health, the resilience of healthcare systems and the ability to mobilize the right infrastructure.

I think there’s one preparedness level that is true for all governments, and that is the sense we actually lived through it. On the positive side, I think there’s a mindset people have understood that decision-making and certain actions must be taken much faster and that we have to live with the uncertainty because you can’t have it all figured out. And I think where we still have challenges, everybody will anchor back to COVID.

3 But what will you do when the next pandemic is not an airborne virus but a bacteria that is water-submitted?

We had all these business continuity plans, and while many of them had pandemic reactions, none had specific details about what we needed to do for what happened during COVID-19.

I think that’s why pandemic response preparedness is tricky. I think what we need to do as a society is to train our agility to act.

BBJ: Your company published an 85-page CSR report in 2022. What are the main focal points?

KB: The report showcases our commitment to sustainability and social responsibility and reflects our remarkable progress over the past year. Our current focus is carbon reduction, and we are expanding to waste and water. We have managed to continue to reduce our greenhouse gas emissions, and in 2022, we increased our goal by committing to a 50% reduction by 2030, and more than 150 of our sites are now fully powered by renewable energy. We are also redesigning water management in our manufacturing sites, especially in areas where water is scarce.

As for social responsibility, we focus on making the workplace an inclusive space. And how do we make sure people feel that they “belong to the company” and feel safe in

Special Report | 17 AI in Shared Services Thermo Fisher has been developing artificial intelligence and AI/machine learning technology for products and services for its customers for years. It recently launched an internal generative AI platform, which has the flexibility to adapt to multiple large language models (LLMs) in the future.

“In shared services, we see many opportunities to use Gen AI to reduce repetitive work, boost productivity and augment our capabilities so that we can further scale our operations and improve service levels,” highlights Konrad Bauer

the environment? We also remain dedicated to supporting our local communities. In Budapest alone, we have dedicated over 500 volunteer hours in the first half of 2023 to helping homeless shelters, cleaning our neighborhood and creating a new sensory playground for the Autism Foundation, maximizing our global impact through local engagement.

18 | 3

Special Report

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Budapest Business Journal | November 17 – November 30, 2023

BSCs an Essential Part of Budapest Office Market Development Hungary, and Central Europe in general, has successfully promoted itself as advanced but costeffective business destinations for international companies looking to establish what used to be called shared services centers. That trend helped make what are now increasingly called business services centers a core driver of the developerled office market.

GARY J. MORRELL

This, in turn, enabled developers to undertake speculative development projects, provided substantial preleases that allowed projects to go ahead and acted as a catalyst for the development of higher quality, more sustainable, well-located office space with Breeam, Leed and Well accreditation. Today’s economic uncertainty, however, means there is currently restrained market demand from companies seeking such space.

“CEE office markets are currently facing a problem of slowing net demand, which stems from higher rental and fit-out costs, adjustments to hybrid work and overall economic uncertainty.

Another challenge is postponing new construction,” comments Blanka Vačkova, head of research for IO Partners in the Czech Republic.

There are close to 150 companies operating BSCs in Hungary, employing as many as

70,000 people

in Budapest and second-tier university cities, according to the Hungarian

As more developers moved into the business district, urban infrastructure emerged, including retail, restaurants and services.

Máté Galambos, leasing director at Atenor Hungary, says GE is a prime example. It has significant amounts of space at the 130,000 sqm Váci Greens offices, which Atenor developed, leased and subsequently sold on to different investors.

‘Dry’ Period Ahead

“There is still weakening demand, a decreasing number of relocation transactions, hopefully bottoming out in the fourth quarter of 2023 or the first quarter of 2024,” comments Kalaus. “Supply of new buildings is getting very slim as there has not been new construction starting in the past 12 months; only the previously started constructions are being finished. Beyond that, there will be a ‘dry’ period in terms of new building delivery,” he explains.

“Demand for classic office space has been H2Offices by Skanska on Váci út has attracted SSC attention. derailed by remote and hybrid work and flex Investment Promotion Agency.

The development of the Leed “Gold” offices / co-working spaces.

Budapest was able to attract such accredited 22,000 sqm Forest Offices The share of serviced centers due to lower labor costs and Debrecen is a good and early example the good language and collaborative of a speculative Hungarian provincial offices will rise, and this skills of Hungarian workers. office project, following a pattern category will be extended “SSCs are a good tenant from a long seen in other leading Central landlord perspective as they demand European countries like Poland and in some secondary cities, large floor plates for long lease the Czech Republic for development like Debrecen, Győr periods,” comments Valter Kalaus, away from the capital. managing partner at Newmark From a real estate perspective, the and Szeged.”

VLK Hungary. The typical business services center requires 1,000-3,000 sqm, with flexibility needed as space is ramped up over time.

Business or shared services can be seen as the entity within an organization responsible for the execution and handling of specific operational tasks such as accounting, human resources, IT, legal, compliance, purchasing and security. Essentially, it is the spin-off of services to separate operational duties from the corporate headquarters, with such a decision typically made from a cost perspective.

Business process outsourcing involves contracting an outside vendor with the appropriate skills and resources to carry out the work, while a shared services center is a single, autonomous business unit within the company. Both are part of the Business Services Sector (BSS), a broader term for the service industry dealing with, for example, IT outsourcing and R&D.

Central Drivers

SSCs and BPOs have been widely regarded as central drivers of Budapest office demand and take-up and a principal vehicle for promoting inward investment. Further, secondary cities such as Debrecen are now attracting BSCs, with developerled commercial office complexes developed to meet demand.

essential requirement for the business services sector has been a stock of welllocated class “A” office space with a premium on good public transport links (for example, a site no more than

400 meters

from a metro station). More recently, a requirement for an interior environment that enhances the health and wellbeing of staff and that enables increased productivity and staff loyalty has been added.

Companies are, in general, prepared to invest in a superior working environment and seek out active design, layout and property management that potentially increases employee productivity and helps attract and retain employees longterm in a tight labor market. Further, there is a need for flexibility and space availability at short notice if an SSC tenant wishes to expand.

The Váci út corridor business district could be considered a classic business services destination.

The District XIII Municipality was keen to promote what was a postindustrial area with numerous brownfield development plots offering direct access to metro and road links, providing easy access to the city center and residential neighborhoods, from where staff can quickly commute by public transport, car or bicycle.

“Demand for classic office space has been derailed by remote and hybrid work and flex offices / co-working spaces. The share of serviced offices will rise, and this category will be extended in some secondary cities, like Debrecen, Győr and Szeged,” Kalaus believes.

“In Debrecen, a major international player has already appeared from the supply side, and the same is expected soon in Szeged and Győr,” he adds.

Due to the elevated base of the pipeline, the present volume in Budapest remains comparatively higher. Nevertheless, the fact that

more than

40%

of the projected 2024 pipeline is already preleased offers some reassurance. This provides confidence that the vacancy rate is not likely to escalate rapidly in Budapest, IO Partners concludes.

With an increased emphasis on sustainability issues, BSCs are undertaking increasingly complex functions beyond an administrative role, such as R&D, with the resulting requirements for more sophisticated and highly specified office accommodation.

3

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Budapest Business Journal | November 17 – November 30, 2023

Special Report | 19

Shared Service Center Operating Companies yeaR establisHed planned neW WoRk foRCe HiRed in H1, 2023

72 12

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–

✓

2001 200

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–

A A

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–

A A

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✓

80 5

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–

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A

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–

–

2

tata ConsultanCy seRviCes ltd. magyaRoRszági fióktelepe www.tcs.com

2,800

31,830

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–

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–

3

Citibank euRope plC. magyaRoRszági fióktelepe https://www.citibank.com/icg/sa/emea/ hungary/

2,742

–

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–

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–

4

bp business seRviCe CentRe kft. www.bp.com/hungary

2,700

57,113

–

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–

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–

–

5

bt RoC kft. www.globalservices.bt.com/

6

RoCHe szolgáltató (euRópa) kft. www.roche.hu

7

exxonmobil HungaRy kft. https://corporate.exxonmobil.com

2,000

59,942

✓

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–

–

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–

–

8

ibm HungaRy inteRnational sHaRed seRviCe CentRe kft. www.ibm.com

1,700 (approx.)

22,547

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–

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–

–

8

vssb vodafone szolgáltató központ budapest zRt. www.vodafone.hu

1,700 (approx.)

genpaCt seRviCes HungaRy kft.

10 www.genpact.com

1,000 (approx.)

unisys magyaRoRszág kft.

11 www.unisys.com

2,128

805

28,949

28,060

21,364

12,059

12,184

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

–

✓

✓

–

✓

–

✓

–

✓

–

–

–

A

–

–

inteRnal

✓

exteRnal

–

otHeR

–

sales

–

pRoCuRement

–

HR

–

finanCe

83,000

–

–

A

✓

–

A

A A

–

A A

✓

A A

✓

–

✓

✓

✓

✓

✓

✓

✓

✓

WoRk fRom Home

–

5,449

paRt-time WoRk

✓

1

flexible WoRk HouRs

✓

– Deutsche Telekom Group (100)

aveRage WoRk entRy peRiod (days) aveRage no. of eduCational days peR yeaR

✓

2006 300

deutsCHe telekom it solutions(1) www. deutschetelekomitsolutions.hu

botH

Client management

total net Revenue in 2022 (Huf mln)

✓

60 8

Company Website

2,200

available WoRk Condition CHoiCes

oWneRsHip (%) HungaRian nonHungaRian

Client division (%)

seRviCe aReas

Rank

no. of employees WoRking foR ssCs on July 1, 2023

Ranked by no. of employees working for SSCs

✓

✓

✓

✓

✓

1985 A

2009 A

2007 A

2006 250

2004 A

2004 A

2007 A

2018 A

A A

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

lászló kónya Zsolt Őrffy Katalin Báthori

1097 Budapest, Könyves Kálmán körút 36.

(1) 456-5400 FMB-TS-ITSH-Info@ t-systems.com

– Tata Consultancy Services Ltd. (100)

prabal datta Sachin Makwana Edit Bencsik

1117 Budapest, Alíz utca 4.

(1) 886-8000 hungary.marketing@tcs.com

– Citibank Holdings Ireland ltd. (100)

veronika spanarova Márk Szentpáli Beáta Smid

1133 Budapest, Váci út 80.

(1) 374-5000 citibank.magyarorszag@ citi.com

– BP Global Investments Ltd. (100)

Jamie anderson – –

1133 Budapest, Árbóc utca 1-3.

(1) 873-6920 hungary@bp.com

– BT Group (100)

péter győri Gábor Dormán Máté Fazekas

1112 Budapest, Boldizsár utca 4.

(1) 777-0850 bt.roc.communications@ bt.com

– F.Hoffmann-La Roche AG (100)

martin kikstein Donát Horváth Barbara Jánosa

1133 Budapest, Véső utca 7.

(1) 461–8900 budapest.admin.ba1@ roche.com

– ExxonMobil Petroleum & Chemical B.V. (100)

byung kim – –

1134 Budapest, Dózsa György út 61–63.

(1) 987-8787 BudapestGBCCommunication@ exxonmobil.com

– IBM International Group B.V. (100)

edina drabik Andrea Szőke –

1083 Budapest, Szigony utca 26–32.

(1) 777-1055 info@hu.ibm.com

– Vodafone International Holding B.V. (100)

dóra debreczeni, adrienne benedek, yapici Cevdet Yapici Cevdet –

1087 Budapest, Hungária körút 40–44.

(70) 460-8000 –

– Genpact Luxemburg S.A.R.L. (100)

pál gazda, sorin-gabriel popescu – –

1138 Budapest, Váci út 117–119.

– communication.europe@ genpact.com

– UNISYS Interntaional Services B.V. (100)

norbert makk – –

1062 Budapest, Váci út 1–3.

(1) 298-9000 ugshadmin@unisys.com

www.bbj.hu

730

129,871

✓

✓

✓

✓

✓

–

–

–

nokia solutions and 13 netWoRks kft. www.nokia.com

650

45,066

A

A

A

A

A

A

–

✓

WoRk fRom Home

paRt-time WoRk

flexible WoRk HouRs

available WoRk Condition CHoiCes

✓

40 12

✓

✓

✓

–

A A

✓

✓

✓

–

✓

✓

tHeRmo seRviCes (HungaRy) kft.

14 www.corporate.thermofisher.com

650 (approx.)

13,194

✓

–

–

✓

–

✓

–

✓

–

A A

kpmg global seRviCes 15 HungaRy kft. www.home.kpmg/hu

560 (approx.)

12,559

✓

–

–

–

–

–

–

–

✓

A A

✓

✓

✓

550 (approx.)

7,935

✓

✓

✓

✓

✓

✓

–

–

✓

A A

✓

✓

✓

448

6,789

✓

✓

✓

✓

–

✓

–

✓

–

A A

✓

✓

✓

✓

A A

–

A A

✓

A A

16

Celanese magyaRoRszág kft. www.celanese.com

floWseRve HungaRy 17 seRviCes kft. https://www.flowserve.com/en/

lexmaRk inteRnational 18 teCHnology HungaRia kft. www.lexmark.hu

367

Cpl Jobs kft. (Covalen 19 solutions HungaRy) https://covalensolutions.com

250 (approx.)

Randstad souRCeRigHt kft.

20 www.randstadsourceright.com

200 (approx.)

21

ey gds (Cs) HungaRy kft. www.ey.com

80 (approx.)

5,279

1,783

4,878

971

✓

–

–

A

✓

–

✓

A

✓

–

–

A

–

–

–

A

✓

✓

–

A

–

–

✓

A

–

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–

A

–

–

–

A

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–

✓

✓

✓

A

A A

–

✓

✓

A

A

A

aRConiC-köfém mill pRoduCts NR HungaRy kft. www.arconic.com

A

238,660

✓

✓

✓

–

✓

✓

–

✓

–

A A

dxC teCHnology NR magyaRoRszág kft. www.hp.hu

A

22,862

A

A

A

A

A

A

A

A

A

A A

A

A

A

yeaR establisHed planned neW WoRk foRCe HiRed in H1, 2023

eaton enteRpRises 12 (HungaRy) kft. www.eaton.com

botH

inteRnal

otHeR

Client management

sales

pRoCuRement

HR

exteRnal

Client division (%)

seRviCe aReas

aveRage WoRk entRy peRiod (days) aveRage no. of eduCational days peR yeaR

Budapest Business Journal | November 17 – November 30, 2023

finanCe

Company Website

total net Revenue in 2022 (Huf mln)

Special Report no. of employees WoRking foR ssCs on July 1, 2023

Rank

20 | 3

oWneRsHip (%) HungaRian nonHungaRian

top loCal exeCutive Cfo maRketing diReCtoR

addRess pHone email

2000 25

– Eaton Global Holdings Limited (100)

istván lenk, istván mátéka – –

1123 Budapest, Nagyenyed utca 8–14.

(1) 499-9100 bscofficemanagement@ eaton.com

– Nokia Solutions and Networks Oy (100)

béla zagyva Erzsébet Tóth –

1083 Budapest, Bókay János utca 36–42.

(20) 977-7797 nokia.hungary@nokia.com

– Thermo Fisher Scientific (100)

miklós koczor – –

1134 Budapest, Váci út 41–43.

(1) 686-1000 facility.budapest@ thermofisher.com

(10) (90)

erik dipaolo – –

1134 Budapest, Váci út 41.

(1) 887-7100 kgsh@kpmg.com

– Celanese Corporation (100)

balázs király – –

1134 Budapest, Váci út 80–84.

(1) 672-7400 –

Flowserve Global Holdings Hungary Kft. (100) –

gergely molnár Gyöngyvér Bögözi –

4034 Debrecen, Vágóhíd utca 2.

(52) 319-600 HUN_Facility@flowserve.com

– Lexmark International Technology Sárl (100)

gabriella fodor Levente Barát Alexandre Cole

1095 Budapest, Lechner Ödön fasor 8.

(1) 501-7200 karrier@lexmark.com

– CPL Resources Ireland Holdings Limited (100)

gergely pusztai – –

1114 Budapest, Bartók Béla út 43–47.

(1) 501-5460 info.cee@ covalensolutions.com

2006 A

2018 A

2013 A

2007 A

2016 A

2008 30

2009 A

2016 A

2021 A

1941 A

1991 A

david alan Randstad vincent, Hungary Kft. (100) dorota zablocka – Lívia Tóth –

1138 Budapest, Dunavirág utca 2–6.

(30) 836-5364 info@randstadsourceright.eu

– EY GDS (CS) Limited (100)

mukul pachisia, srinivasa Rao velliyur nott, vékási tamás – –

1132 Budapest, Váci út 20.

(1) 451-8100 –

– Arconic Manufacturing (GB) Ltd (100)

balázs gábor, zsuzsanna ilona varga – –

8000 Székesfehérvár, Verseci utca 1–15.

(22) 531-200 erika.sas@arconic.com

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

zoltán Czibók – –

1114 Budapest, Bartók Béla út 43–47.

(1) 279-8000 cegugyek@hp.com

notes: (1) Aggregate data of Deutsche Telekom IT & Telecommunications Hungary Kft. and Deutsche Telekom Systems Solutions Hungary Kft.

A = would not disclose,

NR = not ranked, NA = not appliacable

This list was compiled from responses to questionnaires received by November 15, 2023, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time.

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

4

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Budapest Business Journal | November 17 – November 30, 2023

Socialite

Bem Mozi: An Outpost of Filmic Heaven in Buda But in 2009, it looked like the Bem was flickering towards its final frames.

On May 14, 2010, this Hungarian cinematic institution closed for good.

Or so it was thought at the time.

Cinephile Gergő Szomszéd had been inspired by repertory cinemas while travelling in Melbourne, Australia and London. Asking around, he was told about the Bem. He discovered that the cinema had been fitted with Dolby Stereo sound and new projectors before it closed. Szomszéd decided to make it Hungary’s first (and still only) rep cinema. He duly acquired the Bem and reopened it in January 2016.

The satisfyingly scruffy Bem Cinema on the Buda side, just over the curving Margit híd, is the kind of movie house cinephiles like me dream of.

DAVID HOLZER

Apart from the fact that it shows English language movies as well as Hungarian classics (or, as it says on its Facebook page: “the best (or sometimes the worst) pop-cult cinema of the last decades of film history”) with English subtitles, the Bem is free from the stultifying rules that make going to the movies in Hungary all too often a drag.

If you’ve ever been to one of this country’s multiplexes, or even its often excellent arthouse cinemas, you’ll know that you can only sit in the seat you buy a ticket for. I’ve tried bucking the system by flopping down wherever I want. Every time, I’ve been forced to move by a Hungarian brandishing their correct ticket and hissing at me.

Fair enough, but such regimentation takes away part of the fun of going to the movies. Stepping out of the world of rules and into a space of dreams, of freedom from the humdrum.

Hungarian cinemas, along with most in the Western world, also make getting in and out once the movie’s started a pretty unnerving experience.

Bem-lovers Community

At the start, the Bem showed a few classics and promoted itself on Facebook.

Some showings were well-attended.

Others weren’t. But slowly a community Bem Mozi boasts its own bar, a major distraction to seeing the films. of Bem-lovers grew. This was in part down to the movie programing, but the Bem bar was a huge attraction. At that time, it was one of very few alternative Not being able to buy alcohol if you feel vibe, is a dangerous distraction from actually making it into the cinema. drinkeries in that part of the Buda side. It the urge. Stepping over legs that stiffen with This would be a mighty shame as still is. You may even be allowed to smoke irritation as their owner peers round you the Bem is a living breathing part in the bar but don’t quote me on that. while they shovel popcorn into a gaping Regulars love the place so much they mouth. Standing in something sticky that of Hungarian cinema history.

Known in the beginning as the Helios even clubbed together during the dark smells of radioactive cheese. Navigating Mozi, the cinema first flung open its days of the COVID lockdown to help a set of stairs that descend at a terrifyingly keep it from going under. Today steep angle in near pitch darkness. Following doors in 1908. It was a time when around cinemas were opening all over the a never-ending corridor to find the restroom country. There were, apparently, 270 in and having to ask an usher how to get back in. Such are the joys of the multiplex. operation in Hungary by 1910. While of Bem’s program is in English and all the starched collars turned up their At the Bem, you sit where you like, movies have English subtitles. This is bring booze in with you if you fancy, go in noses and looked down their pince-nez and out of the screening theater right next at the movies, the ancestors of the movie particularly helpful for those of us who want to find out more about Hungarian buffs that now haunt the Bem were to the bar (yes, you read that right) as cinema but didn’t know where to start. becoming hip to cinema’s possibilities often as you like, feel you’re in a gang of For example, on Nov. 1, Bem screened for revolutionizing art. like minds rather than in hostile territory.

“Kárhozat” (“Damnation”) directed The Helios changed its name to the Dangerous Distraction by the mighty Béla Tarr.

Admiral in 1934. When cinemas in this Be warned though, the Bem’s bar, with As ever, the program for this month country were given Hungarian names in its hip without being painfully smug has been a mix of Hungarian movies with English subtitles and Hollywood fare. Today (Nov. 17), it is screening it was renamed the Adria Film Theater.

“The Grand Budapest Hotel” on November It became the Bem in the socialist 1950s. 17, and the original “West Side Story” During 1979, the Bem began will be played on Sunday (Nov. 19). evolving into the physical space it is In 2021, between 30,000 and today. Apart from fitting a new space 40,000 people visited the Bem. to house the projector, the shape of the How many made it beyond auditorium changed to accommodate the bar into the theater is a matter 150 people. It now seats 101. The of speculation. But if they did, floor and side walls were carpeted they were in for a cinematic treat. and sheets of metal were fitted to the ceiling to improve sound quality.

The Bem’s fortunes were The Bem is at Margit körút 5. It is unaffected by the collapse of socialism. hard to pin it down precisely, but In 2000 it became a member of the I think the bar’s open from 3 p.m.

Europa Cinemas network. This hugely to 1 a.m. Monday to Friday, 4 p.m. worthwhile organization supports to 1 a.m. Saturday. For film times, cinemas that screen a significant find Bem Mozi on Facebook or number of European films from stroll by the cinema itself. outside their country and engage Bem’s one theater, where you sit where you choose. younger audiences.

70-80%

1939,

22 | 4

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www.bbj.hu

Budapest Business Journal | November 17 – November 30, 2023

Rocking With the Musical Heartbeat of the City A concert film called “Hungarian Rhapsody: Queen Live in Budapest” was released the following year.

As part of his strategy to make Hard Rock Budapest relevant to the city, Walther intends to continue with some of the methods he used with such success in Davos.

Housed in what was once the city’s biggest club in the Opera District, longsince renamed “Budapest’s Broadway,” the Hard Rock Hotel, the first for the chain in Central Europe, has brought its beat to the local hotel scene since it opened this spring.

Sessions at Sessions

“We have live music every Wednesday, Friday and Saturday in the area that connects the lobby to our Sessions restaurant,” he says. “We already have local DJs at our Roxy Rooftop Bar and will promote it as an independent venue, as we will Sessions, as we want to see more guests from outside. Furthermore, if we can be a platform to help young bands be successful as well as making our guests happy, that’s a great result.”

“We already have local DJs at our Roxy Rooftop Bar and will promote it as an independent venue, as we will Sessions […].

Furthermore, if we can be a platform to help young bands be successful as well as making our guests happy, that’s a great result.”

DAVID HOLZER

Even the new general manager arrived in rock n’ roll style. Previously general manager of the Hard Rock Hotel Davos, Florian Walther pitched up to lead the Budapest hotel on Oct. 1 after a two-day ride from Switzerland via his homeland of Austria.

“I rode over the Danube on the Elizabeth Bridge, and this beautiful city opened up before me,” Walther explains. “The sun was shining on the grand buildings. There were no skyscrapers. I was overwhelmed by the sight. Seeing Budapest in all its glory was a kind of time travel.”

Budapest is Walther’s latest destination in a career that has seen him travel the world. He began in hospitality in his native Austria 33 years ago, straight from school.

Hungary is his eighth country, and the Hard Rock Hotel Budapest is his

th 14 hotel.

He’s worked in Africa, China and Europe for prestigious hotel groups, including Kempinski, The RitzCarlton, Starwood Hotels and Resorts, Le Meridien and Sheraton.

When Hard Rock offered him the role of GM at its Davos hotel, Walther jumped at the opportunity.

“Hard Rock Hotels is an extremely interesting brand,” he says. “Having music in our DNA is such a big differentiator. It also enables us to adjust to the market in a particular location without losing our identity. If you ask us, ‘What’s your business?’ the answer will be ‘Entertainment.’ At Hard Rock, we don’t talk about teams; we say ‘the band.’ When we have a meeting, it’s a ‘soundcheck.’ When we’re working, we’re ‘on stage.’”

When the hotel group is more established in Europe, Walther’s dream is for every Hard Rock hotel to invite its five best local bands to tour all the others. Walther

believes

General manager Florian Walther.

Hard Rock Davos has proved successful even though, as Walther puts it, “it couldn’t have been more difficult to bring a lifestyle and music brand to Switzerland.” Now, he is bringing some of the ideas that made the Swiss hotel such a hit to Budapest.

The 136-room hotel features an upscale restaurant named Sessions, the Constant Grind café and bistro, the Roxy Rooftop bar, and a Rock Shop for merchandise. There is a Body Rock Fitness Center, Rock OM yoga sessions, and meeting spaces. Walther has no doubt it will be an excellent add-on for the Budapest market.

Eastern European First

“Hard Rock cafés existed in Europe, but there were no hotels until now. Budapest is our first in the Eastern European market and will set the standard for further growth. I believe it’s a great fit for Budapest, a lifestyle destination where you can have fantastic gastronomic and cultural experiences.

It feels like the city is on its way to being as lively as it was in the 1980s.”

When I ask what he sees as Hard Rock Budapest’s demographic, Walther tells me it’s “quite simply anyone who loves music.

Unlike the restaurants and merch shops with their rock and roll vibe, our hotels are about the music itself. You see this in the hotel memorabilia, which isn’t just from rockers like the Rolling Stones or Black Sabbath but includes artists like Katy Perry and Eminem. Our memorabilia is also specific to the hotel location.”

Pride of place in Hard Rock Budapest’s collection is a letter from Queen frontman Freddy Mercury to his Hungarian driver. Queen was one of the few big bands to play this country before the Iron Curtain came down, playing to a packed Népstadion in

July

1986.

In what has become an iconic concert for locals, Mercury won undying love by singing a few words from the traditional folksong “Tavaszi Szél Vizet Áraszt” (“Spring Wind Brings Water”). There are clips of the song on YouTube. It’s deeply moving.

2024

will be an extremely interesting year for Budapest’s hotel trade.

“Travel behavior has changed over the past three years. When restrictions were eased after the recent difficulties tourism faced, young people began traveling further while older people stayed closer to home,” he tells me.

“In 2024, I believe older travelers, now less wary about travel, will go on the road more. Younger people with children have become fans of traveling and will want to see different places without going long haul.”

Looking ahead, Walther is confident Hard Rock Budapest will play an important role in helping the group to the top of Europe’s hotel charts.

Rooms range from Classic through to the Rock Star Suite.

All offer amenities like The Sound of Your Stay curated playlists, a tailored vinyl selection, and the opportunity to jam on a Fender guitar in the comfort of your own room. Visit the hotel’s website to find out more.

4

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Budapest Business Journal | November 17 – November 30, 2023

Chamber of Commerce Corner

Socialite | 23

This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the website of the organizing chamber. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

Italian Chamber of Commerce for Hungary (CCIU)

Hungarian-Norwegian Chamber of Commerce (HNCC)

The CCIU extends its most sincere gratitude to the Chamber of Commerce of Cagliari-Oristano for making the B2B Sardinian Food 2023 possible and memorable. The event, organized in cooperation with the Italian Chamber of Commerce for Hungary, represented by President Bernardino Pusceddu, was a remarkable moment for the Sardinian agricultural and food sector and all those who took part. Heartfelt thanks go to the Sardinian companies that participated, showcasing their excellence and sharing their products with operators from around the world. This event represented a significant step for the Sardinian agrifood sector and created Italian and Hungarian connections that we hope will lead to fruitful collaborations in the future.

CCIU looks forward to continuing its work to promote and spread the delicacies of Italian food in Hungary.

The HNCC organized a field trip recently for students and teachers of Nydalen Videregående Skole (Oslo) to the Székesfehérvár production facility of Garzon Furniture Factory, a member of the chamber. A group of 25 students had been staying in Hungary under an Erasmus project applied for by the Károlyi Mihály Economic Vocational Secondary School in Budapest, arranging several exciting programs and school visits for the Norwegian guests. The Hungarian students will pay a visit to Oslo in return in March 2024.

French-Hungarian Chamber of Commerce and Industry (CCIFH) The CCIFH is inviting guests to a large-scale gala celebrating the immense heritage left by Gustave Eiffel 100 years ago. In 1889, the Eiffel Tower was built, the World Exhibition took place in Paris, the Moulin Rouge opened, Montmartre became the cradle of artists and painters, and CCIFH will summon this world. • When: Nov. 25, 6:30 p.m.-2 a.m. • Where: Eiffel Műhelyház, Kőbányai út 30, 1101 Budapest.

• Fee: members HUF 45,000; non-members HUF 65,000.

A couple of days later, the CCIFH will hold an event detailing “Inflation Trends in Hungary Over the Past Year and Future Prospects.” The keynote speaker will be Pál Péter Kolozsi, head of department at the National Bank of Hungary. • When: Nov. 28, 9-11:30 a.m. • Where: Párisi Udvar Hotel Budapest, Petőfi Sándor utca 2-4, 1052 Budapest. • Fee: members HUF 18,900; non-members HUF 23,900.

Belgian Business Club in Hungary (Belgabiz) The Belgian Business Club in Hungary (Belgabiz) and the Netherlands-Hungarian Chamber of Commerce, in cooperation with the Business Council for Sustainable Development in Hungary (BCSDH), will organize a seminar on Tuesday, Nov. 21, in the K&H Auditorium from 4:30 p.m. called “CSRD: Transforming Businesses, Impacting Futures.” This event will delve into the implications and opportunities the Corporate Sustainability Reporting Directive presents as industry looks to shape a more sustainable future. Good practices will also be shared by speakers from businesses, including CBRE Hungary, K&H Group, Puratos Zrt., Atenor Hungary, and Future Potatoe.

Canadian Chamber of Commerce in Hungary (CCCH) On Nov. 11, the CCCH hosted its 29th Canadian Lobster Dinner. The event was a great success, with countless influential business leaders attending. The lobster was the main star of the event, but many other entertainments contributed to making the dinner memorable.

CCCH thanks its sponsors and exhibitors for their support. A portion of the raffle proceeds was donated to the SOS Children’s Villages, helping many children in need. There was also live music and a silent auction. “We take pride in our annual Lobster Dinner because it’s always a great opportunity to connect with people and meet like-minded individuals in the business world. Come and join us next year at our grand 30th-anniversary Lobster Dinner!” a CCCH spokesperson said.

The Swiss-Hungarian Chamber of Commerce (Swisscham) On Nov. 2, Swisscham Hungary members attended an inspiring lecture, “1000-plus Solutions,” by Swiss pioneer and visionary Bertrand Piccard. This event was co-organized

by Andrássy University and the Embassy of Switzerland in Hungary. There are two more upcoming events for November. The first is a site visit to the Boxy Fulfillment warehouse, a cutting-edge, robotized warehouse logistics base for webshops and e-traders. This event is organized in the framework of Netzwerk Digital partnership. Registration is open to all. • Where: Boxy Ltd., Zsaróka út 32, 2225 Üllő. • When: Nov. 23, 2-4 p.m. The second is called “Health 2023: Yoga and Better Sleep Workshop.” If you want to know more about the science behind good sleep and are interested in yoga, this workshop is for you. • Where: La Place Studio, 1025 Budapest, Szépvölgyi út 44. • When: Nov. 28, 3-5 p.m.

German Hungarian Chamber of Industry and Commerce (DUIHK) Companies face a bundle of external challenges: two serious geopolitical conflicts, continuing uncertainties regarding the energy situation, a weakening economy in China, etc. In addition, there are far-reaching structural transformations, such as e-mobility and artificial intelligence.

The DUIHK Business Forum on Dec. 5, 2023, will provide an outlook on the economic environment in Hungary and Germany / Europe in 2024.

Our exclusive speakers will talk about this from different perspectives. Minister of Finance Mihály Varga will give the government’s assessments

and its economic policy priorities. Dr. Klaus Günter Deutsch, director of research, economic and industrial policy at the Federation of German Industries (BDI), will address the main challenges facing German and European industry. Radovan Jelasity, chairman of the management board of Erste Bank Hungary and president of the Hungarian Bankers Association, will assess the economic outlook in Hungary from a macroeconomic perspective and Dirk Wölfer, head of communications at DUIHK, will report on the mood and expectations of German companies in Hungary.

British Chamber of Commerce in Hungary (BCCH) The BCCH invites guests to join it for one of the best-known and most successful events in the expat calendar, the St. Andrew’s Ball celebrating Scotland’s national day, sponsored by long-standing member Budapest British International School. Experience authentic Scottish entertainment with Craig Weir, one of Scotland’s leading bagpipers, and dance along with the Liam Smith Ceilidh Band. There will be a three-course meal from the Marriott, along with wine, beer and, of course, whisky, courtesy of Diageo. There will also be a charity tombola for the benefit of Tabitha Haz Children’s Hospice, followed by disco hits to keep the dancing going until the early hours. Törley will be the official sparkling wine supplier for the event. • When: Nov. 25, 6 p.m. the professional management of the Széchenyi Card Program • Where: Budapest Marriott Hotel, Apáczai Csere János u. 4, 1052 Budapest. • Cost: HUF 39,000 per person (+ VAT). Dress Code: Black tie or Highland dress

Joint Venture Association (JVSz)

JVSz recently launched an event series called “Country Ride” to engage the SME sector across Hungary. The second event was held in Pécs involving Baranya, Somogy and Tolna counties, where Minister of Foreign Affairs and Trade Péter Szijjártó was the opening speaker in front of 140 business leaders. These events provide excellent knowledge transfer and networking opportunities.

The JVSz board encourages all interested parties to join the next occasion at Kecskemét, where the current energy and sustainability challenges vs. solutions and ESG requirements will be in focus.

The opening speaker will be Minister of Energy Csaba Lantos, and the programs of the Ministry of Economic Development and Kavosz Zrt., responsible for the professional management of the Széchenyi Card Program, will also be presented.

INTRODUCING OUR MAGNIFICENT TURKEY TO GO MENU A festive experience that is truly exceptional The Slow-Roasted Norfolk Bronz Turkey is an epicurean treasure, served with all traditional trimmings and a homemade pie, meticulously crafted by the world-renowned chef Wolfgang Puck’s elite team.

Matild Palace 1056 Budapest, Váci utca 36. | phone: +36 70 534 9000 | festive@matildpalace.com | spagobudapest.com