Budapest Business Journal 3204

VOL. 32. NUMBER 4 | FEBRUARY 23 – MARCH 7, 2024

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SPECIAL REPORT INSIDE THIS ISSUE

New Technologies

Free Your SME From the ‘Excel Monster’ Hungarian SMEs can have a hard time finding resources for development, including digitizing their manufacturing business. Catching up with multinational companies is just as difficult, yet it is far from impossible.  16

Building FutureProof Businesses Some may already be starting to talk about Industry 5.0, but the harsh reality is that there are hardly any factories with a fully functioning 4.0 environment in Hungary.

For local SMEs to prevail, it takes leadership, commitment and a clear vision. Using a digital twin won’t hurt, either.  18

Making up for Lost Time

SOCIALITE

Hungary’s Computer Art Pioneer Vera Molnár Honored Hungarian-born artist Vera Molnár, a pioneer of computer and algorithmic visual art, passed away in December 2023 aged 99. She is being honored with an exhibition at the Ludwig Museum inside Müpa Budapest.  21

NEWS

Economy Suffers Year-end Hiccups In the fourth quarter of 2023, Hungary’s economic performance stagnated, having changed neither compared to the previous quarter nor Q4 2022.

This was an unpleasant surprise, as the growth of the economy, which had only recovered from the recession in Q3 2023, stopped almost immediately.  3

BUSINESS

In an exclusive interview, British Chamber of Commerce in Hungary chairman Duncan Graham explains why he is keen to carry on in the position for a while yet. 'I like networking and meeting new people,' he tells us. 8 BUSINESS

Global M&A Deals Down, Hungary Does Even Worse “Mostly macro negative circumstances” cut global M&A activity by more than one-fifth; in Hungary, the slump is even worse, according to an annual Allen & Overy analysis. Worldwide, 2022 itself was already “not such a great market.”  9

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Budapest Business Journal | February 23 – March 7, 2024

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.

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THE EDITOR SAYS

UKRAINE WAR JUSTIFIES DEFENSE SPENDING One of the themes that came out of the CEO Breakfast meeting we put on with the German-Hungarian Chamber of Commerce and Industry and Wolf Illner of the Budapest Security Dialogue on the morning this edition went to print may not be particularly pleasant, but it is a brutal reality. Saturday, Feb. 24, 2024, is the second anniversary of Russia’s full-blown invasion of Ukraine. Seen against the backdrop of that and the conflict in the Middle East, this is a good time to be in the defense industry, and that will probably continue at least for a couple of decades.

This wasn’t always the case. As our German panelists from Rheinmetall and Dynamit Nobel Defense made clear, part of the attraction of doing business in Hungary is finding yourself in a country where people are happy to work in and for the defense industry, whether as employees or service providers. A phrase that came up several times was the welcome difference in mindset.

There was another theme that came through and one that deserves to be aired here. Independent and pro-opposition media outlets rarely have much positive to say about the Hungarian Government, especially when it comes to its perceived good relations with Vladimir Putin’s regime (Prime Minister Viktor Orbán remains the only EU leader to have shaken hands with the Russian President since the 2022 invasion when he did so, to much EU and NATO condemnation, on Oct. 14, 2023).

But despite that apparent friendship, Hungary was one of the first countries to react to Russia’s initial invasion of Crimea in February 2014, realizing

it needed to modernize its army given a radically altered European landscape. In January 2017, the Ministry of Defense articulated that idea when it announced the launch of “Zrínyi 2026,” a comprehensive military modernization and rearmament program designed to bring Hungarian Defense Forces into the 21st century after more than two decades of neglect.

Even without the typically “colorful” remarks of former U.S. President Donald Trump regarding NATO spending commitments, you would have heard many similar comments about the urgent need to modernize, especially to rearm and reequip, made at the Munich Security Conference this past weekend. That, and a growing recognition that national approaches may no longer be enough. Paul Walf, CEO of Rheinmetall Hungary, made precisely that point at the CEO Breakfast. One of his few criticisms of Hungary was to suggest that a more friendly attitude to NATO and defense exports would be helpful. The breakfast covered much other ground, not least how GermanHungarian SMEs can get involved in the value chains of multinational military industrial players such as Airbus or Rheinmetall. The short answer is more work is needed on speeding up a roadmap for doing so, but firms should look to join future rather than existing projects, and especially to get involved in R&D. It seems the ramifications of Putin’s war in Ukraine will be with us for years, probably decades to come.

There is plenty of scope to turn that to advantage.

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.

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Photo by Főfotó / Fortepan

THEN & NOW The color picture taken on Feb. 15 by state news agency MTI shows the renovated store of Újtelek, a village of 364 inhabitants in Bács-Kiskun County. The shop was refurbished with an investment of HUF 5 million (one of the smallest in the Kalocsa district, in the west of the county, and part of the Southern Great Plain), topped up by HUF 21 mln in funding from the Hungarian Village Program, launched in 2018. The funding went to renovate the interior and exterior of the building and to purchase tools and equipment. In the black and white photo dated 1970, from the Fortepan public archive, a small town store stands on Béke út in Tápiószele (Pest County), in a design that was typical for Kádár-era communist Hungary.

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Budapest Business Journal | February 23 – March 7, 2024

News

• macroscope

Economy Suffers Unexpected Year-end Hiccups

In the fourth quarter of 2023, Hungary’s economic performance stagnated, having changed neither compared to the previous quarter nor Q4 2022. This was an unpleasant surprise, as the growth of the economy, which had only recovered from the recession in Q3 2023, stopped almost immediately.

ZSÓFIA CZIFRA

Due to the weak performance in the last quarter, the annual average gross domestic product decline in 2023 was slightly more significant than expected. Hungary’s GDP was unchanged according to raw data, although it increased by 0.4% according to seasonally and calendar-adjusted and reconciled data in the fourth quarter of 2023 compared to the corresponding period of the previous year.

Compared to Q3 2023, the economic performance was unchanged, too, according to seasonally and calendaradjusted and reconciled data, the latest figures issued by the Central Statistical Office (KSH) reveal.

Compared to Q4 2022, economic performance rose mostly in certain agricultural sections, human health and social work activities, and information and communication. Falls in industry, construction and some market services, mainly wholesale and retail

Hungary’s Economic Performance: European Commission Winter Forecast 2024 Change in economic output (GDP) compared to the previous year, percentage (2020-2025)

an interesting detail: KSH corrected the data of the previous quarters in such a way that the GDP did not stagnate from January to March to April to June but decreased

by

0.1%,

meaning we had not three but four negative quarters in a row. That has not happened since 1995, when they began calculating according to the current methodology, he says.

Such weak year-end data may also explain why the government is pushing growth-supporting measures so strongly, Virovácz thinks. This means that the deficit target could also be higher since it is calculated in proportion to GDP; if gross domestic product is smaller, the same deficit will be higher in percentage, he noted.

What of 2024?

Source:

trade, offset the growth. According to raw data, gross domestic product was

0.9% lower

in 2023 and 0.8% lower according to seasonally and calendar-adjusted and reconciled data than in the previous year.

Analysts had expected economic growth to continue in the last quarter of 2023, even if not with the momentum of the third quarter. In light of the fact that the consensus of forecasts projected an expansion of 0.4%, the Q4 data is even more disappointing.

It is worth recalling that the Hungarian economy slipped into recession in the second half of 2022 and emerged convincingly only in Q3 last year, producing 0.8% growth.

The drop in real wages, slowdown in the industrial economy, and shrinking public and private investments all contributed to the economic downturn.

Agriculture Grows Recovery Agriculture, which produced good crop results when compared against the base effect of the 2022 drought, played a big role in the recovery. After that, analysts expected to see some growth

in the fourth quarter due to the gradual recovery. But that did not prove to be the case: due to the weak performance in the last quarter, the annual average GDP decline in 2023 was even slightly larger than expected. According to the raw figures, the contraction was 0.9% rather than the expected 0.7%; when adjusted, the figure was 0.8%.

A weaker performance had only been recorded three times in the past 27 years: during the financial crisis in 2009, the European debt crisis in 2012 and the coronavirus crisis in 2020.

Although the detailed structure of the fourth quarter GDP will only be published on March 5, it can be said that the weakness of industry had a negative impact on economic dynamics. However, analysts had trusted that the increase in real wages would finally boost consumption, which could offset the negative effect of industrial performance. But this did not happen after all, so consumption was probably not as dynamic as expected. It was not possible to expect good results from the investments in the first place.

The data published by the KSH on Hungarian GDP was much weaker than the analysts’ preliminary expectations, wrote ING analyst Péter Virovácz. He also drew attention to

With the weak fourth-quarter performance, the spillover effect into 2024 will also be much less robust than desired: to achieve the 4% economic growth that the government hopes for, robust quarterly growth would have to be achieved throughout 2024.

ING’s forecast is fundamentally more pessimistic than the government’s; the bank expected GDP growth of 3% in 2024, but now even this is in danger “seeing the economic performance at the end of last year, so we clearly identify downside risks to the growth prospects,” wrote Virovácz.

While the GDP data was a negative surprise, the January inflation data provided more reasons to be optimistic.

KSH reported that consumer prices were 3.8% higher on average in

January

2024

than a year earlier. Compared to December, prices were up by 0.7% on average; however, clothing and footwear became 2.1% cheaper.

Since the second half of last year, significant disinflation has been detected in the economy. Inflation had already reached single digits in October. In December, prices increased by 5.5% compared to the previous year’s data. Analysts had forecast a figure of around 4% for January, so the 3.8% data was a positive surprise.

However, it is also important to note that the base effect is most visible in the first month of this year since the wave of inflation caused by the war and the energy crisis peaked exactly in January of last year at 25.7%.

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Budapest Business Journal | February 23 – March 7, 2024

Hungary and CEE Attracting Further Hotel Investors The Central and Eastern European markets are seeing a growth in hotel occupation in their average daily rates, although they are not quite back to the 2019 pre-coronavirus levels. Budapest has the second-highest ADR and revenue per available room rates in the region after Vienna, according to the hotel and hospitality consultant Horwath HTL Budapest.

GARY J. MORRELL

“The recovery is already underway and has surpassed most expectations. Hotels across the CEE region are showing robust performance, already exceeding pre-pandemic levels on the markets,” says Cushman & Wakefield and law firm CMS in their Hotel Investment Scene in CEE report for 2023.

“This has attracted the attention of investors, and we are starting to see a rebound in transactional activity despite the high cost of financing and the ongoing economic and geopolitical challenges. Investors are attracted by the anti-inflationary nature of hotel real estate and the long-term growth in the tourism sector in CEE,” the report notes.

A biweekly look at real estate issues in Hungary and the region

Artist’s rendering of the Holiday Inn & Suites Budapest Centrale, due to open in late 2026.

In a new Budapest project, IHG Hotels & Resorts has announced its first 170-room Holiday Inn & Suites property in Europe. Set to open in late 2026, the Holiday Inn & Suites Budapest Centrale will be part of a mixed-use development located directly above the Puskás Ferenc Stadion metro station and intermodal transport hub.

Long-term Agreement

The location is adjacent to the Puskás Aréna national soccer stadium and the Papp László Budapest SportArena.

The developers of the new project, Chain Bridge Ventures, and hotel lease operators Mogotel Hotel Group have entered into a long-term franchise agreement with IHG. “IHG has a long-term and growing portfolio of properties in Hungary, including InterContinental Budapest, Holiday Inn Budapest Budaörs, Crowne Plaza Budapest, Vignette Collection Verno House Budapest and the 27-key Kimpton Budapest, which is expected to open later this year,” said

Investment Breakdown in the 2022 CEE Hotel Sector COUNTRY

Real Estate Matters

AMOUNT

Hungary

EUR 227 mln

Romania

EUR 86 mln

Czech Republic

EUR 76 mln

Poland

EUR 35 mln

Bulgaria

EUR 14 mln Source: Cushman & Wakefield

Willemijn Geels, VP for development in Europe at IHG Hotels & Resorts.

Budapest hotel supply reached a record

224

properties

with a total capacity of more than 50,000 beds, according to Horwath HTL Budapest. The new supply last year exceeded 1,200 rooms.

“Limited financing availability for hotel developments, coupled with rising development costs (now nearly equivalent to Western European standards), suggests that projects not yet started are likely to be postponed or reassessed. The shift will maintain the balance between supply and demand, avoiding market saturation,” comments Attila Radvánszki, director of Horwath HTL Hungary.

Popular Destination

According to Colliers figures, EUR 0.26 billion was invested in the CEE hotel sector for 2023 as it becomes a popular hotel destination in what is currently a challenging investment environment.

For 2022, EUR 227 mln was invested in Hungary, EUR 86 mln in Romania, EUR 76 mln in the Czech Republic, EUR 35 mln in Poland and EUR 14 mln in Bulgaria, according to Cushman & Wakefield figures.

More than EUR 3 billion has been invested in hotels in the CEE-6 (Bulgaria, the Czech Republic, Hungary, Poland, Romania, and Slovakia) over the last five years. The majority of this, 86%, was in the Czech Republic, Poland and Hungary,

with

70%

invested in capital cities and 89% sourced from European and domestic investors.

“To sustain overall profit stability, strategic ADR-driven segmentation is vital. A thoughtful re-evaluation of the F&B offers, focusing on flexibility to enhance uptake, control staffing costs, and improve profitability, is imperative.

As cost escalation intensifies, meticulous expenditure management is crucial for preserving GOP margins through 2024,” the Hotco 2024 Hotel Investment Conference in Vienna concluded.

“Limited financing availability for hotel developments, coupled with rising development costs (now nearly equivalent to Western European standards), suggests that projects not yet started are likely to be postponed or reassessed.

The shift will maintain the balance between supply and demand, avoiding market saturation.”

As much as EUR 63 mln is expected to be transacted by the yearend, the majority of which will be in the Czech Republic, Poland and Hungary. In all, 2,650 hotel rooms are expected to be transacted, according to Cushman & Wakefield.

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Budapest Business Journal | February 23 – March 7, 2024

News | 5

Resolution of Sweden’s Roundup Crisis NATO bid Finally in Sight Ukraine

Prime Minister Viktor Orbán promised the Hungarian Parliament would ratify Sweden’s membership in the North Atlantic Treaty Organization (NATO), once lawmakers reconvene for the spring session later this month, during his annual State of the Nation address on Feb. 17.

Speaker László Kövér on Facebook, in which he requested that a vote on the ratification of Sweden’s NATO accession be put on the agenda for the start of the Parliament’s spring session on Feb. 26. He added that Fidesz MPs were in favor of backing the ratification.

While Hungary was keen on meeting Swedish leadership over the issue of the country’s acceptance into NATO, it was not as forthcoming with some other allies.

A bipartisan delegation of U.S. Senators, including Democrats Jeanne Shaheen of New Hampshire and Chris Murphy of Connecticut, and Republican Thom Tillis of North Carolina, visited Hungary

on

Feb. 18

Republican Senator Thom Tillis, followed by Democratic Senators Jeanne Shaheen (left) and Chris Murphy, speaks during a press conference given by the U.S. Senate bipartisan delegation at the U.S. Embassy in Budapest, on Feb. 18. Photo by Szilárd Koszticsák / MTI. Orbán acknowledged that he and Swedish Prime Minister Ulf Kristersson had made progress “to rebuild trust” between the two countries.

On

NICHOLAS PONGRATZ

Breaking a two-century-long precedent of neutrality, Sweden had applied to join the military alliance in May 2022, following Russia’s invasion of Ukraine in February of that year. Hungary remains the only country in the alliance yet to approve the accession, which requires unanimity.

“It’s good news that our dispute with Sweden will soon be settled,” Orbán told his supporters during the annual address.

“We are going in the direction that at the start of parliament’s spring session, we can ratify Sweden’s accession to NATO.”

Feb. 5,

the opposition had called an extraordinary meeting of Parliament to ratify Sweden’s NATO bid, which lawmakers from the ruling Fidesz party had boycotted, insisting that Kristersson visit Budapest before they did so.

During a visit to Warsaw on Feb. 19, Kristersson said he would visit Orbán in Budapest to discuss the approval of Sweden’s NATO bid.

“We have had a few pieces of conversation this week,” Kristersson told a joint news conference with his Polish counterpart Donald Tusk. “I look forward

to have [sic] the meeting, and I look forward to Sweden’s NATO accession.”

The next day, Orbán’s press chief Bertalan Havasi confirmed that Kristersson would come to Budapest on Feb. 23, at the invitation of the Hungarian PM. “It will be my pleasure to welcome @ SwedishPM Ulf Kristersson in Budapest this Friday,” Orbán said on X (formerly Twitter). “We are planning to discuss how to strengthen the defense and security policy cooperation between #Hungary and #Sweden, as well as our plans for the Hungarian Presidency of the Council of the European Union and the EU’s Strategic Agenda.”

Parliamentary Request Earlier that same day, the head of Fidesz’ parliamentary group, Máté Kocsis, posted a letter to House

“on a mission focused on strategic issues confronting NATO and Hungary,” the U.S. Embassy had said in a statement earlier on Feb. 16.

However, upon their arrival, Shaheen said it was “disappointing” that no members of the Hungarian Government had accepted invitations to meet the delegation. Earlier, Shaheen and Tillis, who co-chair the Senate NATO Observer Group, said they would submit a bipartisan resolution to Congress condemning democratic backsliding in Hungary.

In the resolution, a copy of which was obtained by international newswire service The Associated Press, the senators note “the important role Hungary can have in European and trans-Atlantic security.”

However, it also notes that Hungary “has not joined all other NATO member states in approving the accession of Sweden to NATO, failing to fulfill a commitment not to be last to approve such accession and jeopardizing trans-Atlantic security at a key moment for peace and stability in Europe,” the resolution says.

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Budapest Business Journal | February 23 – March 7, 2024

Chinese Investors Lead the Charge in Boosting Hungarian Automotive Hungary aims high in embracing investments that will deliver automotive’s electric transition.

BYD’s multibillion-euro EV plant in Szeged and a series of other recent announcements showcase a gameplan built, at least in part, around Chinese investments.

early

2000s,

the whole CEE region has welcomed them with open arms.

New Kids on the Board

Shortly after Nevijo Mance, the former CEO of Jaguar Land Rover’s Hungarian operation, was replaced by Ákos Garaba, two other automotive giants announced changes in local leadership. Audi has tapped Michael Breme to be the next chairman of the board of management of Audi Hungaria. The former head of Steering Business Area Product Lines and Module Management at Audi AG replaced Alfons Dintner, who had headed the Hungarian unit since October

A monthly look at automotive issues in Hungar y and the region

Chinese Ambassador to Hungary Gong Tao (left), Mayor of Szeged László Botka (sitting) and Minister of Foreign Affairs and Trade Péter Szijjártó at the signing of the pre-purchase agreement for the site of the future BYD factory in Szeged, at the Ministry of Foreign Affairs and Trade on Jan. 30. Photo by Zoltán Máthé / MTI.

BBJ STAFF

Given the European Union has pretty much written in stone that 2035 is the deadline for producing zero-emission autos only, the road to electrification from here is pretty much a one-way street. As a result, what must now be viewed as European legacy brands are being placed under enormous pressure by competitivelypriced Asian counterparts typically turbocharged with lavish state aid.

On that note, the European Commission has launched an anti-subsidy investigation against China. In a preemptive measure, Chinese investors have been extremely keen to find new strongholds on the continent: setting up shop within the EU neutralizes eventual tariff issues, cuts logistics costs to a vast market and helps serve European partners more easily.

The V4 countries (Czech Republic, Hungary, Poland and Slovakia), have been a hot target for Chinese automotive stakeholders in the past years, but since the

Automotive Matters

The Hungarian Government’s proChina policy and lucrative incentive packages seem to sweeten deals effectively, as evidenced by recent investment announcements. To name a few examples, leading battery manufacturers Sunwoda and Eve Power have announced megaprojects and cathode-material producer Huayou Cobalt has committed to building a new plant worth nearly EUR 1.3 billion.

Little and Large

Smaller-scale projects have also been making headlines lately.

Take Jiecang Linear Motion’s EUR 60 million development or the newly announced nearly EUR 105 mln factory for Evoring Kft. (a Shuanghuan Driveline company), that will build EV gears and shafts.

On top of all that, the news broke before Christmas that BYD would

2019 and left Volkswagen Group to focus on private interests.

The Mercedes Manufacturing plant in Kecskemét (95 km southeast of Budapest) also has a new boss, Jens Bühler, who first joined the automaker at its Sindelfingen HQ in 2003. He later oversaw production planning at the company’s plant in Beijing and was in charge of planning for the plant expansion in Kecskemét. He replaces Christian Wolff, who retired after leading the plant for eight years.

establish its first European EV plant in Szeged (175 km southeast of Budapest by road), since when the land purchase agreement has also been signed. The multibillioneuro project will create thousands of jobs. As Mayor of Szeged László Botka emphasized, up to 85% of the population favor the investment, which will be “one of the largest in the history of Hungarian economic policy.”

Exact numbers are not public yet, but this is no small endeavor considering that construction, scheduled to start on Feb. 10, will take place on a

300-hectare plot.

Minister of Foreign Affairs and Trade Péter Szijjártó praised BYD’s effort accordingly: “It is set to ensure for decades that the Hungarian economy can stay on a growth track.”

The government’s “Eastern Opening Policy” has contributed significantly to the fact that the number one investment target of Chinese firms in the region has become Hungary, he added. BYD’s factory means that Hungary’s position will be further strengthened in the automotive industry. By 2018, it made the list of top 20 exporters in the world, while production value has grown by a factor of 3.5 in the past 15 years, he said.

BYD’s investment is also significant because the firm dethroned Tesla as the largest EV maker last year.

According to Financial Times data, Elon Musk’s company handed over 484,000 million cars in the fourth quarter of 2023, while its Chinese rival delivered 526,000 in the same period.

‘Bring Your Dollars’

In fact, BYD was already the biggest seller of EVs and plug-in hybrids, jointly known as new energy vehicles (NEVs).

With the standalone EV title also officially bagged, the new capacities in Hungary are bound to increase market share. The anecdote that the company’s initials stand for “Bring Your Dollars” might hold some truth. (Officially, it stands for “Build Your Dreams.”)

While construction is ongoing, the Chinese company has already found three retail partners in Hungary.

Alongside Duna Auto and Wallis Motor, Schiller Auto has joined the dealer network. In fact, Schiller is shedding Opel, the brand the car dealer has been most closely associated with for decades, from its portfolio to make room for BYD. While BYD’s arrival has been received with excitement locally, the discussion about the actual benefits of Asian automotive investments goes on. Many fear that only low-added-value assembly will be carried out in the country, that local suppliers won’t be able to join the value chain due to a lack of competence or need, and cheap migrant labor would pose a threat to the Hungarian workforce.

As Corvinus University professor Ágnes Szunomár highlights in a recent study, a shift to higher added-value activities seems to be an option only in the longer run.

For now, China is unlikely to grant access to the upper links in the value chain.

To ensure that happens, it would make sense to ask for guarantees to engage local suppliers in exchange for incentives, and the V4 countries could also craft a joint strategy for approaching Chinese investments, Szunomár argues.

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Budapest Business Journal | February 23 – March 7, 2024

WHO’S NEWS Do you know someone on the move? Send information to news@bbj.hu

VGD Hungary Appoints Fresh Partner Viktor Szabó became a partner at VGD Hungary on Jan. 1, where he now manages the consultancy’s tax and payroll business.

Szabó has gained extensive experience in domestic and international tax consulting. He joined VGD Hungary in 2019 as tax and payroll director, regularly representing VGD Hungary at national and international events, tax working groups, and the consultation forums of social organizations and authorities.

In 2022, he was elected a member of the Nexia BG Corporate Tax Core Group, representing the TAO tax areas of Hungary in the international organization. In addition, in 2023, Szabó was elected a member of the Nexia BG Tax Technology Core Group, supporting Nexia International’s work in tax technology.

He is a member of the Business and Management Skills Council (under the auspices of the Hungarian Chamber of Commerce and Industry), a board member of the Joint Venture Association’s Transparent Finance & Tax & Law Professional Forum, and has also taken an active role in the Hungarian National Tax and Customs

News | 7

market-leading companies every day, from multinationals to large family businesses, we place a strong emphasis on supporting and recognizing our colleagues, who play a very important role in the development of our company,” Szabó notes.

Partner Named at Bán, S. Szabó, Rausch & Partners

Viktor Szabó Administration’s working groups for preliminary consultation on the implementation of tax administration and innovative tax technology solutions.

The consultancy notes that Szabó’s appointment as a partner will further strengthen the business development of VGD Hungary’s tax advisory and payroll services. The focus of his tasks will remain on providing the most optimal and efficient tax and payroll solutions for clients by implementing state-of-the-art digital tools and personalized services.

“I am extremely proud and honored to be a partner of one of the best second-tier consulting firms in Hungary. Moreover, in addition to helping outstanding and internationally

Having worked with Bán, S. Szabó, Rausch & Partners since 2010 and has been an associate attorney since 2012, Kinga László-Bölcskei was promoted to partner as of Jan. 1, 2024.

She initially advised the firm’s German clients, where she gained extensive experience in general corporate and real estate law. She has subsequently been involved in several international corporate transactions and acts as counsel in competition law proceedings.

She completed her law studies at the Faculty of Law and Political Sciences of Eötvös Loránd University, from where she graduated in 2008, and furthered her studies at the Georg-August Universität LLM (Göttingen, Germany). She also graduated in Law and Economics at Corvinus University.

“Kinga’s expertise and professional approach have contributed significantly to the success of the law firm in recent years. We are confident that in her role as a partner, she will continue to contribute greatly to

Kinga László-Bölcskei the success of our clients and our firm,” said managing partner János Rausch.

“I am extremely pleased and proud to continue my career as a partner at Bán, S. Szabó, Rausch & Partners. This new role is not only a personal acknowledgment of my years of work but also an opportunity for me to participate in [...] strategic decisions and subsequently to contribute even more actively to the future success of our clients and our firm,” said Kinga László-Bölcskei.

PRESENTED CONTENT

United Way Launches Essential Skills Program InnoMate for 4th Time United Way launched its successful InnoMate program for developing the entrepreneurship skills of secondary school students for the fourth time on Feb. 16. Seven secondary schools from Budapest, Szeged, Kisújszállás, Szentendre and Szeged are participating.

BBJ STAFF

According to research, poor problemsolving and conflict-management skills, low creativity, and lack of experience in cooperation and teamwork severely hamper the job prospects of Hungarian secondary school students.

The fact that most pupils gain minimal experience in innovation, entrepreneurship, critical thinking, effective communication, financial

The curriculum, unique in Hungary, develops creativity, critical thinking, communication, and collaboration but also provides the foundations for community building, business ethics, and social responsibility.

The program includes a one-day hackathon at participating schools, followed by

12

Innovation Club

awareness, and responsibility exacerbates the education system’s shortcomings.

Low self-confidence and a lack of initiative, experimentation, and implementation predict poor performance in the workplace and reduced employment prospects.

In collaboration with education and start-up experts, United Way developed a specific curriculum to equip young people with the work and entrepreneurial skills needed to meet today’s needs.

Essential Business Skills

The program has been running since 2020 and has helped hundreds of

secondary school students gain the knowledge and skills essential to succeed in the job market.

sessions. The objective is that the participating teams plan and develop an entrepreneurial idea while learning the curriculum.

In the multi-round competition between the participating teams, they match their strength several times. The best five or six teams will join a three-day innovation camp in June with experts, entrepreneurs, coaches and mentors before they present their ideas on finals day.

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Budapest Business Journal | February 23 – March 7, 2024

Business

British Chamber Networking for Better Bilateral Outcomes

Nine months into his latest two-year term as chairman of the British Chamber of Commerce in Hungary, Duncan Graham shows little sign of slowing down. Indeed, he wants to carry on for a while yet, saying he feels a need to make up for lost time.

ROBIN MARSHALL

“I’m very keen to stand again. I think the main drive behind that is I felt robbed of two years during COVID,” Graham tells the Budapest Business Journal.

The BCCH had been an influential lobbying association in the period after the change of regime in Hungary but was in a much-weakened position when Graham agreed to stand in May 2019. Two previous board members, Kam Jandu of Budapest Airport and Dennis Diokno of FirstMed, persuaded him to run for election.

“They said, ‘Look, there’s a real danger here that nobody takes it; it might become irrelevant or disappear completely unless someone runs with it,’” recalls Graham, an authorized securities trader and wealth manager in his professional life.

He, in turn, persuaded others to stand for board positions in those elections. “We put a lot of effort in, and then, just as we started, COVID hit. We had two years of video conferences, and I thought, ‘Well, this is just brutal; I haven’t had a chance to do anything.’ So, I feel that I’ve really only had three years as chairman, not five.”

Given all of that, is the chamber

in

2024

where he wanted it to be? “I definitely feel we’re on the right curve. I wouldn’t say I’m exactly where I wanted to be.

launched last year, an international initiative called ‘Power Talks,’ which offers flash mentoring for young women. In September 2023, BCC Czech became a global partner of L’Oréal, and we are now looking for a partnering company in Hungary to help us deliver this project. We would need some of our key executives to give up some time, which is another set of questions we must work on, but you have to start somewhere,” Graham says.

While he isn’t keen on giving up hosting rights, Graham says he is happy to work with other international chambers in Hungary. He says there are good links with the German and Italian Chambers, and he hopes to build stronger bonds with AmCham following its annual meeting in December. And how about the relationship with the British Embassy?

“We were down to about 74 members when I took over, and we’re back just over 100. We are smaller than AmCham or the German chamber but are seen as being quite dynamic, with good quality, popular Duncan Graham events, and to be speaking to the right people.”

But the positives at this point are that our effort to bring smaller companies in, perception amongst other nationalities and and we’ve had some success with that. businesspeople in the country has changed.” But it is hard to get away from the big Graham estimates membership “had companies and creating events that halved over probably 10 years” but says they would like with our somewhat things have now turned around. limited resources.” There are currently “We were down to about 74 members when four office staff members, one of I took over, and we’re back just over 100. whom is the part-time bookkeeper.

We are smaller than AmCham or the German “Effectively, we’ve got three active Chamber but are seen as being quite dynamic, employees, and it’s a little chicken with good quality, popular events, and and egg. If we could get our numbers to be speaking to the right people.” up over the next few years to 120

Events, Dear Boy, Events

or

130,

Events, the chairman says, are crucial to it would give us a little bit more resource everything. The chamber had begun to piggyback programs organized by others, to employ somebody else and so grow more.” That future growth is most likely which meant the money went elsewhere, to be among SMEs, Graham thinks. and companies ended up asking what “There isn’t a huge number of mediumthey got for their membership fee. sized companies in this country; they are “We organize at least two business really quite small, or they’re absolutely events a month of some nature, led by our outstanding ‘CEO Dinner’ series supported huge. We have a very good ‘hold’ rate, with members rejoining each year. I’m sure by senior professionals from across the that will change; as we get more SMEs, business spectrum. Whether for larger companies or SMEs, we’ve gone for regular the chances that some of those will leave will grow. It becomes a slightly different meetings and sports events like our Royal dynamic, but we’re prepared for that.”

Ascot race day at the Hilton Budapest There is a natural tendency to try and learn to pick up our visibility in the market.” from our neighbors in the region. Graham With the help of executive director recently visited his opposite numbers in Oliver Strommer, Graham spends much the British Chamber of Commerce Czech time courting new members or trying to Republic. He admits, however, that he had persuade former ones to return. BP, for not heard of many of its members, Czech example, came back after a three-year businesses that are tied into supplying break on the back of one of those sporting events, a Six Nations rugby-watching party. the German automotive market.

The two big standouts in 2023 were Rolls Mentoring Scheme Royce Aviation and Jaguar Land Rover.

“We’ve decided we’re going to do So, what is the mix of members like today? some work together. They will help “I’d say we’re still heavy on the large company side. We’re making a conscious us join a mentoring program they

“The British Embassy has been excellent. We have an excellent working relationship. The embassy supports our events and is represented at our board meetings at the highest level. The embassy is open to ideas we suggest, and we receive help from the Department for Business and Trade team. The embassy will encourage us to use the stunning British Residence for high value events too.”

Graham says he has seen little impact from Brexit, probably because most members sell services rather than goods (Tesco would be an obvious exception). Interestingly, he asked that the BCCH be allowed to stay within the EU Chambers organization, which it helped found, a request that was accepted. In the coming years, whoever is chairman of the BCCH will take over the rotating presidency of EU Chambers.

It’s clear that much of the remedial work at the British chamber since 2019 has come from Graham utilizing his own network.

“Yes, a lot of the initial headline stuff has been me, but often, it’s only because I’ve met people at events. I like networking and meeting new people. But now it needs to go up a level. I need the entire board to really contribute to this. With Andras Modos of EY as vice chair and Douglas Arnott of EDMF as treasurer, I’ve seen a big difference, especially in the last 12 months.”

It seems that if you are not already a member, perhaps you ought to expect to be contacted soon.

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Budapest Business Journal | February 23 – March 7, 2024

Global M&A Deals Down by 1/5, Hungary Does Even Worse “Mostly macro negative circumstances” cut global M&A activity by more than one-fifth; in Hungary, the slump is even worse, according to an annual Allen & Overy analysis.

Balázs Sahin-Tóth, Counsel at Allen & Overy Kádár Ügyvédi Iroda in Budapest (Allen & Overy Budapest) Hungary effectively fell off the radar, with just 67 deals worth a mere USD 156.7 million, a paltry 5% of the USD 3.24 bln in 2022 from 89 deals.

As Sahin-Tóth emphasized, the 2022 total had been boosted by the extraordinary one-off sale of Vodafone Magyarország to a Hungarian investor group for USD 1.78 bln.

Occasional Player But while this demonstrates, as he put it, “how Hungary remains a strong market for occasional large transactions, but with far less sustained or predictable performance than other CEE markets,” it still represents a shocking reduction in activity last year.

Another cause, which also negatively impacted the global figures, is

regulatory concerns, the increasing interference by governments jittery about acquisitions in what they view as strategic companies, especially those involving foreign takeovers.

“This January [...] we counted 111 jurisdictions worldwide which have some kind of FDI approval regime in place,” Attila Kőmíves, counsel and antitrust specialist at Allen & Overy Budapest, told clients.

Indeed, the regulatory regime within the European Union became tighter only last October when the EU’s Foreign Subsidy Regulation entered into force. This change alone has already triggered some 50 merger notifications, Kőmíves noted.

Such approvals introduce delays and risk to deal closures, deterring

State Pre-emption Right Over PV Plant Likely to Deter Foreign Investors “Lawyers are [still] trying to understand this new legislation, but as it stands now, it seems that the government will have about four months to think about and approve transactions, or whether to exercise the pre-emption right,” notes Attila Kőmíves.

For Kőmíves, this causes “a huge uncertainty, and a long period which buyers need to build into the transaction timeline if thinking about buying a solar power plant,” he warns.

Allen & Overy advised CMC, a Chinese company, in the sale of its 100MW solar cell installation near Kaposvár to MVM, the state-owned electricity company, only last year.

Consequently, the Budapest Business Journal sat down with Balázs Sahin-Tóth to try to clarify this decree’s impact.

potential buyers. However, in Hungary’s case, many potential target companies are too small to meet the threshold values of the more stringent EU requirements.

However, the regime is further complicated by having to submit deals for approval to both the Ministry of Economy and the Prime Minister’s Cabinet Office, sometimes resulting in “two decisions in conflict with each other,” Kőmíves said.

Unexpected Gov’t Decisions

KESTER EDDY

Hit by “mostly macro negative circumstances,” including high interest rates, credit difficulties, regional conflicts, the volatility of energy prices and uncertainties in capital markets, the value of global corporate mergers and acquisitions deals fell away in 2023, tumbling some 22% on the previous year, Balázs Sahin-Tóth, counsel at law firm Allen & Overy Budapest, said in a presentation to clients on Feb. 8.

Given that 2022 itself was already “not such a great market,” it is clear last year’s results marked a severe downturn in deals across the globe.

In pure numbers, the total value of deals fell from just over USD 3.42 trillion in 2022 to just over USD 2.65 tln last year, while the recorded numbers shrank from 58,000 to 55,000, Sahin-Tóth said, based on London Stock Exchange Group (LSEG) data.

So far, so miserable, but the picture was even bleaker for Central Europe, particularly Hungary. Indeed, the regional deal value almost halved to USD 21.5 billion last year, while

Business | 9

BBJ: In this sale of the CMC solar unit, did the state use the new pre-emptive rights?

BAT: No, this was a market-driven process. MVM took part in an auction, and they offered the highest price.

BBJ: What are the effects of this pre-emption right?

BAT: Technically, it means if you are a foreign investor buying a Hungarian company holding a solar plant, you have to ask the state whether they want it. And if they want it, they can step in and purchase the assets for the same price and terms as was agreed [between the original bidder and the vendor].

The broader effects are still unknown, but one negative effect could be that, probably, foreigners will be less willing to come and

have a look because it costs a lot to do a proper due diligence process.

It’s a long, at least half-year, process to get there and sign the share purchase agreement.

So, there is uncertainty at the end that the state can step into a deal that you prepared at substantial costs, let’s say at EUR 400,000-500,000 preparation costs, which you will not recover.

BBJ: There is no recourse to reclaim [the fees]?

BST: No. So that may be a deterrent [to investment].

BBJ: What happens if you build, say, a manufacturing production hall and install a 10 MW array of photovoltaic cells on the roof, then want to sell the investment later?

Compounding the problems, as Sahin-Tóth pointed out, are unexpected government decisions, illustrated last October, when it granted the state the pre-emption right to buy solar power plants in case of a potential sale.

“This is a big question mark and a cause for concern,” he said. (Editor’s note: see separate box.)

The Hungarian market is not all gloom and doom, however. SahinTóth says that, given global concerns, interest is inevitable in companies everywhere operating what he terms the “three D” activities: de-carbonization, digitalization (primarily AI), and de-globalization, or national tendencies to bring operations back within national borders.

In addition, inflation has been falling quickly, allowing an easing of interest rates and bank credit.

Furthermore, the massive falloff in deal activity might not be as bad as the LSEG data implies. Further analysis by Hungary’s Telex website shows that the annual numbers may have been distorted by different dates used to book transactions.

Using data from the Emerging Markets Group EMIS, for example, Telex estimated the top five 2023 deals alone (which included the Vodafone sale booked by LSEG in the 2022 figures) amounted to USD 3.14 bln, giving a totally different picture to the LSEG data.

BST: That’s a good question!

Technically, it is covered by the preemption right. It [the decree] says that if any of your activities, be it main or ancillary, includes operating solar plant assets, [it is subject to the pre-emption right].

BBJ: Could the company split off the solar plant from the main business and sell the two operations separately?

BST: In theory, yes.

BBJ: And will this pre-emption right mean companies are less likely to install solar cell arrays at their facilities in the future?

BST: Or not include such activity in their activities as registered by the court. The pre-emption right applies to the sale and purchase of a company with “electricity generation” as a registered activity.

10 | 2

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Budapest Business Journal | February 23 – March 7, 2024

Photo by Mladen Mitrinovic / Shutterstock.com

Coors Slides Down the Rockies, all the way to Hungary Starting this month, Hungarian beer drinkers can get a taste of an iconic U.S. beer as Coors, distributed

by Borsodi Brewery, arrives on the market.

BENCE GAÁL

Parent company Molson-Coors picked Hungary as the first country in the region to introduce the beer. Zsolt Vuleta, the managing and commercial director of Borsodi Brewery, noted that this is a clear sign of trust towards the Hungarian company.

Hungary was chosen to launch the beer after in-depth market data analysis revealed that sales results here would give the clearest picture in the region about the “potential” of the beer.

“We are shaping our portfolio to serve the ever-evolving needs of beer lovers. We have found that more people have been keen to try

new, special products in recent years.

The timing is, therefore, ideal for the launch of our newest lager beer, Coors, which will be a favorite with Hungarian

Ryanair to add 6 Routes, Aims to be Hungary’s #1 Airline in 2024 Ryanair will add six new routes and base two more aircraft at Budapest’s Ferenc Liszt Airport this summer, Michael O’Leary, the low-cost airline’s CEO, announced in Budapest on Tuesday, Feb. 20.

KESTER EDDY

The new routes, serving Frankfurt-amMain, Faro, Milan, Skiathos, Trieste and Tirana, mean the Irish carrier will connect a total of 66 destinations to Hungary and expand the total passengers carried to a record five million this year, a 22% increase on 2023 numbers, he said.

consumers thanks to its fresh taste and innovative packaging,” Vuleta said.

He noted that while the past few years have been turbulent for breweries in the country, this did not stifle the transition of Hungarian beer preferences towards quality products.

Blue Mountains

Coors arrives with innovative packaging.

When the beer’s temperature reaches what Borsodi dubbs “Coors cold” (5ºC or 41ºF), the thermochromic ink turns the mountains on the label blue.

At 4.3% ABV, Coors is an easy-drinking beer with light fruity and malty notes and little bitterness or aftertaste.

The beer has a storied past. The Coors story began more than 150 years ago, in 1873, when Adolph Coors set out for Denver, Colorado, to find the perfect conditions for brewing beer.

Drawing inspiration from the initially harsh surroundings of the Rocky Mountains, the young brewer decided to settle directly next to an ice-cold, crystal-clear stream at an altitude of 1,670 meters as the ideal place not only to build a brewery, but also to brew a cool, crisp lager. The original brewery still stands in Golden, Colorado, and generations of the Coors family have continued the brewing tradition.

An intensive ad campaign, including television spots, will accompany the introduction to Hungary.

The product is available from this month in 0.33-liter bottles and half-liter cans, and on tap in some restaurants and bars. The Coors Borsodi distributes in Hungary is brewed in the Czech Republic (although it is not yet commercially available in that country).

Not for the first time, the former Irish accountant had harsh words for the Hungarian Government, terming the current environment tax variously “bogus” and a “scam” that “penalizes ordinary citizens and visitors.”

Empty or Full

Moreover, he alleged that the tax is linked to aircraft regardless of whether they fly full or empty.

“We’re calling for a fair environmental tax, which should take load factors into account, i.e., if you travel with higher load factors, and you are more efficient, you should pay a lower environmental tax, [but] that’s not the way it operates [here]in Hungary.”

In response to a question from the Budapest Business Journal, O’Leary admitted he had flown from Vienna to Budapest as the sole passenger on a private flight earlier that day.

He further admitted that this Ryanair CEO Michael O'Leary. Photo by Kester Eddy. flight’s miserably poor load factor would not be included in Ryanair’s That would also make Ryanair The move will “support” 4,000 jobs official statistics as the aircraft the largest airline in Hungary. in Hungary (directly and indirectly), concerned was owned by a including The additional two aircraft will bring subsidiary airline. the total number of planes based Asked if this did not make the in Budapest to 10, making what statistics “bull s**t,” his reply was “highly paid” Ryanair pilots and cabin O’Leary termed “a USD 1 billion typical O'Leary: “All statistics are crew, he said. investment” in the country. bulls**t, don’t you know that?”

300

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Budapest Business Journal | February 23 – March 7, 2024

PwC Says CEOs Less Concerned, Cautiously Optimistic for 2024 Based on the results of its 13th annual domestic CEO Survey, consultancy PwC Hungary says confidence in both global and Hungarian economic growth seems to be returning after last year’s spike in pessimism.

BBJ STAFF

According to PwC Hungary’s 13th CEO Survey, 54% of Hungarian CEOs are confident about the global economic outlook, while 60% believe Hungarian economic growth will also improve.

For the first time in the survey’s history, Hungarian CEOs are more optimistic about general economic growth than their own revenue prospects.

The percentage of those confident about their company’s revenue growth in 2024 has fallen to 2012 levels (47%).

More than half (58%) of CEOs say they plan to increase prices, and more than a third (36%) anticipate increasing headcount over the next 12 months.

Four out of 10 believe they will need to change their companies’ business models and processes to survive in the long term. Hungarian chief executives expect an exchange rate of 394 forints to the euro, 1.7% GDP growth, and 8% inflation overall this year.

From the 297 personal interviews PwC Hungary staff conducted for this 13th annual survey, it is clear that, compared to last year (when pessimism reached one of the highest levels on record), the majority of Hungarian CEOs are now more optimistic: 54% believe the global economy will improve, and 60% expect the same for Hungarian economic growth.

On the flip side of that particular coin, 22% anticipate a decline in global and Hungarian economic growth (compared to 76% and 85%, respectively, last year).

Over the past five years, CEOs say they have improved the way their company creates, delivers and captures value by developing novel products or services (54%), adopting

Business | 11

have undertaken to improve energy efficiency (84%); innovate new, climate-friendly products, services or technologies (64%); or develop solutions that support their clients’ climate-resilience (52%). About half (47%) of companies are upskilling their workforce, and 40% are incorporating climate risk into financial planning.

However, 13% of respondents do not consider it their responsibility to reduce their emissions; an outstanding proportion of these companies are AI champions in telecommunications and entertainment.

“CEOs perceive enormous inefficiencies across a range of their companies’ routine activities – such as emails, procurement, hiring, and decision-making meetings – Tamás Lőcsei, PwC Hungary’s country managing partner viewing roughly 29% of the (right, with microphone) and Szabolcs Mezei, a partner and government advisory leader at PwC Hungary, summarizing the time spent on these tasks results of this year’s survey at the Feb. 15 press conference. as inefficient. Performing administrative tasks Nearly three-quarters (72%) of CEOs new technologies (44%) or developing as efficiently as possible say they are concerned about AI-related new technologies in-house (32%), and is key to transformation.” forming new strategic partnerships (47%). cyber risk in the short term; and even

Among external threats, inflation remains the top concern for CEOs (see detailed chart of p12-13).

While two-thirds of CEOs report reallocation of resources (financial and human) between core business activities year to year, most companies have only attempted meaningful transformation in response to changes in customer preferences (55%), technological change (44%), government regulation (48%) or competitor actions (30%).

In this ecosystem, government regulation is two-faced: nearly half (48%) of CEOs say it drives change, while more than one-third (35%) say it hinders change. Other barriers inhibiting transformation include bureaucratic processes in the company (20%), lack of technological capabilities (20%), and limited financial resources (19%).

“CEOs perceive enormous inefficiencies across a range of their companies’ routine activities – such as emails, procurement, hiring, and decisionmaking meetings – viewing roughly 29% of the time spent on these tasks as inefficient. Performing administrative tasks as efficiently as possible is key to transformation,” Szabolcs Mezei, a partner and government advisory leader at PwC Hungary, emphasized.

Generative AI and Disrupting Generative AI has been adopted by less than a fifth (18%) of companies, and 27% of CEOs say their company has changed its technology strategy because of generative AI. Exceptions include technology, media and entertainment, and telecommunications, where hopes and fears are also above average.

See chart on pages 12-13.

more (77%) are concerned about it over the next five years. Over half (52%) of CEOs agree that generative AI is likely to increase the spread of misinformation in the next 12 months, while 71% envisage such risk over the next five years. CEOs also expect generative AI to increase legal liabilities and reputational risks: 53% are concerned about this in the next 12 months, and 62% over the next five years.

Climate Action: Investing in Energy Efficiency This year, fewer CEOs said they are concerned about external factors except for climate change: they show the same level of concern (13%) about its negative effects as last year.

These CEOs have already started the transition to more climate-friendly operations or plan to start it in 2024, and offset the impacts of the energy crisis that are of direct concern to them and their clients. Most CEOs

About the Survey

The 13th Hungarian CEO Survey was based on PwC’s annual Global CEO Survey. The aim of the local research, conducted in parallel with the worldwide research, was to gain a more comprehensive picture of what Hungarian senior executives think, how they see the market, their expectations and what growth opportunities they have. PwC Hungary staff conducted in-person interviews with the CEOs of 297 Hungarian companies between October and December 2023, and collected

The two biggest impediments to decarbonization are lower hurdle rates for climate-friendly investments (45%) and regulatory complexity (44%).

CEOs’ Expanding Role CEOs were also asked what they would like to do beyond their usual tasks and what other role they could play in the corporate structure of their company. Four-fifths of Hungarian CEOs want to pay more attention to solving their organization’s HR issues (80%), focusing primarily on organizational culture (94%), employer branding (66%), and employee retention (64%). In addition, almost four-fifths (78%) consider it important to improve their own digital skills (three-quarters say the same for their colleagues), and 62% want to be closer to making technology decisions; they would like greater involvement in organizational matters related to business development (63%) and forming strategic partnerships (56%).

quantitative data by means of questionnaires. PwC industry groups had selected companies from the following sectors: financial services; technology, media and telecommunications; consumer markets; industrial manufacturing and automotive; government and public sector; healthcare and pharma; energy and utilities; hospitality and leisure; real estate; agribusiness and food; SSC and other financial services. The results are presented in detail on PwC’s Hungarian CEO Survey website.

12 | 2

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Budapest Business Journal | February 23 – March 7, 2024

PwC Hungary 13th Annual CEO Survey On these pages, we explore in more depth some of the details revealed by the 2023 survey.

“CEOs’ daily activities are shaped by resource reallocation, technological and regulatory changes, macroeconomic conditions, climate and cyber threats, and transformational needs.

Most of them see their company facing a critical strategic turning point. It is in this context that they must set their priorities.

Smooth adaptation and putting people first seem to be the best recipe.”  Tamás Lőcsei, PwC Hungary’s country managing partner.

The CEO Crystal Ball With confidence in both global and Hungarian economic growth returning after last year’s spike in pessimism, local chief executives expect an exchange rate of 394 forints to the euro, 1.7% GDP growth, and 8% inflation this year, according to PwC Hungary’s 13th CEO Survey.

The figure shows the answers of those who predict that certain event will happen by that year.

Question: How exposed do you believe your company will be to the following key threats in the next 12 months? (share of CEOs who are concerned about the threat in question)

The Threat Landscape Among external threats, inflation remains the top concern for CEOs (51%), followed by skills shortages (48%), macroeconomic volatility (37%), geopolitical conflict (36%), and cyber risks (35%). Compared to 2023, perceived exposure to macroeconomic volatility and geopolitical conflict has declined the most, while concerns about climate change and cyber risks have not shifted.

N= 297 (Hungary), N=4702 (global)

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Budapest Business Journal | February 23 – March 7, 2024

Business | 13

Business Viability As in the 2022 survey published last year, some 43% of Hungarian CEOs said they believe their companies will no longer be viable in 10 years if they continue on their current path.

Question: If your company continues running on its current path, for how long do you think your business will be economically viable?

Róbert Keszte (right), country director of Continental Hungary and winner of the PwC award, with Tamás Lőcsei, CEO of PwC Hungary.

PwC’s Most Inspiring Leader of the Year Award

N= 297 (Hungary), N=4702 (global)

“The transformation imperative also means that the opportunities for extensive growth have largely been exhausted: CEOs do not anticipate an increase in revenues, and the need to increase headcount is more about ensuring skilled labor than increasing numbers.”  Szabolcs Mezei, partner and government advisory leader at PwC Hungary.

Based on the opinions of the 297 Hungarian business leaders quizzed for its annual CEO Survey, PwC Hungary has, for the second time, awarded its “Most Inspiring Leader of the Year Award.” This year’s winner was Róbert Keszte, country director of Continental Hungary.

Established last year, the award recognizes a Hungarian CEO seen as a role model by other top executives in Hungary. Through the award, PwC aims to promote leaders who not only deliver business results but also focus on

Question: To what extent do you agree or disagree that generative AI is likely to increase the following in your company? (agree) In the next year

N= 297 (Hungary), N=4702 (global)

In the next year / 5 years

building a model company culture and who can serve as role models for their peers.

The award was handed over

by Tamás Lőcsei, CEO of PwC Hungary, at the presentation of the CEO Survey in the company of last year’s winner, Zoltán Gazsi, the managing director of Eisberg Hungary Kft. A Hungarian-language video of Keszte, in which he shares his leadership credo and what he sees as the critical factors of individual and organizational success, is available on PwC’s Hungarian CEO Survey website.

AI’s Transformative Potential Expectations are high regarding the transformative potential of generative AI over the next year: about half of CEOs expect AI to improve product or service quality (52%), enhance their company’s ability to build trust with stakeholders (45%), and increase efficiency at work (56%). Within the next three years, six in 10 respondents anticipate generative AI will not only require new skills from their workforce (68%) but will also change the way their company creates, delivers and captures value (60%) and increase competition (63%).

Four-fifths of respondents predict that generative AI will increase their productivity and efficiency at work (86%), and two-thirds (68%) expect it to improve profitability in the next five years.

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Budapest Business Journal | February 23 – March 7, 2024

Hungarian SMEs Gain Ground in Public Procurement Amid Market Shifts In 2023, successful Hungarian public procurement deals were worth nearly HUF 3 trillion.

The competitive landscape intensified as, on average, 7.6 bids were received per tender. The share of the total attributed to smalland mediumsized enterprises increased by 8% compared to the previous year: HUF 58 out of every HUF 100 was allocated to the SME sector.

GERGELY HERPAI

The Public Procurement Authority released its rapid report for 2023, detailing the primary indicators and trends shaping the market last year.

According to the data, 7,964 successful public procurement procedures were completed, a nominal change that saw only a 0.9% increase over the 2022 figures. The final total value of successful public procurements amounted to HUF 2.869 tln, approximately two-thirds of the value recorded in 2022.

The distribution of public procurement tenders by object remained similar to the previous year.

The majority, 2,918 procedures, were related to construction investments, accounting for 36.7% of the total.

Deals procuring goods numbered 2,814 (35.3%), while service orders constituted the remaining 28% or 2,232 procedures.

Significant changes were observed in the distribution of the total value of public procurements by object compared to previous

The proportion of public procurements incorporating environmental and social criteria in the national procedure significantly increased in 2023 compared to the previous three years, signaling that those placing the tenders are paying greater attention to applying sustainability criteria in domestic public procurements.

Sustainability Criteria

The Public Procurement Authority continues to push for sustainability criteria to be increasingly observed in public procurements, contributing to the reinforcement of environmental protection, climate defense, and economic and social sustainability.

Discussing the authority’s oversight efforts, the president highlighted that, last year, a significant number of notices were issued (28,441, to be exact). This figure represents a record in the PPA’s efforts to address discrepancies and ensure adherence to regulations.

In alignment with its predefined annual audit strategy, the authority conducted

100 checks

to assess the legality of public contract executions. The audits were distributed across various sectors, with 46% targeting construction projects, László Kovács, President of the Public Procurement Authority. indicating a focus on one of the most substantial areas of public expenditure. years. While the value of goods procurements in 2023 doubled to a

41.1% share

of the prior year, the total value of construction investments, which previously held the largest share, constituted less than one-third (31.7%) of the total value.

“The overall value of the public procurement market decreased in 2023, primarily due to the decline in the value of construction investments. Despite this, we can report positive trends in the realm of domestic public procurements,” highlights László Kovács, president of the Public Procurement Authority.

“On one hand, the SME sector’s market presence has significantly increased: out of every 100 successfully conducted procedures in 2023, 80 were won by SMEs, with HUF 58 out of every 100 spent in public procurements going to SMEs,” he notes.

Strict Supervision

“This is an eight percentage point increase over the figure measured a year earlier. On the other hand, the numbers also support the authority’s increasingly strict, consistent, and intensive supervisory work: last year saw a record number of 27,316 announcements, leading to 28,441 requests for rectification.

A notable achievement was the stabilization of the number of negotiated procedures without announcement at a low level,” Kovács says.

The Public Procurement Authority publishes several indicators in its

reports characterizing the intensity of competition. One such metric is the trend of single-bid public procurements.

The proportion of single-bid contracts in public procurements conducted under EU procedures decreased compared to the previous year while their value increased. In Hungarian procedures, aligning with the trend of the past five years, the proportion of single-bid contracts, both in terms of number and value, also continued to decrease.

“The moderate decrease in the number of single-bid procedures and the recent increase in their value proportion could be attributed to the concentration in the global energy market and the consequent narrowing of procurement sources,” Kovács says.

Another measure of the competitive situation is the development of negotiated procedures without publication (NWP). The number and value proportion of completed NWPs in 2022 remained virtually unchanged in 2023, meaning that the proportion remained low in both EU and national procedures. The proportion of NWPs has been below the 5% threshold set by the European Commission for many years.

“Last year, on average,

7.6 bids

were received per procurement procedure, allowing for the selection of the best out of approximately eight bids. This value exceeds the past fiveyear average of 6.6 bids per procedure, indicating a strengthening of the competitive situation in the public procurement market,” Kovács notes.

“Last year, on average, 7.6 bids were received per procurement procedure, allowing for the selection of the best out of approximately eight bids.

This exceeds the past fiveyear average of 6.6 bids per procedure, indicating a strengthening of the competitive situation in the public procurement market.”

Goods procurement was the subject of 29% of the audits, reflecting attention to the quality and compliance of physical products procured through public funds. Services procurement accounted for the remaining 25%, showcasing the PPA’s comprehensive approach to monitoring the broad spectrum of public contracts.

“Last year, the number of legal remedies initiated by the authority decreased; conversely, more procedures were initiated by economic actors, indicating the intensity of market competition,” Kovács says.

Overall, the number of legal remedies last year increased by 12% to 598, while the total amount of fines imposed decreased from HUF 734 million in 2022 to HUF 630 mln.

2

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Budapest Business Journal | February 23 – March 7, 2024

Business | 15

Reading the Real Estate Crystal Ball for 2024 After an economically turbulent 2023, what’s in store for the real estate business in 2024? Senior Colliers experts Kristóf Tóth (head of research), Bence Vécsey (head of capital markets), Miklós Ecsődi (head of office) and Tamás Beck (head of industrial) detail the most critical factors likely to affect the Hungarian real estate market this year.

BENCE GAÁL

In terms of the real estate investment market, last year saw a 27% decline in investment transaction volumes compared to 2022. The cost of capital has increased, and it is challenging to make returns in the region more attractive compared to Western European countries. The expert team says there is still a wide gap between buyers’ and sellers’ expectations, and rental markets are weakening.

“2022 was a weak year already, and the numbers kept falling compared to a low base. The number of deals plummeted,” notes Bence Vécsey.

He also says that the balance of Hungarian and foreign investors shifted significantly compared to the 50:50 ratio in place until about 2016; 90% of investments made in 2023 were Hungarian.

“We expect this to change, to get better.

We are competing on a regional level; investors tend to look at regions like CEE as a whole. Still, a price correction

Industrial Pipeline 2024-Q1 2025 Key developments (above 20,000 sqm ):

Distribution of Pipeline , until Q1 2025 2%

Developments

Size (sqm )

Delivery date

Type

CTPark Sziget

118,400

2024Q2

Big-box

Weerts Vecsés

55,902

2024Q2

Big-box

HelloParks Maglód Budapest Airport

45,000

2024Q4

Big-box

HelloParks Páty PT3

42,512

2024Q4

Big-box

HelloParks Páty PT2

42,000

2024Q1

Big-box

CTPark Tatabánya - park expansion

33,591

2024Q1

Big-box

needs to happen, and financing costs need to decrease,” he adds, forecasting a slow recovery in the real estate investment market from the second half of 2024 and into 2025.

Macroeconomic Trends

Changing Office Priorities

Pipeline distibution 0,78%

120 000

96,652

100 000

Central Buda

80 000

49,404

60 000

35,170

40 000 20 000

16,576 1,560

0 Central Buda Central Pest Non Central South Buda Váci Corridor Pest

72%

In the office market, Colliers predicts rising vacancy rates. However, there is still a noticeable demand for modern, welllocated buildings that meet ESG guidelines, and there is a good reason behind this trend, according to Miklós Ecsődi.

“COVID and the rise of remote working forced companies to rethink their office concepts, with priorities shifting away from office spaces with focus on individual work to more coworking areas.

We can expect the most moves from companies currently residing in older category ‘B’ office buildings,” he argues.

The total modern office stock in Budapest currently stands at 4,369,900 sqm, including 3,571,710 sqm of modern speculative office space in categories “A” and “B” and 798,190 sqm of owner occupied office space. Total gross demand in 2023 was 575,504 sqm, while net demand over the same period was 290,082 sqm.

Both gross and net occupancy showed a 47% increase compared to 2022.

The vacancy rate reached 13.3% in the fourth quarter of 2023. The rate increased by 0.1 of a percentage point compared to the previous quarter and by 2 pp compared to the same period last year.

Office Pipeline Until Q4 2025

24,78% 8,31% 17,64%

Central Pest

48,48%

Non Central Pest South Buda Váci Corridor

Big-Box Countryside Big-Box Budapest

by 8.7% and 7.9%, respectively, in the first 11 months of the year. E-commerce declined by 5.4% in the year to the end of November. Looking ahead to 2024, however, the retail sector is expected to expand as disposable income increases.

Looking at the underlying macroeconomic trends, 2023 saw a decline in GDP and industrial production. There were, of course, some areas that went in the opposite direction, such as automotive and electrical components, which managed to maintain their growth trajectories. The high inflation rate continued its rapid decline throughout 2023, driven by downward base effects and lower energy prices.

“We can expect 3-4% growth to return in 2025, which could boost the tenant side a little bit. On the other hand, there are no changes expected to unemployment, which means that the tight labor market is here to stay,” says Kristóf Tóth.

Construction output declined by 5.3% in the first 11 months of 2023. Falling government and private investment, changes in commodity prices and the EUR/HUF exchange rate played a significant role in moderating construction output price dynamics, Tóth noted.

On a more negative note, lower disposable and negative real income led to a marked decline in retail sales.

Total retail sales and sales volumes in the clothing and footwear segments fell

Speculative pipeline until the end of 2025 ( sqm )

26%

City Logistics Budapest

In the last quarter of 2023, the lowest vacancy rate was recorded in the North Buda submarket (8.7%), while the highest rate, unchanged, was in the agglomeration (36.8%). Although net absorption moved into positive territory during the fourth quarter, the total amount of office space in use decreased by 4,428 sqm across the whole of 2023.

Budapest vs Countryside

The industrial real estate market has seen positive net absorption, with an increase in vacancy compared to 2022, while also showing a healthy pipeline.

At the end of 2023, the total national modern industrial/logistics stock stood at 5,090,570 sqm.

Of this, 3,487,830 sqm is located in and around the capital, while the regional domestic stock is 1,602,750 sqm.

The annual new supply volume in and around the capital reached 358,010 sqm, while it was 159,800 sqm in regional markets. But why is Budapest so far ahead of the countryside in terms of logistics real estate projects with all the new factories appearing in the country?

“You have to look at the country’s size and the structure of its transportation routes, which is different from that of Romania or Poland,” Tamás Beck explains. “You can drive 200 km from Budapest and practically ‘fall off the map.’ That’s not a huge distance for trucks,” he adds. The nearly three million people living in the Budapest agglomeration remains a considerable labor market draw compared to the next largest city, Debrecen, which has fewer than 250,000 inhabitants.

At the end of Q4 2023, a total of 298,560 sqm of industrial/logistics space was vacant in the market around Budapest. In the regional domestic speculative real estate stock, 91,310 sqm of vacant space was recorded, corresponding to a vacancy rate of 5.7%. The national vacancy rate is currently 7.7%.

Editor’s note: The Colliers experts were speaking at an exclusive breakfast event the consultancy held in its offices on Jan. 25, looking at the domestic commercial real estate market, trends, and current expectations for 2024.

3

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Budapest Business Journal | February 23 – March 7, 2024

Special Report Manufacturing

Embracing Industry 4.0: Free Your SME From the ‘Excel Monster’

BBJ STAFF

When it comes to integrating the latest digital technologies in manufacturing, the gap between multinational companies and Hungarian small- and medium-sized enterprises remains vast.

The reality is that most domestic SMEs are still in the Industry 3.0 phase and are considering an upgrade to 4.0 at best. The past few years haven’t helped.

There were few funds up for grabs from calls for proposals, skyrocketing interest rates made taking out corporate loans prohibitively expensive, and company bosses still shudder when you mention the spike in costs during the energy crisis.

However, it is no longer a nice option for manufacturing businesses to embrace cutting-edge solutions. It is becoming a matter of survival. Ferenc Nyírő, industrial digitalization business unit manager at Kontron Hungary, says fundamental factors hamper the operation of local SMEs. For starters, product development is not digitized.

“Without sophisticated product lifecycle management, the digital leap won’t happen.”

A state-of-the-art PLM presumes the existence of a digital thread that follows the entire process of product

Sustainability Costs

Photo by Zapp2Phot / Shutterstock.com

Hungarian SMEs can have a hard time finding resources for development, including digitizing their manufacturing business.

Catching up with multinational companies is just as difficult, yet it is far from impossible.

“When you start planning even near-term, you need to add a risk coefficient,” Nyírő says.

management, manufacturing and servicing. Productivity is at stake here, as evidenced by the fact that hourly production in neighboring Austria is

74% higher

than in Hungary. It takes a comprehensive audit to assess what must be done to narrow that gap.

One issue Nyírő identifies is that many businesses still rely on Excel, for example.

“Fair enough, you can do many things with Excel, but it’s an offline tool, and it doesn’t know anything about manufacturing processes,” he points out. “The worst part is when one person at a company builds this ‘Excel monster,’ around which the whole production revolves; when he leaves, everything crumbles.”

The Best can do Better

Even those SMEs that produce for export markets can improve productivity significantly, Nyírő argues.

“Imagine if they introduced robust digital solutions, how much that would boost their global competitiveness,” he suggests. Training also comes into the picture, and even though it is a lowhanging fruit, it is typically underrated.

It is also crucial to go one step at a time.

“You can’t just jump too big all at once,” Nyírő points out, emphasizing that industrial digitalization must

factor in reality. Local SMEs just don’t have the right size to implement change of that scale. Nyírő gives the example of Bosch, where 3D design for simulation and manufacturing has been standardized, as a result of which working hours can be cut

by

40%.

Since design itself eats up half of the total working hours, this is a vast advantage.

“Bosch has a lot of people on projects like that, whereas SMEs would need time and resources to get the same done,” Nyírő says.

For the sake of process optimization, his company combs through every manufacturing step to develop proposals for improvement. A document of up to 100 pages is then prepared to outline a road map for change so every client can receive a tailor-made transformation action plan.

Apart from such audits, the supplier development programs of MNCs can fast-track SMEs to success.

But Hungarian SMEs typically embrace one of two approaches: either they are developing or aiming for survival.

COVID and the energy crisis taught them not to take anything for granted.

Geopolitical tensions, like the war next door in Ukraine and the conflict in the Middle East that is now impacting Red Sea shipping, can turn any business plan upside down overnight.

The need to comply with an ever-more stringent legal framework at the EU level further raises costs. Sustainability is pushing its way to the fore, not least because of mandatory ESG reporting, while stakeholders also expect elevated IT security measures.

Such extra expenses can divert resources from digitization. Yet, they should be considered opportunities since businesses (and the whole economy) will become more crisisproof in the long run.

Finally, Nyírő mentions the quick emergence of AI-driven applications.

AI relies on data, and it would be great to have information from all kinds of best practices. However, companies are reluctant to share their own findings as they fear competition. Therefore, company-specific data tends to be used for training AI tools.

“It’s incredible that, within one year, all related products have an AI feature when it comes to digital manufacturing,” Nyírő notes.

“Simulation, for instance, can be accelerated to a large extent if you have the right training data.”

“You can do many things with Excel, but it’s an offline tool, and it doesn’t know anything about manufacturing processes.

The worst part is when one person at a company builds this ‘Excel monster,’ around which the whole production revolves; when he leaves, everything crumbles.”

The ultimate task is first to turn data into Big Data and then Big Data into Smart Data, as only the latter represents an actual business value. Smart Data can be used for decision-making in the form of insight or foresight; it is easy to understand and interpret and enables imminent intervention.

SMEs willing to embrace digital transformation in manufacturing must be clear on that, as well as the fact that it isn’t enough simply to say you want to move to Industry 4.0.

Setting the purpose of its adoption is even more critical.

3

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Budapest Business Journal | February 23 – March 7, 2024

Special Report | 17

New professions are constantly popping up thanks to the speed at which robotics, AI, machine learning and virtual reality are evolving.

The Institute for the Future says some 85% of jobs that will exist in 2030 have not yet been invented, making the ability to acquire new knowledge more valuable than the knowledge itself.

BENCE GAÁL

Research conducted by the Boston Consulting Group predicts that knowledge in computation and traditional STEM (science, technology, engineering and mathematics) subjects will be in especially high demand.

The Budapest University of Technology and Economics (BME) says it is looking to give students a competitive, multi-layered knowledge foundation that emphasizes

Image by Kurka Geza Corey / Vasilius / Shutterstock.com

BME Promises Graduates a Future-proof Education

innovation and highlights the value of intellectual property via its physicistengineer bachelor of science program Cultural anthropologist and ethnographer László Rab believes that careers dealing with data, information, and control will be crucial. According to Hungary’s Central Statistical Office, employment in the country’s information and communication sector increased from 92,400 people in 2009

to

147,500

in 2020, indicating a surge in datarelated occupations.

not take over all jobs. Indeed, among positions that are less easily automated, employment is on the rise.

In the BME physicist-engineer program, students collaborate with companies such as the Bosch Group and Semilab during their university years, gaining insights into the world of the most innovative R&D firms, and providing students with real-world opportunities for study and development.

Take, for example, the doctoral work of Ábel Sulyok, a BME Institute of Physics researcher who explored head-up displays projected onto car windshields. To utilize the results of his research in developing nextgeneration displays, Sulyok, along with The saying “data is the new oil” his doctoral supervisor and business highlights how important data is becoming. partner, founded a knowledge-utilization Millions of terabytes of data are generated company named aHead Photonics. worldwide daily, and the ability to process The company’s primary goal is to and analyze it will become a critical area advance the findings that the university of demand. The BME physicist-engineer has patented for use in the private sector. program covers essential topics such Physicists, engineers, and computer as data analysis, modeling, algorithms, scientists have now collaborated with statistics, and probability calculation. aHead Photonics to build a prototype that has been fitted into an automobile.

The Human in the Machine The company plans to join the market BME notes that, by 2025, an estimated in five or six years with a unique wide133 million people worldwide will be angle display that improves driving directly or indirectly involved in AI and safety and can be used as a home machine learning. But while automation theater in self-driving cars, working expands into more areas, robots will with BME and automotive suppliers.

PROMOTION

Magyar Suzuki: On the Road Towards Being a Smart Plant The daily production capacity at Magyar Suzuki’s Esztergom factory has been raised almost 65 times from its launch in 1992 until the rolling off of the four millionth model on Feb. 8, 2024.

In 1992, 970 cars were made in five months by Magyar Suzuki; today, 650 autos are produced in a single day, resulting from intense cooperation between humans and robots. Seven different models have been built at Esztergom since the first vehicle rolled off the line 32 years ago. The recordmaking four-millionth auto was an Ivory Cosmic black pearl metallic Vitara GLX. The manufacturer has evolved a lot in its more than 30-year history.

Key Years: 1992, 1996, 2002, 2006, 2008, 2011, 2014, 2017, 2020, 2024 Each milestone year has contributed to making the Esztergom manufacturing company the factory it is today. In 2024,

Hungarian professionals is also sought when designing new models at the Japanese headquarters.

more than 500 robots help the work of nearly 3,500 employees in the making of the Vitara and S-CROSS models.

Magyar Suzuki is one of the country’s most stable economic players and Suzuki Group’s most reliable subsidiaries. Esztergom is the thirdlargest manufacturing base for Suzuki Motor Corporation, following Japan and India, and the only one in Europe.

Since establishing Magyar Suzuki, Japanese parent company Suzuki Motor Corporation has invested more than EUR 2 billion in Hungary, continuously developing its European plant.

From the beginning, the Esztergom factory has been engaged in comprehensive manufacturing

activities, covering all processes of auto production: stamping and welding of steel sheets, assembly of vehicles, painting, and the final inspection of the finished cars.

For nearly 20 years from the start of production in the summer of 1992, the manufacturing of Suzuki models took place exclusively under Japanese presence and supervision. However, since the series production of Vitara began in 2015, the role of Hungarian engineers has become increasingly prominent, and they have actively participated in prototype development and the improvement of manufacturing technology. Feedback from

1 Million, 2 Million, 3 Million, 4 Production started in the summer of 1992 with the Suzuki Swift.

For almost 10 years, this was the only model produced in Hungary.

In 2006, the one-millionth Swift was produced, followed by the two-millionth in 2011, and the three-millionth vehicle, an SX4 S-CROSS, in 2017. Magyar Suzuki Corporation currently exports to 123 countries, with the five largest in 2023 being the United Kingdom, Italy, Germany, France, and Poland.

As mentioned above, a total of seven models have been produced at the Magyar Suzuki plant: three generations of Swift (1992, 2005, 2010), the Wagon R+ (2000), the Ignis (2003), the SX4 (2006), the Splash (2008), the SX4 S-CROSS (2013), and the Vitara (2015).

About 2,200 employees work in two shifts to manufacture the vehicles, from pressing the steel coils delivered to the plant to parking the finished cars after their rain test. Around another 900 colleagues contribute to production, transportation, and promotion in the background.

Twenty people in the current workforce joined Magyar Suzuki before Dec. 31, 1992. Since 2019, the Esztergom plant has exclusively produced hybrid-powered Vitara and S-CROSS autos for the European markets.

18 | 3

Special Report

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Budapest Business Journal | February 23 – March 7, 2024

Industry 4.0, 5.0 Necessary to Build Future-Proof Businesses Some may already be starting to talk about Industry 5.0, but the harsh reality is that there are hardly any factories with a fully functioning 4.0 environment in Hungary. For local SMEs to prevail, it takes leadership, commitment and a clear vision.

Using a digital twin won’t hurt, either.

BBJ STAFF

“We’d rather buy another robot. I’m only here for two more years; let the next manager worry about it. We just don’t have enough people for that.”

These are just a few of the typical excuses offered up to explain why long-overdue digital transformation projects get delayed. The smaller the company, the more crucial the leadership’s role is in making them happen.

Large companies have the capital to push innovation-focused investments through no matter what; however, in the case of SMEs, it takes an owner’s total commitment, explains István Nadj, CEO of CADTerv Kft. It is the digitization of development processes that must be dealt with first, he explains.

“Development makes up just

10% of the

total costs, and the cost of failure grows exponentially if errors are not eliminated in the development phase,” Nadj says. Therefore, a whole new mindset is needed when embracing digital solutions in manufacturing.

“It must be clear from the outset that you don’t want to have Industry 4.0 just because that’s what all the headlines are all about, but because you would like to build a robust future-proof business,” he insists.

Currently, a bunch of factors hinder small businesses in that effort.

Silo-structured systems, separate

“It is beyond any doubt that executives must set clear goals and be open to embracing bottom-to-top initiatives and engaging employees. A new mindset and full commitment are ‘must-have’ things to get the most out of what Industry 4.0 can offer,” Nadj concludes.

Zsolt Molnár, senior consultant of GraphIT Kft., emphasizes digital twins.

“Collecting production data alone won’t cut it anymore,” he says.

Digital Twin

The problem is that by the time you gather enough data, production has often changed, and that data is now useless. That’s when a digital twin comes into the picture. “ We build them, which allows you to run the manufacturing data of multiple years in a matter of days,” he explains.

“If production changes, the digital twin can be updated accordingly. As long as that digital twin doesn’t exist, though, our hands are tied. This paves the way for simulation, a ‘must-have’ feature for long-term development.”

Companies claim how unique they are all the time, but, in truth, they are not, at least not in terms of processes.

In some instances, however, sectorspecific adjustments do need to be made. Take salami making, for example, where products must be packaged within half an hour.

“The Siemens software that we rely on was developed for automotive; yet, disassembly can be used as an analogy for chopping up meat at István Nadj, CEO of CAD-Terv Kft. a slaughterhouse, so inventories can be created similarly,” Molnár says, giving an extraordinary example. databases, individual processes, gets automatically updated on your Intelligent production timing plays and a lack of standards undermine cell, but a printed copy, albeit originally an ever-increasing role, too. The idea efficiency. Another problem produced electronically, won’t. is to determine how to deliver the most is that people mix the meanings orders to the greatest effect. It is an area Saving Development Time where AI comes in very handy. It can of ‘electronic’ and ‘digital.’

One of CAD-Terv’s popular 3DExperience tell you to what extent the penalty on platform solutions, automated inventories, late delivery to “Customer A” would be illustrates even more the ultimate offset by the profits from another order to advantages of digitization. Once data “Customer B” if the latter were fulfilled is entered, the 3D version contains first. Bicycle manufacturers, for example, everything, and digital engineers can can use AI-driven predictions to work focus solely on development. out when any given customer-picked The importance of development time configuration would be ready. can’t be emphasized enough. Shockingly, Molnár also believes that on average, less than half (48%) of charismatic and purposeful development time is spent on innovation; leadership can help SMEs embrace Industry the rest goes on non-value-added work and other mechanic data processing tasks.

This underlines the use cases tremendously. of programs that, for example, “The entry threshold is low; nowadays, automatically collect tolerance figures subscription plans enable you to access from manufacturing design. The state-of-the-art tech easily,” he says. relevant data in the 3D design is thus He cites the example of a 30-person converted into an Excel format. packaging company where design and “Continental ordered it from us, production planning can take place and they just love it,” Nadj notes. seamlessly thanks to cost-effective Audi is another client of CAD-Terv so-called low code solutions. that also needed some productivity “When Industry 4.0 was invented, it was enhancement. Its customized Zsolt Molnár, senior automated pneumatic planning designed to reduce the number of humans consultant of GraphIT Kft. solution cuts development time by in the factory to the minimum. Industry up to 5.0 should be more human-centric. It won’t just mean a carefree collaboration with machines. It will be much more about “When data is entered just once in Development time is just the tip custom-making ever more products, which one given database, and all the rest of the iceberg, though. Corporate will require human engagement. People is generated from that database in standards, automation, quality, IP are going to pay for this hand-made an automated manner, that’s what’s protection and a dedicated workforce customization; that’s what will make the key,” Nadj notes, giving the example are all part of the equation. whole thing human,” Molnár concludes. of a boarding card. A digital one

4.0

60%.

www.bbj.hu

Budapest Business Journal | February 23 – March 7, 2024

3

Special Report | 19

A Digital Future Awaits Hungarian Agriculture With support from government financing programs, many Hungarian farmers are leaning into digitization and the modernization of the domestic agricultural industry, including upgrades to more efficient technology, aiming at precision farming, analysts say.

LUCA ALBERT

A sector-wide shift is developing, at least among the more significant actors: precision agriculture is growing within the domestic food production industry as market players begin to take advantage of new technologies for assessing and managing farm production.

According to an agricultural handbook published by PwC, smaller

farming groups have not yet begun to invest in newly developed agricultural technology; however, some larger farms have already made progress with precision farming methods.

A recently observed example of switching to precision agriculture practices is the introduction of spraying drones to replace more traditional agricultural approaches such as tractors, especially in the area of crop protection.

The Rise of the Drone

Many domestic farmers now use smaller drones to spray protective substances or fertilizers across their crops and fields. Aviation technology is becoming preferred to conventional machines such as tractors, because they can overcome obstacles that older technology cannot handle, such as working in certain weather conditions or being able to efficiently coat irregularly shaped crop fields.

However, there are both benefits and costly disadvantages to this method of conservation, according to a piece from leading online business news publication Világgazdaság [World Economy].

Although drones are time-efficient, lightweight, and easily operable, their overall cost represents a significant investment. Farmers not only have to pay for the specially adapted uncrewed aircraft itself but also extra necessities such as aggregators, spare batteries,

an additional monitoring drone, and fork out (pun intended) for training those controlling the drone.

With switching to more developed precision farming techniques not yet accessible to many domestic firms due to its cost-intensive nature, the Hungarian Government says it is supporting players and investors of the agricultural industry through state aid and financial options for farmers, launching programs offering investment support to encourage the modernization of cultivation processes.

One of the most impactful schemes for agricultural development in Hungary is the Rural Development Program, financed by the European Union, which aims to provide grants and loans to Hungarian farmers to encourage investments. The Agricultural Credit Guarantee Fund, meanwhile, is a financial program launched by the government to help farmers overcome obstacles they may face when applying for financial aid from commercial banks.

Farming’s Digital Future

Initiatives across Hungary and the European Union also call attention to the digitization of agricultural production.

In 2019, the Hungarian government passed the Digital Agricultural Strategy (DAS), thereby creating one of the most relevant documents for the modernization of agriculture in Hungary.

DAS focuses on implementing a viable

strategy for the necessary development of agricultural production. Its overall aim is supported by three pillars: developing and digitizing precision farming, improving agricultural decisions based on new technologies, and developing product pathways with digital solutions, according to the Neumann Technology Platform.

In 2020, the Hungarian government allotted financial support for further projects under the DAS policy, while in 2022, its Digital Food Strategy (DÉS) was introduced, showcasing objectives similar to the original agricultural strategy while furthering the efficiency and competitiveness of the Hungarian agricultural industry.

The European Union has many other agriculture-based initiatives, most famously the Common Agricultural Policy (CAP), which focuses on both the societal and agricultural aspects of food production, and the Farm to Fork strategy, part of the EU Green Deal, which aims to reduce harmful inputs during cultivation.

According to the 2023 Country Report for Hungary, published by the European Commission, CAP provided EUR 16.2 billion for Hungary’s agricultural practices from 2014 until 2022. The policy will continue to support Hungarian cultivation with another EUR 8.4 bln for the funding cycle running from 2023 until 2027.

Annual Agro Expo The 42nd annual AGROmashEXPO and Agricultural Machinery Show held in January, hosted by the National Association of Agricultural Equipment and Machinery Distributors (Megfosz), also highlighted the relevance of digitization within agriculture. The annual exhibition was held across four days in eight pavilions at the Hungexpo event center, showcasing some of the most relevant ideas in modern agriculture from domestic andinternational companies.

Calling attention to the prominence of digitalization in modern agricultural industries, this year’s AGROmash grand prize award winners were rewarded for their innovations driving forward the future of farming technology.

The “Domestic Product Development, Mechanization” grand prize went to Farmgép Fejlsztó és Gépgyártó for its research into innovative drone technology used as a method of plant protection as an alternative to traditional tractor-based methods.

Proving that drones won’t supplant tractors just yet, the grand prize winner of the “International Product Development,

The award-winning Hungarian drone technology from Farmgép.

Mechanization” category was the Claas Xerion 12.650 Terra Trac, imported to Hungary by Axiál Kft. But you can forget your traditional children’s drawing of a tractor with oversized rear wheels and tiny front rubber; this machine boasts

triangular caterpillar tracks at each corner in place of wheels.

The exposition’s final grand prize was in the “International Product Development, Digitalization” category. Swedish agricultural company Väderstad, won with its

innovative iPad-based electronic control system that wirelessly connects to compatible machinery, enabling full access to its functions and data, offering user-friendly remote setup and calibration, as well as real-time monitoring and control.

20 | 3

Special Report

www.bbj.hu

Budapest Business Journal | February 23 – March 7, 2024

Electronics Manufacturers Ranked by total net revenue in 2022 (HUF mln)

FlExtRoniCs intERnational kFt. www.flextronics.com

749,054

3

RobERt bosCH ElEktRonika gyáRtó kFt. www.bosch.hu

728,417

4

Cloud nEtWoRk tECHnology kFt. www.foxconn.hu

651,750

no. oF Full-tiME EMployEEs on July 1, 2023

2

yEaR EstablisHEd

–

✓

1989

A

– Samsung Electronics Co. Ltd. (100)

Joseph Rhee Wonju Kim Gerda Witch

5126 Jászfényszaru, Samsung tér 1.

(80) 726-7864 –

✓

✓

1992

6,856

Flextronics Sárvár Logistics Kft. (A) Flextronics International GmbH (A)

lászló nagy, tamás lászló – –

8660 Tab, Munkás utca 28.

(84) 526-100 legalhungary@flextronics.com

–

–

✓

1998

5,384

– Robert Bosch Investment Nederland B.V. (100)

arne Ziegenbein, attila Horváth – –

3000 Hatvan, Robert Bosch utca 1.

(37) 549-100 info@hu.bosch.com

–

–

–

2017

A

– Focus PC Enterprises Ltd. (100)

péter tálos Gabriella Pistauer –

2900 Komárom, Bánki Donát utca 1.

(34) 886-055 komarom@emea.foxconn.com

tibor bogoly, gregory bowling Hebard, gábor tóth, traud timothy – –

3580 Tiszaújváros, Huszár Andor út 1.

(49) 548-500 tis_jabil_info@jabil.com

✓

✓

✓

✓

✓

✓

✓

✓

✓

A

A

A

–

–

✓

✓

✓

✓

✓

it

✓

EMs

✓

–

autoMotivE ElECtRoniCs

1,180,925

ConsuMER ElECtRoniCs

saMsung ElECtRoniCs MagyaR ZRt. www.samsung.com

oWnERsHip (%) HungaRian non-HungaRian

HousEHold ElECtRoniCs

1

tElECoM

total nEt REvEnuE in 2022 (HuF Mln)

odM

CoMpany WEbsitE

sECtoRs

oEM

Rank

aCtivity typEs

top loCal ExECutivE CFo MaRkEting diRECtoR

addREss pHonE EMail

5

Jabil CiRCuit MagyaRoRsZág kFt. www.jabil.com

435,097

✓

–

–

✓

✓

–

✓

✓

2001

4,064

– Jabil Circuit Netherlands B.V. (98.10), Jabil Circuit Limited (1.90)

6

ContinEntal autoMotivE HungaRy kFt. www.conti.de

421,206

A

A

A

–

–

–

–

✓

1990

4,103

– Continental Automotive Holding Netherlands B.V. (100)

Róbert keszte, Zoltán dapsy – –

8200 Veszprém, Házgyári út 6–8.

(88) 540-100 –

7

RobERt bosCH poWER tool ElEktRoMos sZERsZáMgyáRtó kFt. www.bosch.hu

417,325

–

✓

–

–

–

✓

–

–

2001

4,336

– Scintilla AG (100)

lászló Fükő – –

3526 Miskolc, Robert Bosch park 1.

(46) 518-300 info@hu.bosch.com

8

ni HungaRy kFt. www.hungary.ni.com/debrecen

279,950

–

✓

–

–

✓

–

–

–

2001

1,564

– Enterprise International Holding B.V. (100)

Róbert Hosszu – –

4031 Debrecen, Határ út 1/A (52) 515-400 nora.kovacs@ni.com

9

lg ElECtRoniCs MagyaR kEREskEdElMi kFt. www.lg.hu

174,539

A

A

A

A

A

A

A

A

1992

A

– LG Electronics European Holding B.V. (100)

kim dong Hyun, lee Hyun Cheol – –

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 –

128,108

–

✓

–

–

✓

–

–

1991

1,407

– AB Electrolux (100)

Ferenc József szentpéteri – –

5100 Jászberény, Fémnyomó utca 1.

(57) 415-999 –

2,395

– TDK Elektronics AG (100)

balázs József takács – –

9700 Szombathely, Csaba utca 30.

(94) 522-100 hrszombathely@ tdk-electronics.tdk.com

2,010

– Aptiv Global Holdings 2 (Luxembourg) S.à.r.l., Aptiv Services Austria GPD GmbH & Co. (100)

bethany Jacobs appel, Eoin Muldowney – –

9700 Szombathely, Zanati út 29/A (94) 517-800 eniko.varga@delphi.com

1,404

– Sanmina-SCI Systems Holdings Inc. (100)

károly Hoffmann – –

2800 Tatabánya, Kóta József utca 2.

(34) 515-600 sanmina.tatabanya@ sanmina.com

alexey sergeevich klimovskiy, Francois Claude tardif – –

2760 Nagykáta, Jászberényi út 116.

(29) 640-100 clarion@clarion.hu

ElECtRolux lEHEl 10 HűtőgépgyáR kFt. www.electrolux.com

tdk HungaRy CoMponEnts kFt. 11 https://hu.tdk-electronics.tdk.com/

aptiv sERviCEs HungaRy kFt. 12 www.delphi.com

sanMina-sCi MagyaRoRsZág kFt. 13 www.sanmina.com

ClaRion HungaRy ElEktRonikai kFt. 14 www.clarion.hu

96,107

95,029

25,057

✓

–

✓

✓

–

✓

–

–

–

✓

–

–

–

–

–

✓

✓

–

✓

✓

✓

✓

1994

A

1997

20,122

✓

✓

–

–

–

–

–

✓

1997

217

✓

–

–

✓

–

✓

–

✓

1938

293

Gábor Széles, Péter Lakatos, Ottó Sinkó (100) –

péter lakatos, ottó sinkó, gábor széles Gyöngyi Rácz Ranczné –

8000 Székesfehérvár, Berényi út 72–100.

(22) 533-421 vthjogi@videoton.hu

–

✓

✓

✓

✓

–

1989

64

– Koninklijke Philips Electronics N.V. (100)

Róbert imre Wágner, pavel sot, Rita Rátky – –

1097 Budapest, Könyves Kálmán körút 11/C (1) 382-1700 zoltan.meszaros@philips.com

A

✓

–

–

–

–

2003

A

– Success World Holdings Ltd. (100)

péter tálos – –

2900 Komárom, Bánki Donát utca 1.

(30) 422-9608 komarom@emea.foxconn.com

vidEoton Holding ZRt. www.videoton.hu

18,005

16

pHilips MagyaRoRsZág kFt. www.philips.hu

9,584

✓

–

17

FiH EuRopE kFt. www.foxconn.com

1,155

A

A

NR = not ranked, NA = not appliacable

–

✓

Faurecia Clarion Electronics Zrt. (100) –

15

A = would not disclose,

–

This list was compiled from responses to questionnaires received by February 21, 2024, 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 | February 23 – March 7, 2024

Socialite

Hungarian Computer Art Pioneer Vera Molnár Honored at Müpa Hungarian-born artist Vera Molnár, a pioneer of computer and algorithmic visual art, passed away in December 2023 aged 99. She is being honored with an exhibition at the Ludwig Museum inside Müpa Budapest near the Ráckóczi bridge on the Pest side of the Danube. I’ve said this before, but one of the great delights of Hungary for anyone interested in the arts is discovering artists you’ve never heard of before. Molnár, for me, was one such.

DAVID HOLZER

Efraim Arazi, who helped develop the technology that enabled the first moon landing to be recorded on video. In 1969, one year after the London Institute of Contemporary Arts hosted the highly influential “Cybernetic Serendipity” exhibition, the Computer Arts Society was born. Molnár appears to have been doubly unique among the very early pioneers of computer art in that she was an artist, rather than an engineer or scientist, and a woman.

For Molnár, discovering the computer was a revelation. She told an interviewer, “I was born a second time with the visualization of the screen.”

The ‘Aesthetic State’

Molnár’s goal in using the computer was to find what she called the “satisfactory aesthetic state,” the beautiful. She did so by introducing a “1% disorder” of color, line thickness or a different direction into a basic structure. In the mid-1970s, Molnár and her husband developed a program that introduced a new way of using the computer for artistic purposes called the “Molnart system.”

She applied this to her work.

Using the computer as a tool allowed Molnár to explore the zone between order and disorder and try to find the place where one becomes the other. She also systematized her homages to her chosen masters with color prints inspired by Klee, Monet and Cezanne. In the 1970s, Molnár followed a line that began with Hokosai’s monograph of Mount Fuji, which had inspired Cezanne to paint Montagne Sainte-Victoire in Provence, when she discovered the Gaussian curve used in statistical surveys.

Towards the end of her life, Molnár told an interviewer, “I have no regrets. My life is squares, triangles, lines.” Today, she is regarded as a pioneer of computer art.

She’s also an inspiration for artists keen to embrace technology rather than fear it.

Vera Molnár, Juxtaposed by 25.

One of her last series of works is a collection called “Themes and Variations” from the moment she arrived, and was driven to make a series of geometric drawings of Notre-Dame.

Although educated in classical art, Molnár had become an abstract artist during her time at the academy, influenced by the “cool geometry” of the Constructivists, Dutch Neoplasticists such as Mondriaan, and its Cubist offshoot Orphism, practiced by Sonia and Robert Delaunay.

Despite the radical nature of Molnár’s work, her influences are evident.

Learning about Molnár, I’m struck by how her systematic approach shaped her art via the homages to her “chosen masters” she began making

Born in Hungary in 1924, Molnár was an artistic child precociously predisposed to systematic art. When her family holidayed at Lake Balaton, she would draw the sunset every night, always with a randomly selected, in different colored pencil. Aged 16, according to an account she gave to an interviewer, Molnár told her mother, when the “magic square” in the top “I don’t want to play piano, I want to paint. I don’t want to go to church. I don’t right corner of Dürer’s 1518 engraving “Melancholia” caught her attention. want to wear glasses. And finally [….] I A magic square is a square array want to make my life in France.” of numbers where the sums of After graduating from the Budapest the numbers in each row, column Academy of Fine Arts in 1947, Molnár and main diagonals add up to 34. met and began collaborating with Dürer’s magic square is different scientist Ferenc Molnár, who became because the sum of the numbers her husband. She moved to Paris in the four corners also adds up to 34. in 1948, finding the city inspirational

1948

Visual Language

After Dürer, Molnár’s homages embraced Monet, Mondrian, Cezanne and particularly Klee. She transcribed their work into her own visual language, using lines and geometric shapes and systematically making slight changes every time. Klee’s 1927 “Variationen (Progressives Motiv)” comprises 81 squares filled with thin lines that run parallel or intersect at different angles.

This became one of Molnár’s touchstones.

Molnár began making what is called combinatorial art, heavily influenced by mathematics, in 1957.

Collaborating with her husband led Molnár deeper into math and information theory, the science of measuring and communicating information. Following the route she’d first taken as a child drawing those Balaton sunsets, Molnár went deeper into systematic pictorial thinking. After experimenting with simple algorithms, she became one of the first computer artists

in

1968,

using a computer at the research lab in the Sorbonne.

The term “computer art” was first used in January 1963 to describe a piece by

of

500

generative non-fungible tokens (NFTs), made in collaboration with Martin Grasser. Although it engages with what was then the leading edge of artistic production, the series combines specific parameters and randomness to create a different image every time.

While I can’t say Vera Molnár’s work is especially pleasing to me, I am absolutely fascinated by the rigor of her thinking and the astonishing consistency of her life’s work. I’m grateful to the Ludwig for introducing me to her remarkable oeuvre.

À La Recherche Vera Molnár is at the Ludwig Museum in Müpa Budapest until April 14. Müpa is a short bus, train or boat ride from the city center at Komor Marcell u.

1, 1095 Budapest. Find out more at www.ludwigmuseum.hu Thanks to Mónika Kumin for her excellent introduction to the exhibition, which I’ve drawn on for this article.

22 | 4

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www.bbj.hu

Budapest Business Journal | February 23 – March 7, 2024

Buildings Tell Tales: Budapest’s Hidden Architectural Heritage

Culture Matters A regular look at culture issues in Hungar y and the region she has learned much about the Hungarian capital through their joint work.

“It has been fascinating how many treasures are hidden behind those doors because I’d never been into the courtyards or these kinds of buildings before. I have a license as a tour guide, but it’s not [for] the inside of buildings, just the outside, the history of the city. It has opened another world for me,” Urbán says.

An “underground” pub exhibition highlights a Swiss-Hungarian photographer’s passion for Budapest’s classical housing blocks.

Shabby Properties

Inevitably, given that he prioritizes buildings needing renovation or at risk of demolition, a good few photos show KESTER EDDY somewhat run-down, shabby properties.

He insists his goal is not to “take photos Vincent Baumgartner was born in of decay for the sake of decay,” however.

Geneva, Switzerland, to a Swiss-French “It’s not my goal to take photos of father and a Hungarian mother who poverty or misery, but more to show that had defected from Budapest in 1979. even in parts of the city where people Eszter Urbán and Vincent Baumgartner. Photo by Kester Eddy. don’t have lots of money, many people are His mother, he says, was a naturally “curious person;” whenever the two trying to make the place where they live visited Budapest and walked the streets, nice,” he says, pointing to an image of on seeing an open door of an apartment a dilapidated dwelling on Gát utca, a poor Realizing that history was disappearing they can connect us to the past. It’s something which is palpable,” he enthuses. area of District IX, to prove his point. block, they would sneak inside before his eyes, Baumgartner began Slowly but surely, people began to and view the courtyard’s “secrets.”

Des res District II it is not; poor it may photographing the courtyards, corridors notice his work: magazine editors asked It became a habit he could not shake off, be, but it is a cacophony of color, with and stairways of homes in his spare time, for interviews, and inquiries arrived and as a young adult, it made Baumgartner initially using his mobile phone. flowers on the porch. from former Budapest residents asking a keen observer of the architecture “Attila József was born in this street,” “At first, it was more about if he could track down and photograph and layouts of living quarters. It also he says, using the Hungarian form of the documenting. I was entering random their one-time homes. meant that, after a break from living in acclaimed poet’s name. “They put some buildings, taking photos of all the One of the most notable came last year small items, flowers, to decorate [the the Hungarian capital, upon his return, details. I was not really seeking to take he noted that things were changing fast, environs], and in the end, those places aesthetically pleasing photos,” he recalls. when a woman from the United States, who had grown up in Budapest, asked if especially in some of the older districts are much more liveable than the newly And then came COVID. Lockdown Baumgartner could get pictures of the house with poorly maintained housing. built, huge housing [projects ] which are meant Baumgartner, unable to travel where her uncle, himself a photographer, booming everywhere in the city.

“When I came back or spend money, also had time on his in had worked before the onset of Naturally, that may not be the view hands. It was then that he bought some World War of those buying those spanking new high-quality gear and began focusing on flats, replete with mod-cons, in new capturing “more serious” photos. SelfI realized that many of the small complexes across town. taught, he took a few lessons from a “The uncle’s name was László Elkán. details and even entire buildings had After six years of sneaking into professional and then began posting his This rang a bell because Elkán [after disappeared or were ‘too’ renovated,” he housing blocks and snapping vistas work online, always accompanying the leaving Hungary] changed his name told the Budapest Business Journal. of corridors, spiral stairways and pictures with a story about the building. to Lucien Hervé. Hervé became one “Renovation is good and very stained glass, Baumgartner, now Making History Tangible aged of the most famous architectural important, but it’s quite often overdone “That’s why I [chose] the name “Buildings photographers in the world. He worked here in Hungary. In France and Italy, with Le Corbusier [the renowned Swisssomehow, they are able to keep the spirit, Tell Tales.” I want somehow to make appears as fervent as ever regarding history tangible to people. Those are not French architect] and took many of his the atmosphere of the old buildings. his self-appointed task. just walls of buildings or stairways; they photos,” Baumgartner recalls.

Here, they tend to make them look “It’s very exciting here because the have a past, a history, and somehow, Naturally, being asked to supply sterile; they look like hospitals,” he says. architecture is very diverse. When we go images of the home of a giant of on holiday, we do the same [photograph photography like Hervé by his niece, work] when we can, but I think Hungary is whom he later met in person, felt a great honor for the still-youthful photographer. really special because you don’t know what to expect behind the facades,” he enthuses.

“That was really special for me,” “Sometimes you have a very freshly he says of the experience. renovated facade, and inside there’s Of course, it has not all been plain total decay. Sometimes, it’s the opposite. sailing. Many times, he’s struggled Sometimes, a building which doesn’t look to get into a building, while once, he interesting from the outside is fascinating found himself locked inside a small inside. Again, sometimes it’s the block over a bank holiday with nobody opposite. That’s what makes it exciting.” at home in any of the apartments.

Typically starting at or soon after dawn, he has made numerous visits to favorite courtyards, hoping to find Buildings Tell Tales: Budapest’s them devoid of cars or other modern Hidden Architectural Heritage paraphernalia, and failed. features 35 of Baumgartner’s Early in his quest, Eszter Urbán, his Budapest images. It is being long-time girlfriend, began to join shown at the Hintaló pub, Bacsó Baumgartner on his forays into backBéla utca 15, 1084 Budapest, street Budapest. Though a qualified and runs until mid-March. tourist guide and brought up in the largely Home at Gát utca, in Pest’s District IX. Photo by Vincent Baumgartner. working-class district of Angyalföld,

2018,

2.

34,

4

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Budapest Business Journal | February 23 – March 7, 2024

Chamber of Commerce Corner Swiss-Hungarian Chamber of Commerce (Swisscham)

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 organizing chamber’s website. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu

The French Chamber of Commerce in Hungary (CCIFH) Szalai, of the competitiveness and structural analyzes department of the Magyar Nemzeti Bank. • When: Thursday, March 21, 9-11:30 a.m.

• Where: Mamaison Hotel Andrássy Budapest, Andrássy út 111, 1063 Budapest.

Swisscham Hungary members enjoyed a lively networking event on Feb. 12 at the Tokaj Art Wine Gallery. The event was themed around introducing new and old members, viewing the gallery’s current exhibition and tasting wines from the Tokaj region. It was a perfect opportunity for members and partners to network and get to know each other.

 Join the CCIFH for the next Business Women’s Lunch, with the title “Leadership is a Choice, You Decide!” The speaker will be Tímea Pesti, CEO of Ald Automotive / LeasePlan Hungária Zrt. • When: Tuesday, March 19, noon-2p.m.

• Where: Kempinski Hotel Corvinus Budapest, Erzsébet tér 7-8, 1051 Budapest.

British Chamber of Commerce in Hungary (BCCH) The BCCH is pleased to announce the return of one of its best-attended community events, the live Six Nations rugby doubleheader, in a new but very apt venue: the Hungarian University of Sports Science, courtesy of event hosts TFSE Volleyball. The doubleheader on March 9 starts with the Italy vs.

Scotland game and concludes with what is expected to be a fiercely contested fixture between England and Ireland. Great food will be served between the games provided by Noiret Catering, with refreshments including Guinness on tap and Soproni by the can. For those not keen on beer, Nyakas Winery will have a wine bar, afternoon tea will be supplied by the English Tea Shop, and the refreshment corner is courtesy of Viwa Vitaminwater.

The BCCH says this headline sporting social event promises a relaxed atmosphere where networking takes a more personal, laid-back approach. The fourth round of 2024 Six Nations Championship matches will see England attempt to avenge the loss in the corresponding feature last year as they enjoy home advantage at Twickenham, London, against an Ireland team that (at the time of writing) is top of the table and will hope to keep its dream alive of a repeat of last year’s grand slam.

The other game will see Scotland attempt to improve on a promising performance last year against an Italian side, which is always stronger in its home venue, the Stadio Olimpico in Rome.

• When: Saturday, March 9, 2:30-8:30 p.m.

• Where: Dr. Koltai Jenő Sportcomplex, Csörsz u. 2-10, Room 112, 1123 Budapest.

• Fee: Members HUF 10,000 (+ VAT), non-members HUF 15,000 (+ VAT).

Socialite | 23

 The CCIFH’s next “Hot Topic” event will be the “Outlook for the Hungarian Economy in 2024: Competitiveness, Risks, Breaking Points.”

The conference and round table discussion are not open to the press. Other topics covered will include indicators, the HUF/EUR exchange rate, loan interest rates, inflation, wages, sectors, and enterprises exposed to exports.

The guests will include Gergely Suppan, Deputy State Secretary for Macroeconomic Analysis at the Ministry of National Economy; Tamás Isépy, macroeconomics business manager at Századvég Konjunkturakutató Zrt.; and Ákos

 The next CCIFH Communication Club will consider the role of arts patronage in corporate communication and innovative ideas in communication for a five-star hotel. What art patronizing activities can a hotel engage in?

How can this be a USP that distinguishes it from the competition? Which stakeholders can you reach with this activity? How can you harmonize the activity with the company’s other business goals? Ildikó Dudás, PR director at the Kempinski Hotel Corvinus Budapest, will be the speaker. • When: Tuesday, March 5, 9-11 a.m. • Where: Hotel Nemzeti Budapest Mgallery, József körút 4, 1088 Budapest.

Belgium Business Club in Hungary (Belgabiz) Belgabiz, the Swiss-Hungarian Chamber of Commerce (Swisscham) and consultancy VGD Hungary joined forces for a successful networking event on Feb. 15 at Courtyard by Marriott Budapest City Center. On behalf of VGD Hungary, Viktor Szabó, tax and payroll partner, gave a brief overview of the changes in the Hungarian tax environment, drawing attention to the most critical aspects.

The lively networking offered a perfect occasion for members of Belgabiz and Swisscham to mingle in a relaxed but professional atmosphere.

Canadian Chamber of Commerce in Hungary (CCCH) It was an exciting morning at the CCCH Business Breakfast. The chamber gathered at Concorde Értékpapír Zrt. to delve into the global economic landscape and Hungary’s outlook for 2024. Tamás Móró from Concorde Securities Zrt. kicked things off with an insightful keynote, followed by Péter Herczog from MBH Fund Management Company joining for a dynamic panel discussion, expertly moderated by former Minister of Finance Csaba László (2002-04), now an honorary professor at Corvinus University of Budapest. From the U.S. elections to China’s role in global trade, we covered it all, including the fresh morning stats released by the Central Statistical Office.

Opening a business doesn’t make you a businessman.