BR/04/2020 by Business Review

ROMANIA’S CITIES IN FIERCE COMPETITION TO ATTRACT MONEY AND SOULS

April, 2020 / Volume 24, Issue 3

www.business-review.eu

CORONAVIRUS OUTBREAK RESHAPES LOCAL WORKFORCE MARKET

WHY ROMANIA MUST TAP INTO ARTIFICIAL INTELLIGENCE

FAKE NEWS AND MANIPULATION IN TIMES OF CRISIS

COMPETITIVE POTENTIAL KEY TO ROMANIA’S (POST-PANDEMIC) RECOVERY

www.business-review.eu Business Review | April 2020

EDITORIAL 3 MACROECONOMY

• Editorial •

6 Bucharest is richer than

Anda Sebesi

Budapest and Transylvania is more developed than most of Hungary

• Editor-in-Chief •

7 Romania’s cities in fierce competition to attract money and souls

COVER STORY 8 Competitive potential key to Romania’s (postpandemic) recovery

Let’s focus on competitiveness

12 The three crucial factors of economic competitiveness: capital, workforce, productivity

HUMAN RESOURCES

he Covid-19 pandemic has hit almost every sector worldwide and forced countries to close their borders in order to limit the outbreak. Companies around the globe have

been forced to take tough measures and make huge efforts to adapt their business strategies to the new context. Yet uncertainty is the

22 Coronavirus outbreak

watchword for companies small and large, employees or entrepre-

reshapes local workforce market

neurs. Having said that, it is hard to talk about economic competitiveness in the context of the global coronavirus pandemic, but it is

ENTREPRENEURSHIP

nonetheless necessary. With the IMF recently announcing that it was clear that the global economy had entered a recession that could be as bad or worse than the 2009 downturn, it becomes obvious that the most competitive economic areas will be the main pillars of the future recovery from the imminent crash. This is why we’ve decided to dedicate our cover story to answering a simple question: do we want to be more competi-

28 Startups facing uncertain funding future over disruptive coronavirus

30 Startups preparing for paradigm shift on remote work

tive in the context of an economic recovery in the second half of 2020? Then we need to focus on the added value of our products

CITY

or services, their market share, as well as on the level of exports in relation to companies’ turnover and profitability. In order to survive in the international competition of the future, we need higher investments in both the private and the public sectors, based on data from the World Economic Forum’s latest index of Global Competitiveness, which ranked Romania as the 51st most competitive country in the world. It is clear that the next few months will be difficult, but let’s stay positive and see where we, as a country, could become more competitive.

44 Pandemic won’t put a stop to innovation & optimism

46 Technology gives piano lovers the chance to experience famous live performances

EDITOR-IN-CHIEF: Anda Sebesi JOURNALISTS: Aurel Constantin, Mihai Cristea, Romanita Oprea, Oana Vasiliu CONTRIBUTORS: Ovidiu Posirca, Sorin Melenciuc, Claudiu Vrinceanu COPY EDITOR: Anca Alexe PHOTO EDITOR: Mihai Constantineanu PHOTOS: Dreamstime ART DIRECTOR: Raluca Dumitru PUBLISHER: Bloc-Notes Media Network ADDRESS: 58 Stirbei Voda Street, 3rd Floor, District 1, Bucharest, Romania LANDLINE: 031.040.09.31 SALES MANAGERS: Radu Fireteanu, Alexandra Rosca EVENTS MANAGERS: Mara Dragoiu EVENTS & MARKETING MANAGER: Luiza Luca PRODUCTION: Dan Mitroi DISTRIBUTION: Eugen Musat EXECUTIVE DIRECTOR: George Moise GENERAL MANAGER: Catalin Alistari USA MANAGER: Oana Molodoi FOUNDING EDITOR: Bill Avery EMAILS: editorial@business-review.eu, sales@business-review.eu, events@business-review.eu SUBSCRIPTIONS on Manpres Distribution Business Review is a member of Fwei

Publicație auditată pe perioada Apr 2015 - Mar 2016

ISSN NO. 1453-729X

www.business-review.eu Business Review | April 2020

4 NEWS

WHO’S NEWS BR welcomes information for Who’s News. Submissions may be edited for length and clarity. Get in touch at mihai.cristea@business-review.eu

Bucharest’s service-driven economy among most insulated in Europe from COVID-19 outbreak numbers suggest that should a negative scenario come to pass, Bucharest may at least end up suffering much less than other office markets or recover quicker,” says Silviu

Francisc Kiss has been named Global Category and Channel Development Director at Danone. He is a graduate of the Babes-Bolyai University in Cluj-Napoca and he started his career at Nutricia Romania in 2009, serving as Trade Marketing Manager, and became a Sales Manager in 2011. In 2015 he was appointed as Country Manager, and for the past 5 years he has contributed to the development of a successful organisation and a sustainable business model, managing to achieve a growth rate of over 10 percent each year.

Pop, Head of Research at Colliers International. Also, while not necessarily relevant for the office market, but rather for the local economy as a whole,

Bucharest is also heavily reliant on public administration

page 5

ant on public administration. On the other hand, Romania’s

By Aurel Constantin

status as a fairly small and quite

The Bucharest economy stands

Dublin, Paris or London. That

open economy means that real

as one of the most insulated

said, Romania’s high integration

estate markets will not remain

service centers in Europe from

in global value chains means that

immune to global trends. Given

the negative effects of the CO-

it would face significant head-

that manufacturing has been

VID-19 outbreak, according to

winds given negative develop-

quite significantly impaired by

Colliers International consul-

ments in the global economy.

the Chinese factory shutdowns

tants, who analysed scenarios

“Even though the Bucharest

of recent weeks and also taking

for various segments of the real

office market may seem funda-

into account Romania’s heavy

estate market.

mentally a bit more insulated

reliance on the automotive sec-

from the issues plaguing the

tor, it means that the impact on

rest’s heavy reliance on IT&C

global economy, this doesn’t

the warehouse market should

activities as well as scientific

mean we won’t see office market

be more significant, but a lot

and professional services, on

vacancy edging higher or rents

depends on how long this situa-

par with European capitals like

coming under pressure. Still, the

tion will take.

This is largely due to Bucha-

Alexandru Aparaschivei is the new Tax Partner at Nestor Nestor Diculescu Kingston Petersen (NNDKP). With over 12 years of experience in the tax consultancy field with a focus on all VAT-related matters, he joined the firm in 2018 as Tax Director, having previously worked for several important companies such as Ernst & Young or Deloitte. Aparaschivei is a graduate of the Alexandru Ioan Cuza University in Iasi, with a BA in Economics and Business Administration. He is also a Certified Tax Advisor.

Bucharest is also heavily reli-

Omniasig posts 11 percent rise in gross written premiums in 2019 By Aurel Constantin Omniasig Vienna Insurance

written premiums exceeded RON

Group (VIG) continued its sus-

1.3 billion, while the registered

tainable development strategy in

gross profit, according to IFRS

2019 and maintained the growth

reporting standards for consoli-

of the previous years, having

dation purposes, was above Ron

recorded an increase of approxi-

45 million. The total amount of

mately 11 percent in gross writ-

the claims paid by the company

ten premiums compared to the

last year was slightly above RON

previous year. In 2019, the total

820 million.

value of the company’s gross

“In 2019 we were still mainly

In 2019, the total value of the company’s gross written premiums exceeded RON 1.3 billion

www.business-review.eu Business Review | April 2020

NEWS 5

Deloitte and FintechOS take part in CEC Bank’s digital transformation By Aurel Constantin

Colin Lovering is the new Senior Business Advisor at Corporate Office Solutions (COS). His new role will include performance coaching with the COS team and supporting the enhancement of customer relationships and new business development. Colin Lovering has been living and working in Romania since 2009, when he initially arrived to offer consultancy and advice to organisations looking for growth and profitability.

Deloitte Romania and FintechOS have created and implemented the technical solution for the “Welcome” package, which was integrated into CEC Bank’s legacy systems and allowed the bank to launch a complex project aimed at digitalizing the products and services it provides to customers in Romania and abroad. The package can be accessed fully online and includes a current account, a debit card, and access to the

Opening accounts remotly is a very important project for CEC Bank

Mobile Banking service. The process features multiple levels

is opened immediately after the

institutions. “Access to banking

of security, including applicant

online registration process is

services is essential for people

verification, using artificial

complete, and the customer can

and for the economy. Opening

intelligence algorithms for data

access Mobile Banking straight

accounts remotely, without

and facial recognition as well

away. The card is issued and sent

any visits to the bank and no

as video calls with the bank’s

by mail to the address chosen

paperwork, is a very important

staff. The contract is signed by

by the customer. This is among

project for CEC Bank, and it can

both the bank and the cus-

the first projects to be finalised

contribute to increasing finan-

tomer using a qualified digital

within Deloitte Romania and

cial inclusion, considering that

certificate (eIDAS compliant),

FintechOS’s strategic partnership

over 90 percent of Romanians

then sent by the bank to the

for providing digital transfor-

have access to mobile internet,”

customer via e-mail. The

mation solutions and business

said Bogdan Neacsu, CEO and

“Welcome” package account

process automation to financial

President of CEC Bank.

Robert Jasinski was appointed the new Country Manager of Nutricia Romania. He will succeed Francisc Kiss, who was named Global Category and Channel Development Director at Danone. Robert Jasinski has over 15 years of experience in the FMCG sector, having joined the Nutricia team in 2011 as National Key Account Manager in Poland, where he successfully managed several projects for the company.

focused on supporting the non-motor insurance segments, in line with the company’s long-term strategy of sustainable growth. The positive results and the stable evolution from 2018 underline the fact that our strategy produces the desired effects. For 2020, we have an integrated action plan that will allow us to adapt to the new economic context generated by the coronavirus crisis while preserving our ascending development trend,” said the representatives of Omniasig VIG.

Eva Forika was promoted to Partner at Nestor Nestor Diculescu Kingston Petersen (NNDKP). She joined the firm in 2008 and had been the head of NNDKP Timisoara for the past 6 years. Eva is a highly seasoned Romanian lawyer with over 20 years of professional experience in the legal field. The new NNDKP partner holds a Bachelor of Law from the West University of Timisoara, where she has also been a Lecturer in European Comparative Studies.

www.business-review.eu Business Review | April 2020

6 MACROECONOMY

Bucharest is richer than Budapest and Transylvania is more developed than most of Hungary Some regions in Romania have seen fast development and are now richer than most neighbouring countries. Bucharest was richer than Budapest in 2018, while Banat and Transylvania were more developed than most of Hungary’s regions, according to the latest Eurostat data. By Sorin Melenciuc was still more developed than all Bulgarian regions except the area around the capital city of Sofia (Yugozapaden). Meanwhile, development levels against the EU average reached 152 percent for the Bucharest region, 68 percent for the West/Banat region (including the rich Timisoara-Arad area), 62 percent for the Central region (southern Transylvania), 61 percent for the North-West (northern Transylvania), 55 percent for the South-East region (including the rich port of Constanta), 51 percent for South-Muntenia and 50 percent for the South-West-Oltenia region. Compared to 2007, the West region’s GDP per capita in PPS rose by 20 percentage points (pp), from 48 to 68 percent of the EU average, while the South-East’s grew by 19 pp. In 2018, only one of eight Romanian regions was still included in the list of the EU’s 20 poorest regions. But Romania remains the EU member state with the highest GDP disparities Bucharest is by far the richest part of the country

between its regions.

REGIONAL PERSPECTIVE

omania already has some regions that

above Budapest. In fact, Bucharest region was

Over the last decades, Romania’s regions

could be considered “developed” by

slightly above the EU average as early as 2007,

have developed at an impressive speed and

international standards, at a moment

the first year of Romania’s EU membership.

outpaced most regions in neighbouring states.

when the whole country is preparing to leave

In fact, Eurostat data show that in 2018, Ro-

the “upper-middle income” status and enter

LARGE DISPARITIES

mania’s West region was more developed than

the superior category. However, many areas

But the rest of the country was considered

6 out of the 8 regions in Hungary – the excep-

are still lagging far behind and can be consid-

poor by any standard, with real GDP per

tions were Budapest and Nyugat Dunántúl.

ered poor even by local standards.

capita (at purchasing power standard – PPS)

At the same time, both Transylvanian regions

levels between 27 percent (North-East region)

in Romania (Centre and North-West) were

European nation, is by far the richest part of

and 48 percent (West region), according to

more developed than 5 out of the 8 Hungarian

the country. The city of 2 million people and

Eurostat data. In 2018, income inequality

provinces.

its surrounding areas (Ilfov County) had a

between the different regions of Romania

gross domestic product (GDP) per inhabitant

has been a growing problem, even if the poor

est nation – after Bulgaria and Croatia, with

of EUR 24,200 in 2018, more than twice the

regions of Romania are not as poor as they

the same GDP at PPS/capita standard –, even

national average of EUR 10,500. But consider-

were 11 years ago.

though within a decade after it joined the

Bucharest, the capital city of the Eastern

ing real GDP per capita (at purchasing power

Eurostat data show that the North-East (a

But Romania is still the EU’s third poor-

EU, its economy grew enough to become by

standard – PPS), the Bucuresti-Ilfov region

large part of the Moldova region), the poorest

far the largest in its region. Economists say

was by EU standards a very developed region,

area in Romania, was only at 42 percent of the

that EU accession helps real convergence, but

with 52 percentage points above the EU de-

EU average in terms of development in 2017

a good national economic strategy is key to

velopment average – and 7 percentage point

(but advancing from 39 percent in 2017), but

achieving economic and social development.

www.business-review.eu Business Review | April May 2016 2020

MACROECONOMY COVER STORY 14 7

Romania’s cities in fierce competition to attract money and souls Romania’s major cities are developing at a fast pace and they traditionally bet on their historical, urban, and human qualities in order to develop. But the asset that could really help them become relevant at the European level may lie elsewhere: in their ability to attract talents from within the country as well as from abroad through the professional opportunities and quality of life they offer. By Sorin Melenciuc just on pure market dynamics,” World Bank experts note.

HISTORICAL AND CULTURAL DIFFERENCES However, the development of Romanian cities depends on historical, urban and political factors – just like it does everywhere else. Despite its huge financial resources and high earnings, Bucharest is affected by poor public management, incompetence, and stunning corruption. In some cities in Transylvania, where urban life emerged earlier and was historically more developed and sophisticated, the qual-

The future development of major secondary cities is a key factor in the advancement of the whole country

ity of life is much higher and the situation improves every year, with the help of EU funds. Cities like Cluj, Sibiu, Oradea or Timisoara

omania currently has one metropolis,

try’s gross domestic product (GDP). Experts

are attracting people and developing, while

Bucharest, three major secondary

point out that these are some of Romania’s

cities in other parts of the country are offering

cities – Cluj, Timisoara, and Iasi – and

main economic growth engines, and Romania

low quality of life and little hope to their resi-

several other tertiary cities that have the

in this respect is no diﬀerent from other EU

dents. This could be a key factor in develop-

potential to become secondary urban centres

countries. With the exception of Bucharest,

ment and in attracting more people. “The

in the future: Constanta, Brasov, Craiova,

which has a national reach, and maybe with

most dynamic cities have attracted labour

Oradea, Galati/Braila, Sibiu, Bacau, Ploiesti,

the exception of Cluj-Napoca, Timisoara, and

force from quite a distance, and localities with

Pitesti, and Arad.

Iasi, which manage to attract people from

a more mobile population have tended to be

other urban centres, most functional urban

more developed than those with a less mobile

KEY DEVELOPMENT FACTOR

areas in Romania have a limited reach. This

population. In essence, development spills

The future development of these cities is a

means that they primarily attract migrants

over from the most dynamic cities to the sur-

key factor in the advancement of the whole

and commuters from nearby areas, so the

rounding areas, and this is a core aspect of the

country, experts say. “Without strong cities,

qualifications of their migrants and commut-

development process,” the study indicates.

one cannot have strong regions and a strong

ers are usually not better than the general

The key issue of this year’s local elections,

national economy,” according to the “Magnet

qualifications of the people in the region.

which seems more visible than it has been in

“All things being equal, it is likely that Bu-

prior elections, is quality of life. People have

nia” report recently released by the World

charest will remain the most attractive place

been noticing differences and those in cities

Bank, the most comprehensive study of

for migrants in the future. (…) Cluj-Napoca

offering low quality of life tend to start asking

Romania’s urban areas published so far.

and Timisoara are likely to be runners-up to

for improvements. Meanwhile, people living

The study found that the eight largest cities

fill the secondary city gap, so they are likely to

in large urban areas are seeking good jobs, but

in Romania – Bucharest, Cluj, Timisoara, Iasi,

become very attractive places for migrants in

they also highly appreciate the better educa-

Constanta, Brasov, Craiova, and Ploiesti –

the future. Whether these two cities manage

tion and health services, decent infrastruc-

amass around 22 percent of the population

to keep their leadership positions also de-

ture, lower pollution, and large parks and

and generate around 53 percent of the coun-

pends on how well they are managed, and not

entertainment areas.

Cities: Migration and Commuting in Roma-

8 COVER STORY

www.business-review.eu Business Review | April 2020

COVER STORY 9

COMPETITIVE POTENTIAL KEY TO ROMANIAâ&#x20AC;&#x2122;S (POST-PANDEMIC) RECOVERY By Claudiu Vrinceanu

It is hard to talk about economic competitiveness in the context of the global coronavirus pandemic, but it is nonetheless necessary. The most competitive economic areas will be the main pillars of the future recovery from the imminent recession.

www.business-review.eu Business Review | April 2020

10 COVER STORY

o understand the post-COVID-19 economy, we should iden-

industries selected by the Business Review team, which we see as

tify the benchmarks of a competitive environment. How

the fields with the greatest growth potential in the medium and

can we measure economic competitiveness? The competi-

long term.

tiveness of an economy can be evaluated first and foremost on the quantity and quality of its exports, the dynamics of investments,

RETAIL POST-COVID-19

the quality of infrastructure, and the human resources. Do we want

On the one hand, online retail, which is already booming these days,

to be more competitive in the context of a future economic recovery

will grow even more as consumers spend less time in public areas.

in the second half of 2020? Then we need to focus on the added

We also expect massive gains in e-commerce delivery services. On

value of our products or services, their market share, as well as on

the other hand, retail as a whole, which had been on a ten year-long

the level of exports in relation to companies’ turnover and profit-

growth cycle, will likely show contraction for the first time since the

ability.

last recession. According to the most positive scenario, we will have

In order to survive

an economic recovery

in the international

in May with 50 per-

competition of the fu-

cent of the turnover

ture, we need higher

of the period before

investments in both

the crisis. The most

the private and the

pessimistic option

public sectors, based

involves a restart in

on data from the

August, with 30 per-

World Economic Fo-

cent of the turnover.

rum’s latest index of

The evolution of sales

Global Competitive-

will vary depending

ness, which ranked

on the areas. Accord-

Romania as the 51st

ing to estimates by

most competitive

eMag, some com-

country in the world.

merce categories will

Competitiveness is

experience a drop of

defined as the set of

30-50 percent (based

institutions, policies

on what happened in

and factors that deter-

China): fashion, home

mine a country’s level

appliances, cars. But

of productivity.

there will also be ar-

Romania has

eas of high growth in

climbed one spot in

retail, namely IT and

the ranking compared

care products.

to the previous year, coming in above Mauritius, Oman, and

CHEMICAL INDUSTRY MUST ADAPT

Uruguay, and below

Reinvention will be

Mexico, Bulgaria, and

the keyword in the

Indonesia, in a list of 141 countries analysed by the WEF. The WEF’s

chemical field, and this is confirmed by the current economic reali-

index looks at 12 pillars of development, all of which contain several

ties. For example, Chimcomplex, the former Oltchim, has started

sub-topics that each get a score out of 100 – Institutions, Infrastruc-

biocidal production on its Ramnicu Valcea and Onesti platforms.

ture, ICT adoption, Macroeconomic stability, Health, Skills, Product

The company has received biocidal approval for sodium hypochlo-

market, Labour market, Financial system, Market size, Business

rite concentration 1.25 percent from the Health Ministry. Chimcom-

dynamism, and Innovation capability.

plex has modified its industrial production lines in recent weeks

Romania’s highest rankings were for pillars such as ICT adop-

in order to be able to produce sodium hypochlorite as a necessary

tion, Market size, Institutions, Infrastructure, and Innovation

product for public health in the context of the coronavirus pandem-

capability. On the other hand, the country ranked lowest for the

ic. The first deliveries will be prioritised according to emergencies

following competitiveness pillars: Financial system, Health, Skills,

and institutions that urgently need disinfection of external spaces.

and Business dynamism. As for Romania’s performance in the post-

The company estimates that it will initially reach a delivery capacity

COVID-19 recovery period, several key sectors will adapt to the new

of 1,000 tonnes/county.

conditions. We’ve developed a forecast of opportunities in several

www.business-review.eu Business Review | April 2020

COVER STORY 11

HR IN THE NEXT ECONOMIC CYCLE

the economy through various proactive measures and schemes to

There are many employees who say they would rather be in the

support employees and entrepreneurs. In order to stop the spread of

office than at home. Co-working spaces in office buildings serve

the pandemic, authorities impose strict measures to isolate people

exactly this need for socialising. However, the main lesson will be in

and reduce their mobility.

the usefulness of a flexible lease contract as opposed to a rigid one,

“However, to hope that liquidity injections will be able to restart

so that you can reduce/increase it your space depending on how

the economic system in the current pandemic situation, as has been

many people you have working remotely and how many are at the

the case in classic economic crises, might prove unwarranted given

office.

the wildly different contexts. The measures that worked 11-12 years

The evolution of HR will also affect the real estate sector. Even if

ago will not have the same results in the current context of a public

people will be going back to the office, I think the percentage of time

health crisis. Currently, the real economy is frozen and decoupled

worked from home will increase from 5-10 percent before the crisis

from the financial sector,” said Cosmin Marinescu, Economic

to 30-50 percent after

Advisor to Roma-

the crisis. The office

nian President Klaus

will be flexible and

Iohannis. In these condi-

the extra space will be let go.

tions, economic measures to stimu-

IT&C: TWO OPPORTUNITIES FOR A COMPETITIVE ECONOMY

late demand and

The two main op-

fiscal channels, are

portunities in the

somewhat in contrast

Romanian IT industry

to the “stay home”

that will bring results

objective of this

in terms of economic

emergency situation.

competitiveness are

In the meantime,

private organisa-

there was strong

tions’ need for digital

emphasis on the need

transformation and

to prevent the fall

the digitalization of

of financial systems

the public system.

through liquid-

Romanian society

ity injections. It is a

will depend on digital

prophylactic measure

infrastructure and on-

to ensure financial

line communication.

stability, which will

The industry’s reac-

alleviate the popu-

tion will have a major

lation’s feelings of

impact in maintaining

anxiety.

production, whether through monetary or

the new normality and future opportunities will be generated by those companies that will be able to adjust

coronavirus pandemic? This is the first time when public policy

“THE MEASURES THAT WORKED 11-12 YEARS AGO WILL NOT HAVE THE SAME RESULTS IN THE CURRENT CONTEXT OF A PUBLIC HEALTH CRISIS,”

has faced a stop-and-go paradox: we need to stop mobility and

COSMIN MARINESCU

themselves and manage to stay relevant. The Romanian IT market was focused on outsourcing resources (low risks, big volumes, low margins) and, more recently, on product startups (high risks, volume volatility, high margins). The country’s public administration has every chance to be digitalized, and the crisis generated by COVID-19 can accelerate this process.

FROM CORONAVIRUS OUTBREAK TO NEW ECONOMY What is there to be done in the economy in the context of the

interaction in society and, at the same time, we need to (re)start

www.business-review.eu Business Review | April 2020

12 COVER STORY

The three crucial factors of economic competitiveness: capital, workforce, productivity A company’s economic competitiveness depends on its position on the market, the share of exports in its total turnover, and the weight of its revenues in the national GDP. For a country, competitiveness is based on added value generated in the economy. Added value is a relevant indicator because it reflects the economy’s ability to process raw materials and to retain part of the value that is created in the country.

By Claudiu Vrinceanu

n economic terms, in order to

the processing of information than on

stimulate the added value of the

the processing of natural resources, a

Romanian economy, three impor-

large share of young Romanian people

tant factors must be improved: capital,

will be functionally illiterate, unable to

labour force, and productivity.

understand the meaning of a phrase.

The capital factor: foreign di-

Production is the essential element

rect investments (FDI) , an essential

of a country’s development vision and

component of the capital factor, have

the areas of interest are those sectors

decreased from an average of EUR 7.3

which, in line with Romania’s competi-

billion/year in 2004-2008 to an average

tiveness strategy, represent the pillars

of EUR 2.5 billion/ year over the last

that can significantly contribute to the

ten years, and the improved absorp-

acceleration of economic growth.

tion of European funds has only offset

Agriculture is one of these sectors.

this decline to a small extent. But the

Currently, over half of Romania’s popu-

outlook for FDI in Romania will change

lation lives in the rural area, making the

in 2020: the coronavirus outbreak will

country the most rural and agrarian so-

cause foreign direct investments to shrink by 30 percent compared

ciety in the European Union. Romania has one of the most extensive

to previous forecasts, resulting in only marginal growth in 2021, with

and fertile agricultural areas. In order to stimulate agriculture, we

the automotive, hospitality, transports, and energy industries to be

need to develop our irrigation systems, improve associative struc-

the hardest hit.

tures among farmers and reinvigorate agricultural education. At the

The labour force factor: the number of people entering the field of

same time, niche sectors such as organic farming should be backed

work at the age of 18 averaged 365,000 yearly in 2004-2008 (the last

as well, as Romania has a good potential for competitive advantage

generations of the “baby-boomers” born before 1990), while the new

in a branch that is experiencing rapid growth at the international

labour force of recent years has gone down to 254,000 people yearly

level.

on average, as a result of the fall in births after 1990 (a phenomenon

At the same time, in terms of productivity, the information tech-

that continues and worsens). These developments have influenced

nology and creative industries also play important roles, and they

the labour factor, the second pillar for a competitive economy. In the

have certainly demonstrated their growth potential in recent years.

near future, the coronavirus outbreak will change many things in the

The objectives for these sectors are to define operating frameworks

Romanian economy. For example, the labour crisis will be alleviated,

and stimulate growth by qualifying the workforce and adapting

as many Romanians will no longer go abroad. Furthermore, greater

the education system to the market requirements, together with a

importance will be given to local production, because, as it has now

favourable fiscal framework for development.

been confirmed, each country/individual is on their own in times of crisis. Productivity, the third factor of competitiveness, is overwhelm-

Energy is also a critical area for the economy, and through the correct management of resources and investments, Romania can become a provider of stability in the region in the coming years. The

ingly dependent on the quality of the education system. According to

structural measures refer only to increasing energy efficiency and

the international PISA test, carried out among high school students

minimising losses. Energy objectives should also include increasing

aged 15-16 in 65 countries, Romania ranks 45th in mathematics,

renewable energy production, which ensures both better energy

49th in science, and 50th in reading and understanding of texts,

independence and security as well as a contribution to reducing

well below the level of Central and Central European states. In other

greenhouse gas emissions and, consequently, to the fight against

words, in a tech society, where production will be based more on

climate change.

www.business-review.eu Business Review | April 2020

COVER STORY 13

Consumers move online in times of crisis Many global retailers operating both in Romania and abroad have announced temporary store closures in a bid to help stop the spread of the coronavirus. In parallel, they’ve adapted their working policies to the new context.

By Anda Sebesi

t the international

to that of a job well done,”

level, in most

Pozdarie concludes.

cases, employees

As one of the main en-

are being paid for lost

gines of the local economy

shifts, and things are quite

in the last decade, retailers

similar on the local mar-

are now more concerned

ket. For example, Mobex-

than ever about the safety

pert Group has decided to

of their customers and

close its stores indefinitely

employees and are focus-

and pay 75 percent of the

ing on maintaining stocks

base salary for each of its

available for the popula-

2,400 employees until the

tion. From Carrefour

Covid-19 outbreak passes.

to Cora, Kaufland, Lidl,

“Since we don’t sell a basic

Metro, and Mega Image, all

necessity product for this

retailers are now focusing

situation, the only respon-

on bringing their contribu-

sible decision is to suspend

tion to stop the spread of

our activity,” Dan Sucu,

coronavirus. “During this

president and co-owner

difficult time, we as retail-

of Mobexpert Group said

ers play a crucial role and

earlier this month, cited by

have a huge responsibility.

Hotnews.ro. The company

So we’re making all the

has also decided to take on

possible efforts to remain

all the financial loss due to the current crisis in an attempt to protect

a safe place for shopping both in stores and online,” says Mircea

its customers and employees.

Moga, CEO at Mega Image. As a result, the company has adjusted

With consumers staying at home and avoiding public places, it is

its schedule, set up a dedicated shopping timeframe for seniors and

clear that many online retailers will see an upsurge in traffic. Food

disabled people, limited access to its stores to avoid congestion and

is the sector that looks set to benefit the most. A recent global Ipsos

made adjustments to the self-service aisles and cash register areas.

survey found that in most countries, people are buying food or

In addition, in order to avoid prolonged human contact, deliveries

groceries online no more than they usually would, with Italy being

from its supermarket only allow online card payments.

an exception. Going back to the Romanian market, Catalin Pozdarie, general

Kaufland is another example in this regard. Apart from similar standard measures to protect its customers, Kaufland decided to

manager at Hervis Sports & Fashion Romania, says that considering

offer a EUR 1.6 million bonus to the teams working in its stores and

the current context, when it is easier to prevent than to treat, it is

warehouses and introduced immediate payment for overtime per-

obvious that shopping for primary needs is mainly being carried out

formed during this period. In addition, in an attempt to protect its

online. “Apart from consuming food and movies, people need to stay

more vulnerable employees, the company decided that employees

calm and optimistic. Individuals who used to have a healthy and ac-

aged over 65 and pregnant women who work for the company could

tive lifestyle and engaged in physical activity on a daily basis have an

choose to take paid leave.

advantage. And this can be seen in our latest online orders,” he says. As for the significant lack of workforce in this field in Romania,

Last but not least, Roland Ruffing, CEO at Metro Cash&Carry Romania, said in March that the company had established a working

he says this problem existed before the Covid-19 outbreak, too. “It is

group that closely cooperates with Romanian authorities and all

now probably the time for us to realise that we are not alone. We live

the Metro stores in the country in order to ensure that all possible

in a society and we need to rely on respect, starting from self-respect

preventive measures are taken.

www.business-review.eu Business Review | April 2020

14 COVER STORY

Romania could play an active role on the global chemical scene Despite the absence of some significant sub-sectors, the Romanian chemical industry has the potential to become an active player at the international level. Yet Romanian authorities need to take some important measures in order to support this field. By Anda Sebesi

urrently, the local chemical industry is represented by some

hypochlorite. These products are used in the chemical treatment

of its sub-sectors, such as the processing of salt for sodium

and disinfection of surfaces in the fight against the most dangerous

chloride-based products, natural gas for chemical fertilisers,

viruses and germs, including Covid-19. They are also used in the

oil, plastics and rubber processing, pharmaceuticals, and the paper and chemical pulp sector.

treatment of drinking water. Moreover, Chimcomplex recently got approval from the Health

â&#x20AC;&#x153;Romania has all

Ministry to produce

the material and hu-

sodium hypochlorite

man resources and the

biocide at a 1.25 per-

knowledge it needs

cent concentration. As

to have a developed

such, the company has

chemical industry that

adjusted its indus-

could cover all the

trial production line in

needs of the national

order to prioritise so-

economy and act as

dium hypochlorite, as

an active factor in the

the product is essen-

international chemi-

tial for public health

cal industry. The local

in the context of the

chemical scene lacks

Covid-19 pandemic.

some of the most

Production will start

significant sub-sectors

at the Ramnicu Valcea

like chemical rubber

and Onesti industrial

synthesis, synthetic

platforms, in an effort

fibers manufacturing

to slow down and limit

or chemical pigment

the Covid-19 outbreak

production. Unfortu-

in Romania. â&#x20AC;&#x153;Our

nately, some products

products are being

are scarce on the local

used in Romania and

market and in their

other countries like

case imports are six

Moldova, Bulgaria,

times larger than exports,â&#x20AC;? says Stefan Vuza, the president of Chim-

Hungary, Ukraine, and Serbia, among others. Therefore, we can

complex.

say that Chimcomplex is a strategic company for the Romanian

The company now operates the largest chemical manufacturing

economy in terms of national security and water-related public

facilities in Romania, with two industrial platforms in Onesti and Ramnicu Valcea. It is also the largest exporter backed by Romanian private capital and provides both on vertical and horizontal levels the salaries of over 15,000 employees (including the employees of Chimcomplex and of other economic sub-sectors). In addition, Chimcomplex is the sole Romanian manufacturer of biocidal active substances based on chlorine, sodium hypochlorite and calcium

15,500

is the number of employees (including the employees of Chimcomplex and of other economic sub-sectors) for which the company provides the salaries

www.business-review.eu Business Review | April 2020

COVER STORY 15

health,” says Vuza. He adds that 2020 started with a major crisis

pigments, bio-synthesis products, cosmetics, silicone products,

in the European chemical industry, which translated into a drop in

artificial fibers based on carbon, glass, and volcanic slate, special

sale prices. The situation got worse along with the general economic

chemical products, and fine chemicals (products manufactured in

crisis generated by the coronavirus. “This is why the industry needs

small quantities with a minimum value of USD 10/kg) are among

the government’s support and refinancing from local banks, in order

such sectors. “Highly polluting commodity-based industries have

to carry on with the medium and long term activities in production

been transferred and developed in Asia, which had easily accessible

facilities,” Vuza adds. He warns that a disruption of the chemical

raw materials, cheap workforce and plenty of consumers,” he says.

industry could have a ripple effect and may lead to the disappear-

Germany – with companies like BASF, the largest chemical

ance of some local

manufacturer in the

producers who are

world –, France (with

crucial for economic

Buyer and Evonik),

well-functioning.

the Netherlands, and

Asked what Ro-

Italy are countries

mania should do to

with some of the

become an exporter

most competitive

of chemical products,

chemical industries

Vuza of Chimcomplex

in the world right

says that the develop-

now. “These countries

ment and implemen-

allocate significant

tation of a sovereign

budgets to research

guarantees mecha-

and development

nism for high-grade

activities or post-

loans used by players

graduate studies and

in this industry for

are suppliers of state-

investments is crucial.

of-the-art technolo-

“Investments in the

gies, having launched

chemical industry are

modern development

very costly and access

directions like the

to such loans is either

Circular Economy,

too expensive or im-

the New Chemistry or

possible,” adds Vuza.

Industry 4.0. What’s

Secondly, he adds that

interesting is that

a stabilisation of prices

these countries’ envi-

for electricity, heat,

ronmental protection

natural gas, and other

rules are more flexible

utilities the chemical

than Romania’s.”

industry uses is also important. “In addition, there is a need for a special programme to develop the chemical industry, based on available national resources like salt, natural gas, wood, oil, and coal. The programme has to promote the efficient capitalisation of these raw materials, aiming for integration and advanced processing in order to obtain high added value for exports.”

WHAT’S HAPPENING AT THE EUROPEAN LEVEL? According to Vuza, the European chemical industry is very competitive. However, in the last two years, its profits halved compared to past levels and initial targets. “The European chemical industry performs well due to the fact that between 2000 and 2010 it went through a smart restructuring, re-engineering, and development strategy that essentially aimed at keeping highly scientific and value-adding sub-sectors in Europe,” he adds. Pharmaceuticals,

www.business-review.eu Business Review | April 2020

16 COVER STORY

Covid-19 outbreak to accelerate demand for logistics and office spaces As one of the main drivers of the local economy, the Romanian real estate sector is highly competitive, showing sustainable development over the long term. Despite the Covid-19 crisis hitting Romania too, specialists say that the current turmoil will not have negative long-term effects on the local real estate market.

By Anda Sebesi

he stock of modern

those from older build-

office spaces in

ings, some of which are

Bucharest reached

in very good locations,

nearly 2.7 million square

but were built by inex-

meters last year, up 12

perienced developers or

percent compared to the

have not been investing in

previous year. An addition-

technical upgrades. The

al 700,000 sqm could be

vacancy rate could reach

delivered over the next two

12-13 percent, up from 10.5

years, which means a 25

percent in 2019,” says Se-

percent increase over the

bastian Dragomir, Partner

current office stock, which

& Head of Office Advisory

will intensify the competi-

at Colliers.

tion to attract new tenants,

As a pillar of the local

according to the annual

economy, the real estate

report released by Colliers

sector is a significant

International. Tenants will

contributor to what makes

thus be in a position of

Romania a competitive

strength in negotiations,

country. According to

and vacancy is expected to

Eurostat data, Bucharest-

climb to 12 percent, maybe even to 13 percent by year-end. 2020 is set to be a good year for the Bucharest office market, with

Ilfov has a GDP per capita representing 144 percent of the EU average, reaching Berlin or Madrid levels. In terms of population, Bucharest ranks 5th among

Colliers consultants predicting demand for around 320,000 sqm, of

EU capitals. As Alinso Group CEO Ivan Lokere puts it, future dynam-

which 120,000 sqm of net office space. As in previous years, IT and

ics also look very promising and this will lead to a further increase

financial services companies will be the main drivers of demand in

in demand for offices, residential, industrial and logistics spaces.

2020.

“International companies, as well as Romanian companies that

”The wave of deliveries from 2019 is reduced this year to 200,000

have become big players, are increasingly looking for quality space.

sqm, but with a spectacular return in 2021, when developers antici-

Besides traditional sectors such as industrial, manufacturing, and

pate a potential of around 500,000 sqm, a new historical record.

services, ICT especially is in high demand, now representing almost

Competition is on the rise among developers, but also between

6 percent of Romania’s GDP. The roll out of 5G will further support

them and the owners of existing modern buildings, who just last

Romania’s technological leadership,” says Lokere.

year lost tenants occupying 140,000 sqm through relocations.

He adds that it is obvious that demand for qualitative well-

Tenants will be the ones to enjoy opportunities, because Bucharest

located dwellings will increase further as a result of the growth of

is starting to become a tenant’s market for office buildings. There

the middle class working in the ICT sector and building families

will be increased competition for attracting new tenants, including

and a bigger inflow of people from all over Romania or from abroad

www.business-review.eu Business Review | April 2020

towards the Bucharest area. “In the long term, we do not expect a

COVER STORY 17 As for the office segment, Lokere says that the current crisis will

big net negative impact of the coronavirus crisis, as Romania has

accelerate remote working, now that companies have been forced

everything it needs to come out of this crisis stronger,” says Lokere.

to adapt their modus operandi. In Bucharest, the growth of the ICT

According to data from Colliers International, industrial and

sector will continue and so demand will further increase. Especially

logistics overall take-up increased some 40 percent in the first three

for modern, recent offices as companies have a greater focus on the

quarters of 2019, to 306,300 sqm. Private consumption remains

health and well-being of their staff.

quite decent in Romania amid (still) double-digit wage growth in year-on-year terms, meaning that the need for

CEE MORE COMPETITIVE THAN THE WEST

industrial and logistics

The entire Central and

spaces assigned to the

Eastern European market

expanding retail sector

recorded transactions

throughout Romania

worth EUR 14 billion in

should remain a driver in

2019, an increase of EUR

2020; so will the expan-

1 billion compared to the

sion of e-commerce,

previous year, according

which is growing quite

to consulting company

quickly alongside tradi-

JLL. Poland accounted for

tional brick-and-mortar

55 percent of these trans-

operations. The same

actions. In all CEE markets

source says that indus-

where Skanska operates,

trial and logistics stock

including Romania, the

will grow considerably

market has been dominat-

by 2023, if infrastructure

ed by office projects.

projects really start to

“2019 was a very in-

become visible and fiscal

teresting year for the CEE

policies don’t experience

real estate market - and

major changes designed to

office sector in particu-

discourage investments in

lar - and very successful

this segment.

for Skanska. Due to the

As for the future of

great quality of assets with

the office and industrial-

stable tenants and higher

logistics segments, Lokere

return on investment than

says that demand will

in western Europe, the

grow, especially towards

demand for prime office

high quality buildings and

buildings in CEE remains

business and industrial

very high among inves-

parks in general. “Despite

tors. Skanska again at-

the short-term negative

tracted newcomers to the

effects of the COVID-19

market, for example South

outbreak, this crisis will

Koreans who were very ac-

lead to an increase of the

tive in our region this year.

need for logistics space.

Our strategy of delivering

This will come a result of an accelerated adoption of e-commerce

futureproof projects has proven successful over the years,” says

and rising inventory levels, resulting from an increased awareness

Katarzyna Zawodna-Bijoch, President and CEO of Skanska Commer-

of supply chain stability following disruptions in transport and

cial Development in CEE.

production,” says Lokere. In his opinion, this crisis will fast track

In the CEE region, Skanska, one of the largest office building

the trend to diversifying manufacturing locations, reshoring and

developers in Europe, operates in Poland, the Czech Republic,

de-globalisation to mitigate supply chain risks. “These trends will

Hungary and Romania, while in northern Europe it is present in

lead to higher needs for warehousing and production facilities. The

Sweden, Denmark, Finland, and Norway. At the CEE level, the

reshoring will go hand in hand with robotisation and automation,

company’s portfolio will grow this year by almost 220,000 sqm of

and Romania has strong cards to be a net winner of this trend,” adds

LEED-certified projects and almost 80,000 sqm of WELL-certified

the Alinso Group representative.

office spaces.

www.business-review.eu Business Review | April 2020

18 COVER STORY

Telecommunications industry keeps economy alive during turbulent period The telecommunication industry is working at full capacity in this period. With millions working from home, phone and internet services have become more important than ever.

By Aurel Constantin

omania has one of the

and there were no interruptions

most advanced and

or other issues with the infra-

competitive telecom-

structure. All operators stated that

munication industries in Europe.

there would be no problems and

The development of the last 20

that they were prepared to solve

years has given us one of the best

any issues that might appear. “The

infrastructures for mobile and

need to ensure reliable and high

fixed data, while the competition

quality mobile communication

among the four big market players

services for Romanians has never

has kept prices at minimum levels.

been more important,” said Catalin

The number of mobile internet

Buliga, Technology Director at

connections reaches 19.6 million,

Vodafone Romania. “Our com-

of which 84 percent are 3G or 4G

mitment to contributing to the

connections, meaning high-speed

Romanian digital society has been

data. The number of active users

reconfirmed by this new Best in

of mobile communications is 22.3

Test certification.”

million, according to the National

Over half (55 percent) of all mo-

Authority for Administration and Regulation in Communications (ANCOM).

bile data connections in Romania are 4G. This translates into download speeds of up to 100 Mbps or

This year, the main operators of mobile communications – Vo-

more in most regions. This means that the high-speed mobile infra-

dafone, Orange, Telekom, and Digi – should focus on developing 5G

structure can cover the requirements of a fixed internet line, a very

technology. Unfortunately, since authorities were unable to conduct

important aspect for those working or studying from remote places.

the auction for the new frequency range in 2019, the development

According to 2018 data, the four large telecom operators in

was delayed. ANCOM announced last month that the auction would

Romania recorded a total income of EUR 3.6 billion, up 1.7 percent

be postponed for the last quarter of this year for reasons of political

compared to 2017. Orange Romania ended the year with EUR 1.12 bil-

instability, and now, due to the COVID-19 pandemic.

lion in revenues, Telekom Romania with EUR 933 million, Vodafone

This doesn’t mean that Romania is lagging far behind other coun-

Romania with EUR 720 million, and RCS & RDS (Digi Communica-

tries; Vodafone, Digi Communications, and Orange launched the first

tions) with EUR 698 million (in Romania alone). “The value of the

5G connections in major cities in 2019. Using the frequencies they

Romanian telecom sector increased slightly in 2018, by 1 percent,

already had, the operators managed to install 5G equipment that of-

reaching RON 16 billion in revenues obtained by operators. The

fered download speeds of up to 600 Mbps and peaked at 1 Gbps. But

sector has a share of 1.7 percent in Romania’s GDP,” said ANCOM

development is stalling and 5G connections are available only in a

president Sorin Grindeanu.

few parts of big cities like Bucharest, Cluj, Brasov or Constanta.

Since the beginning of the pandemic, all the operators have announced that they would offer more data to their customers, to

KEEPING THE ECONOMY GOING

make sure that no one has any connection issues. In normal times,

The quality of the communications infrastructure was tested last

the average data consumption reaches 50 GB per month for every

month after the country entered the state of emergency. Millions of

customer, but the number may rise during the state of emergency.

employees and students are working from home and they all rely on this infrastructure. The volume of data through fixed and mobile connections went up by 30 to 50 percent in March compared to the previous month

The telecommunications infrastructure is today part of the critical services people and companies need, just like power, natural gas, and water. And the importance of this infrastructure will only grow in the coming years.

www.business-review.eu Business Review | April 2020

COVER STORY 19

IT industry breaking the barriers of social distancing The Romanian IT industry is one of the most competitive sectors in the local economy. The main engines behind the industry’s success are the employees and their advanced skills.

By Aurel Constantin

he IT industry is one of

is visible through the funding

the lucky ones in the

local startups received in 2019.

COVID-19 pandemic,

Companies like FintechOS or

since most of its employees can

Typing DNA got millions of dol-

work from home just as well

lars through several investment

as they do at the office. With a

rounds. The most innovative

computer, a good internet con-

ideas are coming from indus-

nection and a small desk, they

tries like FinTech, biometrics,

can set up an office at home.

blockchain, robotic process

A good example is DB Global

automation, and HR solutions.

Technology, part of Deutsche

The main problem encoun-

Bank, whose employees have

tered in 2019 in the expansion

been working from home

of the IT industry was the lack

since the beginning of March

of qualified workforce. There

and whose operations are still

are over 120,000 employees

within normal parameters. All

working in the software devel-

900 employees are keeping in

opment industry and the need

touch through online socialis-

for new people was at 15,000

ing activities and are using

per year. The COVID-19 crisis

applications for video and audio meetings, e-mails and internal

may reduce the number of employees needed in the industry, so it

platforms.

may be able to cover its workforce needs in the coming period.

“Over the last two weeks we have launched into production over 25 applications integrated into the bank’s mobile banking and trading

OPPORTUNITIES IN CRISIS

systems, on which everyone involved worked from home as part

Looking beyond the COVID-19 crisis, which will take a big toll on all

of global teams,” said Marian Popa, general manager of DB Global

economies, we should be optimistic about the future of the IT indus-

Technology. Global teams working through online apps is one of the

try. Closed borders are not affecting communications, so those who

things that give a competitive edge to IT companies over those in

are able to work through the internet infrastructure will come out as

other industries.

winners. Romania is well-positioned inside the European Union and

Cities like Bucharest or Cluj are reliant on IT&C activities, pretty much like other European cities, like Paris, Dublin or London. Romania is well integrated in the global IT production chains; companies

has close relations with the United States, which gives us an edge in front of big players like China or India. In the business service industry, the outsourcing sector, Romania

like Amazon, Deutsche Bank, Oracle, Microsoft or SAP have software

has 131,000 employees that have also managed to keep operations

developing centers here and they don’t seem to downgrade. DB

going as normal even with 98 percent of employees working from

Global Technology, for example, announced that it has 100 open

home. “At the end of 2019, we estimated a 10 percent increase in

positions for the Bucharest office and it is looking to hire.

revenues for this year. The goal will probably be difficult to achieve in the current context,” said Dragos Stefan, president of Business

ATTRACTIVE MARKET

Service Leaders Association. He points out that services like Shared

Romania is on the list of the most attractive places for UK and US

Service Center, Business Process Outsourcing, and Information

tech companies in the Global Expansion Tech Index, which takes

Technology Outsourcing will find fewer clients after the crisis. Still,

into consideration factors like skills, regulatory landscape, commu-

the IT industry will be one of the pillars on which the Romanian

nication infrastructure, and GDP growth. Romania is ranked 29th out

economy will start to grow again. In the context of self-isolation, the

of the 50 best locations for international expansion. Its attractiveness

IT&C businesses are becoming more and more important.

www.business-review.eu Business Review | April 2020

20 ECONOMY

Coronavirus to take high toll on Romanian economy Like every other country in the world, Romania is facing one of the biggest crises of the last few decades, lacking the resources it needs to respond to the health emergency. But the toll the coronavirus will take on the country is difficult to predict, as economic forecasting is currently subject to substantial uncertainties ranging from the duration and severity of the SARS-Cov-2 outbreak to the post-corona-crisis developments. By Sorin Melenciuc

The cost of the coronavirus crisis to the national budget looks to be very high

istorically, almost every generation

UNCERTAIN BUT FRIGHTENING IMPACT

optimistic scenario, and that France is losing

has experienced a major disrup-

Romania had already entered 2020 in a bad

roughly the equivalent of 3 percentage points

tive event. Our great-grandparents’

economic shape, with huge twin deficits,

of GDP with every month of lockdown, Roma-

generation fought in World War I, our grand-

high financing needs, crippled infrastructure,

nia’s position is unlikely to look any better,”

fathers spent their best years in the trenches

a workforce crisis, and political turmoil. But

explains Valentin Tataru, economist at ING

of WW2, while our parents experienced Com-

the global downturn triggered by the new

Bank Romania.

munism and the fall of the Iron Curtain.

coronavirus adds a lot of pain to this already

According to the International Monetary

tough state of affairs. And the first forecasts

Fund (IMF), infectious diseases and the as-

Black Swan coming from the East, has the

indicate a very high impact from the corona-

sociated mortality remain a significant threat

potential to change our lives forever. “Hu-

virus crisis.

across the world. A recent study estimated

For our generation, the coronavirus, this

mankind is now facing a global crisis. Perhaps

“While we still don’t have enough data

the global yearly cost of pandemic influenza

the biggest of our generation. The decisions

to assess the economic impact, the first esti-

at roughly USD 500 billion (or 0.6 percent of

people and governments take in the next

mates we’re getting from confidence surveys

global income), including both lost income

few weeks will probably shape the world for

and economic players converge towards the

and the intrinsic cost of the elevated mortal-

years to come. They will shape not just our

same conclusion: in the course of only a few

ity. But the cost of the SARS-CoV-2 outbreak

healthcare systems but also our economy,

weeks we will experience a contraction that

already seems to be much higher. In Roma-

politics and culture,” famous writer Yuval

normally would have taken several bad years

nia, as well as in other countries, the biggest

Noah Harari wrote in the Financial Times on

to materialise. Considering that a -4 percent

impact is estimated to emerge in the second

March 20.

contraction in Germany has become the most

quarter of this year.

www.business-review.eu Business Review | April 2020 May 2016

COVER ECONOMY STORY 21 14

GDP. This will deteriorate the already weak

The full recovery will take a few more quar-

developments is unprecedented. (...) We

public finances, with the budget deficit likely

ters as some companies will not survive the

believe that GDP contraction will begin in

to widen to -7.3 percent of GDP,” Ciprian

shock and it could take a while for others to

1Q20 and estimate a -1.3 percent drop vs 4Q19

Dascalu, chief economist at BCR, wrote in a

get back to full capacity and go through the

(+1.7 percent vs 1Q19), despite the probably

research note. “The lockdown in response

rehiring process,” Ciprian Dascalu predicts.

strong first two months. The bulk of the cur-

to the coronavirus outbreak is likely to lead

Most economists are betting on significant

rent anti-pandemic measures will be visible in

to major losses in most economic sectors,”

GDP growth in 2021, the year that could mark

2Q20, where we see a -19.7 percent contrac-

he added. However, economists underline

the starting point of the global economic

tion vs 1Q20 (-19.1 percent vs 2Q19), with the

that out of all the scenarios they have looked

recovery.

main drags coming from industry and trade,”

at, the current one seems to have a prob-

“The magnitude and rapidity of current

“The recovery is likely to continue in 2021,

Valentin Tataru estimates. This projection assumes a gradual re-opening of the Romanian economy starting in late May. According to this forecast, by the end of June, conditions to restart growth engines will be met, prompting a third quarter

ability above 50 percent, though things can

which we expect to post a 3.9 percent y/y GDP

advance by 17 percent vs the second one. “We

change rather quickly and render the forecast

growth, also benefitting from a favourable

see GDP contracting by 6.6 percent in 2020,

obsolete.

statistical base effect and assuming some

with a second quarter to forget, followed by

fiscal consolidation partially offset by accom-

a less pronounced “V-shaped” recovery than

RATING RISK

modative monetary policy stance,” Dascalu

previously expected,” ING Bank analyst said.

But beyond its domestic troubles, Romania is

indicates.

However, this sharp decline in 2020 could cre-

also hit by the collapse of external demand, as

ate quite a strong carry-over effect for 2021,

BCR’s GDP forecast for the Eurozone – Roma-

UNEMPLOYMENT THREAT

when ING Bank sees Romania’s GDP acceler-

nia’s main trading partner – is a -3.5 percent

But BCR economists warn that unemploy-

ating by 7.1 percent.

contraction this year. Romania also risks

ment in Romania is likely to be sticky and that

being hit by a rating downgrade that will limit

the full recovery of the lost jobs could take

tional budget also looks to be very high. “We

its financing options. “Pre-coronavirus crisis,

more than a year. According to the Labour

are therefore pinpointing a -7.9 percent bud-

rating agencies were looking beyond the elec-

Ministry, more than 400,000 Romanian em-

get deficit for 2020, acknowledging that there

toral cycle for fiscal consolidation measures

ployees temporarily lost their jobs due to the

are many unknowns at this stage,” Valentin

aimed at preserving Romania’s investment

coronavirus outbreak in March, but the total

Tataru notes. However, analysts warn that

grade. It remains to be seen if their approach

effect on jobs is difficult to predict. However,

economic forecasts have become even less of

changes after the virus outbreak and the

the global impact of the coronavirus is likely

an exact science in these turbulent times.

subsequent sharp deterioration in the short-

to limit the depreciation of the Romanian

term growth profile and debt metrics,” the

currency.

The cost of the coronavirus crisis to the na-

“In all fairness, we are facing an unprecedented situation, with a sudden large-scale

BCR chief economist says. “We believe that

shutdown of almost all economic sectors,

the downgrade risk is materially higher due to

EUR/RON at 4.88 and inflation at 2.5 percent.

for reasons that go beyond – and in fact have

the COVID-19 crisis. This risk is starting to get

All in all, we believe that the BNR will be able

nothing to do with – economics,” Tataru

priced-in by credit markets,” he added.

to keep things under control due to its still

added.

“We maintain our year-end forecast for the

large foreign exchange reserves, but pressures

THE POST-CORONAVIRUS ECONOMY

for something to give in will remain,” ING

LARGE STRUCTURAL BREAK IN THE ECONOMY

Most economists are trying to envision the

analysts write. This forecast is consistent with

post-COVID-19 world, but the picture is

market consensus, which sees the Romanian

Some analysts are betting on a smaller im-

still unclear. “Recovery is likely to be sharp

currency depreciating at a controlled pace

pact, but they also point out that uncertain-

initially given the very supportive fiscal and

this year. BCR analysts estimate EUR/RON at

ties are still too significant to make decent

monetary conditions both domestically and

4.90 by year-end, slightly higher than previ-

predictions. “For the whole year, we estimate

abroad with the aim of limiting the duration

ous forecast, while other economists expect a

a contraction of -4.7 this year to Romania’s

of the demand shock as much as possible.

slightly higher depreciation.

www.business-review.eu Business Review | April 2020

22 HR

Coronavirus outbreak reshapes local workforce market The world has changed more in the past two months than it had done in decades, as the Covid-19 outbreak has forced countries to close their borders and led companies to take crucial business decisions. Business Review talked to several local HR specialists and found out how this crisis will reshape Romania’s workforce market. By Anda Sebesi

Ionut Sas, PwC Romania

Calin Stefanescu, Dora by Happy Recruiter

he outbreak of the Covid-19 pandemic

it has been coping very well with the myriad

forced every employer in Romania

of video calls and conferences,” says Oana

at a micro level, the tools that companies

to make quick decisions in order to

Munteanu, senior manager of people and

have at their disposal to make virtual work

organisation at PwC Romania.

possible are crucial. According to her, multi-

reduce the negative impact on their businesses and employees as much as possible

Calin Stefanescu, the CEO and co-founder

In addition, Munteanu of PwC warns that

nationals and software companies are among

and to be able to continue their operations.

of Dora by Happy Recruiter, shares the same

the best prepared for virtual work, as in

According to an HR Barometer conducted by

opinion and says that internet speed is a big

recent years they have invested in apps and

PwC Romania between March 11-13, 58 per-

advantage from this perspective and we have

infrastructure that allow them to implement

cent of the companies included in the study

no other choice but to be prepared for remote

remote work.

implemented the work from home system

work. “This is the only valid option now. It

solely for those employees who can work re-

will be difficult because some employees will

gy, some companies have adopted shift work

motely while 25 percent did this for all their

leverage the fact that they’re working from

or even limited the number of virtual confer-

employees. “The work from home system

home while some companies which will not

ences in certain time slots, so that they can

has two major implications: technology and

be able to mobilise themselves will feel the

avoid overloading the system during busy

culture. Fortunately, digital infrastructure

effects of the crisis more intensively. But I

hours. Other companies have overstrained

is the only aspect of digitalization where

think that all companies should understand

their IT departments, but fortunately, the

Romania is highly advanced. Our internet

that this is how things stand now and their

current offer for tools is huge and costs are

speed is among the best in Europe and so far

only way is to find a solution,” he says.

affordable,” says Munteanu.

“In order to reduce the stress on technolo-

www.business-review.eu Business Review | April May 2016 2020

COVER STORY HR 23 14

pean ones from this perspective. “Remote

negative effects will be transferred gradu-

“When working remotely using virtual tools,

work for a longer period could be functional

ally onto other sectors because all industries

we all face major challenges because few

if there is effective control over the employ-

are interconnected,” says Ionut Sas, Partner,

have worked exclusively remotely so far.

ee. This means they will be checked during

People and Organisation Leader at PwC

The highest pressure is on line managers

working hours and they will fill out an activ-

Romania. He adds that both companies and

who have to make sure that their teams have

ity report each day,” says Roman of Noerr.

local authorities need to think of a plan to

The culture is another significant aspect.

normal and equal workloads and that they

Last but not least, Sorina Donisa, CEO at

support the private sector and secure the jobs

give feedback in an effective manner,” she

APT Prohuman, says that companies that al-

and incomes of both companies and people.

adds. Furthermore, Stefanescu of Dora by

ready had implemented the work from home

“In the meantime, there are sectors where

Happy Recruiter agrees that working from

system are prepared, from the infrastructure

demand has increased as a result of the crisis,

home involves a cultural component that is

and set-up points of view, to continue this

like food retail, online shopping, pharmacies,

specific to our country, which is relatively

process for a longer period of time. “In ad-

medical services, telecommunications, tech-

uniform compared to large western countries

dition, their employees are used to the tele-

nology, and online entertainment. However,

the ripple effect of the drop in consumption and the constraints on resources as a result of closed borders will affect every activity. Yet it could generate new areas of innovation,” says which have a diverse immigrant population.

working system, which is a positive factor for

Sas. Roman of Noerr says that sectors like IT,

“This could be an advantage for Romania in

the continuity of their activity,” says Donisa.

delivery, and medical equipment manufacturing are favoured in the current context.

the sense of uniformity, homogeneity, and effective communication, especially in the

THE IMPACT WILL BE HUGE

“The biggest impact is likely to be visible

work from home paradigm which requires

The local economy is already facing the

starting April and will continue during the

better organisation and more precise com-

negative impact of the Covid-19 pandemic,

summer,” Roman adds.

munication. There will be fewer cultural and

with transportation, hospitality, and tour-

linguistic barriers,” he argues.

ism being among the most impacted sectors in Romania. In addition, large automakers

TECHNOLOGY LENDS A HAND TO THE HUMAN RACE

ment & Pensions Practice Coordinator at No-

which are major contributors to the local

Stefanescu of Dora by Happy Recruiter says

err, points out that according to Euromonitor

GDP have already either opted for furlough

that technology is definitely a strong ally

stats, 52.9 percent of Romanian households

or adjusted their operations towards the

in this context, supporting and making the

have laptops, which means that our country

production of medical equipment needed

recruitment process possible. “Dora is now

is much better positioned than other Euro-

to address the current health crisis. “The

communicating with tens of thousands

Catalin Roman, Senior Associate, Employ-

www.business-review.eu Business Review | April 2020

24 HR

of candidates, a thing that would be very

outbreak, because most companies have sus-

municating and finding specific solutions for

difficult for professionals to do right now.

pended or postponed new staffing. “Things

each industry, it is important to have balance

It keeps in touch with candidates and it

will be different for other processes that will

across all employee categories. If the preser-

is the first to learn about their concerns,

rely much more on technology, like train-

vation of salaries and jobs in the public sector

whether they’ve started to look for a job

ings or personnel evaluations. According to

will be done at the expense of the private

and the fields they are interested in,” he

the HR Technology survey, the adoption of

sector, then the recent distortions on the la-

says. Stefanescu adds that Dora currently

technologies by employees will be the real

bour market will deepen,” says Sas. But Calin

conducts recruitment for companies which

challenge. The positive side is that this crisis

Stefanescu sees an opportunity on the local

are now on a growth path and are looking to

could anticipate this process. In addition,

labour market considering the large number

hire or replace employees. In addition, the

in their need to survive, businesses could

of Romanians who have come back home

robot develops employer brand awareness

generate new innovative solutions within a

or are about to return in the next period.

campaigns for those firms that don’t intend

very short time.”

“Companies in Romania now have the opportunity to access potential employees who

to hire personnel in the next period.

have been abroad until now. With a proper

says that there are unfortunately few open

HIGHER COSTS FOR WORKFORCE ABSORPTION

or pending positions now, and the majority

As Sas says, it is very difficult to estimate the

some of them to stay in Romania after the

of job openings are frozen. “Everyone is now

costs of the current crisis for the local labour

crisis passes. The window of time is not very

waiting to see the next developments. Many

market, at a time when all companies intend

large. We’re talking about a few months, so

companies have decided not to continue em-

to keep their employees and uphold opera-

now it is time for companies to act,” says the

ployment contracts on a determined period

tions. We all know that layoffs are a likely

representative of Dora by Happy Recruiter.

or to suspend and discontinue them because

scenario despite all the efforts being made to

Last but least, while until recently there had

they are no longer able to pay salaries as a

avoid them. “It mainly depends on how the

been a lack of candidates on the market, the

result of the drop in volumes or a freeze in

government cooperates with the business

situation has changed completely, as candi-

operations ,” she says.

environment in this direction. Unfortunately,

dates are now unable to find jobs. “Romania

2020 caught Romania off guard regarding its

will post a high unemployment rate because

in the next period, the recruitment process

budgetary burden, which limits the country’s

the absorption of new workforce will no

will no longer have the same importance

ability to support the private sector. Apart

longer be as big as the number of candidates

and volume as it did prior to the Covid-19

from the government’s openness to com-

available on the market,” Donisa says.

In a similar vein, Donisa of APT Prohuman

In addition, Sas of PwC Romania says that

approach and offering, they could convince

www.business-review.eu Business Review | April May 2016 2020

ARTIFICIAL INTELLIGENCE COVER STORY 14 25

Why Romania must tap into artificial intelligence Artificial Intelligence (AI) will have a massive impact on the global economy and Romania has huge potential in this field, fuelled by its talent pool in fields like robotics, technology, and IT. We’ve been hearing it constantly over the last few years, but what does the beginning of the year look like for AI in Romania? By Claudiu Vrinceanu this issue through workers coming in from all over the world. Implementing AI would bring a tremendous benefit. To be able to do this, apart from government support, I think we would have to take a few steps. The first is related to human resources. Romania has a formidable problem with what’s happening in IT: 85 percent work in outsourcing. This work does not bring much benefit to Romania, apart from the taxes paid on salaries. The way to help the AI sector is to support startups that can attract people currently involved in outsourcing,” said Liviu Dragan, the founder of Druid.

AI startups on the Romanian market had a very good first quarter of 2020

ROMANIA’S ANNUAL INVESTMENTS IN AI STARTUPS CAN REACH EUR 50 MILLION BY 2025

opportunity that Romania cannot

for the use of artificial intelligence. However,

million annually by 2025, according to esti-

afford to miss in terms of its eco-

the implementation of AI in the public sec-

mates by Horvath & Partners, a management

nomic development. As a general context, the

tor has been included in the objectives of a

consulting firm. Investments in AI startups in

European Union is pursuing a digital strategy

newly-established institution - the Authority

Romania amounted to around EUR 20 million

that builds on technology, innovation, and in-

for the Digitalization of Romania.

in the last quarter of 2019.

rtificial intelligence represents an

genuity, projecting European values onto the

Investments in Romanian Artificial IntelliRomania doesn’t have an official strategy

The Romanian Business Leaders organisa-

gence (AI) startups will reach almost EUR 50

AI startups on the Romanian market had

international stage. The recently presented

tion, through the RePatriot programme, has

a very good first quarter of 2020. Series A

White Paper on Artificial Intelligence (AI) and

organised several debates in the past year on

investments worth almost EUR 20 million in

the European data strategy show that Europe

the “Country Strategy for Artificial Intelli-

startups Typing DNA and FintechOS have ac-

can set global standards on technological

gence”. The need to develop such a strategy is

celerated Romania’s growth, and the country

development while putting people first. What

constantly being discussed, and the business

has seen increasing acknowledgement in the

does the strategy say?

environment highlights Romania’s privileged

global rankings of states that are able to sup-

geographical position, numerous specialists,

port and benefit from the AI-based techno-

will focus on three key objectives to promote

and successful domestic IT companies in a

logical revolution.

technological solutions that will help Europe

global high tech business context.

Over the next five years, the Commission

pursue digital transformation: technology

“The number one goal of AI is to replace

According to Horvath & Partners, between 40 and 50 percent of existing jobs could be

that works for people; a fair and competi-

repetitive, tiring work. Such work is pre-

replaced by automation solutions by 2030.

tive economy; and an open, democratic, and

cisely where Romania lacks resources. Due to

Accounting and marketing could be some of

sustainable society.

globalisation, other countries have resolved

the most affected areas.

www.business-review.eu Business Review | April 2020

26 GLOBAL

Romania’s place on the global soft power stage Romania ranks 52nd in a Soft Power Index of the world’s 60 most influential countries, behind some of its Central & Eastern European (CEE) peers. By Claudiu Vrinceanu

ix Central & Eastern European nations earned a spot in the first-ever Global Soft Power Index compiled by London-

based consultancy Brand Finance: Poland, the Czech Republic, Croatia, Hungary, Ukraine, and Romania. The country scored an overall 30.4 out of 100 points. The US tops the index as the most influential country in the world, followed by Germany and the UK.

In Europe, Romania was the 23rd most influential country

The consultancy interviewed 1,000 experts, including politicians and business lead-

POLAND AS ROLE MODEL FOR ROMANIA

business and 27th rank for economic stability.

ers, as well as 54,000 members of the public

Arguably one of Europe’s biggest economic

“Nevertheless, currently witnessing the rise

to rank 60 countries by their “soft power” or

success stories, Poland has celebrated con-

of populism and threats to the rule of law,

ability to influence others through the art of

tinuous economic growth driven by strong

a potential result of post-transformational

diplomacy and persuasion. Researchers used

domestic demand, increased foreign direct

fatigue and delayed resistance to the west-

three metrics - familiarity, reputation, and

investment, and solid productivity, all of

ern liberal narrative, Poland is putting its

influence, as well as seven soft power pillars

which have been accelerated by significant

achievements of the past decades at risk,”

- business and trade, governance, inter-na-

inflows of EU cohesion funds, reflected in

said Brand Finance representatives.

tional relations, culture and heritage, media

the nation ranking 24th for ease of doing

and communications, education and science, people and values. The index revealed that Romania’s soft

What does soft power look like around the world?

power is weaker than that of several Central

• Australia | The greatest place to visit in the world

& Eastern European peers. Poland is ranked

• India | The most populous democracy in the world ranks 27th

35th and the Czech Republic 39th. In Europe,

• Ireland | The power of the diaspora

Romania was the 23rd most influential coun-

• Israel | Vibrant startup scene makes nation a global tech hub

try. Romania scored 4.6 out of 10 for familiar-

• New Zealand | Jacinda Ardern reinforces top marks for People & Values

ity, which assesses people’s level of awareness about a country, and 5.7 in global reputation. It scored 2.9 in terms of its influence on the world stage, 2.9 in people and values, and 3.3 in culture and heritage. Romania did not fare well in categories such as business and trade (2.4), international relations (1.9), media and commu-nications (2.0).

• Singapore | Asian leader in Education & Science • South Africa | On a high following Rugby World • Spain | More fun and friendlier than any other nation • United Arab Emirates | Expo2020 and Emirates Mars Mission • United Kingdom | Royal Family appeal holds firm abroad • Central & Eastern Europe | 7 CEE nations make the Index • Latin America | Brazil leads the way

www.business-review.eu Business Review | April May 2016 2020

COVER BUSINESS STORY 27 14

Romanian firms lagging behind EU peers on productivity There is a lack of world leaders in new sectors and Romanian companies are struggling to compete with those in other EU countries in innovative fields. Creating the right business environment and improving access to finance for startup and scaleup companies are the best ways to create leaders and stimulate innovation and productivity. By BR Team high. Access to external financing is a bigger problem than in other EU countries, and even the most effective firms face even greater difficulties in obtaining external financing. “Supporting Romanian firms in catching up with European peers on productivity requires comprehensive effort. The focus Romania has to improve its investment outlook, as it has one of the lowest investment shares in the EU

should be on a business-friendly environment, allocative efficiency, and improving conditions for upgraders,” recommends

omanian firms are lagging behind

investment gap and improve the quality

Debora Revoltella, Director of the Econom-

their EU peers in terms of productiv-

of assets. “Addressing investment barriers

ics Department of the European Investment

ity, and “superstars” are very rare,

should accelerate investments and boost

Bank.

according to a European Investment Bank

long-term competitiveness,” EIB specialists

(EIB) study. One explanation for this trend

explain in a public presentation.

is that the share of Romanian companies

The most stringent long-term barriers to

Moreover, Romanian companies are behind EU companies when it comes to adopting key digital technologies. The solu-

making investments is among the lowest in

investments in Romania are related to uncer-

tion for Romania? “Invest in productivity

the EU. Only 71 percent of companies on the

tainty about the future, transport infrastruc-

improvements through new technology and

local market allocated funds to investments

ture and skills, with the latter particularly

innovation to avoid the low competitiveness

in the last financial year, compared to an

affecting firms trying to catch up in terms of

trap,” says the EIB report. This will strength-

average of 85 percent at the Union level, ac-

productivity.

en robustness of networks (transport, energy)

cording to an EIB survey. Consequently, we’re

Financing constraints remain above the

and the skill base.

seeing strong productivity disparities within

EU average, with smaller firms more often

Romania.

facing difficulties. Costs are the most com-

based on interviews with 482 companies in

mon source of dissatisfaction According

Romania, between April and August 2019.

its investment outlook, as it has one of the

to the EIB, about one in ten companies in

The research is part of the EIB’s annual in-

lowest investment shares in the EU, and this

Romania face financial constraints, and reli-

vestment survey, conducted at the EU level,

should help it address the relatively higher

ance on domestic financing sources remains

among 12,500 companies.

In this context, Romania has to improve

The results of the EIB study were obtained

www.business-review.eu Business Review | April 2020

28 ENTREPRENEURSHIP

Startups facing uncertain funding future over disruptive coronavirus As the spread of the coronavirus wreaks havoc on global markets, the local economy will get a relief package worth around 2 percent of GDP to help companies, including small businesses, get through the initial impact of the pandemic. Startups, which generally struggle to maintain a balance between burning through cash and scaleup operations, might also be hit by a sudden cut in funding. By Ovidiu Posirca

In the next few months, entrepreneurs could face a complex environment marked by limited opportunities to raise new capital

rivate market funding in the first

ten years, second only to a 36 percent drop in

indoors in order to limit the risk of infections,

quarter of 2020 was set to reach USD

the third quarter of 2012.

technology came to the rescue. For instance,

77 billion, down 16 percent compared

to the previous quarter, according to data

more people are working from home and using video tools to stay in touch with

by CB Insights. Furthermore, the projected

STARTUPS BEING HELPFUL DURING LOCKDOWN

decline in the first three months will be the

With authorities across the world - includ-

ride-sharing startups are working around the

second steepest quarterly decline of the past

ing those in Romania - asking people to stay

clock to cover demand for transportation and

colleagues and family, while delivery and

www.business-review.eu Business Review | April May 2016 2020

delivery of basic food items. “Tech startups are somehow less exposed

ENTREPRENEURSHIP COVER STORY 14 29

nobody really knows the length and possible

STATE SUPPORT FOR SMES

ramifications of the coronavirus crisis. The

Some of the major economies have an-

than those with a more traditional line of

impact will probably be felt similarly across

nounced large state-backed programmes

business. However, all of them, depending

Europe, not just in Romania,” Marius Ghenea,

to support the private sector, particularly

on the field in which they operate, can be

investment director at 3TS Capital Partners,

industries which saw demand for their busi-

impacted to some extent. Let’s say a startup

told BR.

nesses being wiped out overnight. While the

has a platform for tourist services; it

Ghenea suggested that startups

will obviously be significantly affected in comparison to one that develops an on-

and young companies that are

around USD 1 trillion to companies, European

working to automate vari-

support packages are already running into the

ous processes and reduce

line educational prod-

US said it would provide a relief package of

human interaction

hundreds of billions of euros. In Romania, the government said it would

uct or a GDPR-related

might actually stand

cover unemployment costs for workers of

one. However, all of

out during this pe-

firms that have temporarily halted produc-

them will suffer the

riod of uncertainty.

tion. For instance, car makers Dacia and Ford

impact of the market

“Delivery

paused production for the upcoming weeks

scarcity in terms of

platforms, digital

in an attempt to limit the risk of coronavi-

new product adop-

delivery of various

rus infection for their employees. Hotels,

tion,” said Cristian

products, e-learning

Dascalu, GapMinder

solutions, robotic pro-

partner and Techcelerator

cess automation, and other

co-founder.

digital solutions with no need

Startups focusing on innovation

of physical presence or contact will be

restaurants, coffee shops, and retail centers are operating at very low capacity as the government ordered strict distancing rules for citizens. For small and medium-sized companies,

will continue to be attractive as companies

winners in the new paradigm and quite a few

the category encompassing 99.7 percent of

are looking to emerging technologies to repair

Romanian tech startups are doing just that.

firms operating in Romania, the government

their supply chains and manage their opera-

I am personally involved as an investor in

said it would delay certain tax payments and

tions, suggested CB Insights analysts.

some of them; conversely, I am also involved

provide guarantees for bank loans. For loans

In the short term, the financial impact in

in startups which are being hit hard by this,

taken out by microenterprises and SMEs, the

the startup industry looks to be significant.

such as travel or MICE platforms, etc,” he

state will subsidize interest payments. Fresh

One indication of this challenge comes from

added.

funding for small companies could reach RON

SoftBank, which manages Vision Fund, the biggest investor in startups. The company said it would need to

Meanwhile, startups could spin off and develop solutions that could support response efforts in the fight

1 million. The funds could be used to finance companies’ working capital, a critical move for businesses that were most affected by the lockdown measures.

raise USD 10 billion

against coronavirus or

to support portfolio

alleviate the disrup-

procedures during the emergency period in

companies that have

tive effects of the

order to support the fight against coronavi-

been battered by the

infection on people

rus.

coronavirus, accord-

and businesses.

ing to Bloomberg.

“I believe some

The state has also suspended foreclosure

Entrepreneurs who are issued an emergency certificate by the Economy Ministry will

By the end of 2019,

MedTech or FinTech

be able to delay the payment of utility bills

the fund had invested

startups, for example,

and rents for their business locations. The

over USD 80 billion in dozens of startups ranging from coworking operator WeWork to ride-sharing player Uber and tech company ByteDance.

could engage in this direction and find new business angles, and not for the sake of profits, but for a bigger, more

government has also extended the payment deadline for taxes on land, buildings, and means of transportation until June 30, 2020. Representatives of SMEs have said that

meaningful purpose. Techcelerator alumnus

these measures were a good start, but they

In the next few months, entrepreneurs

XVision, which uses AI algorithms to analyse

have also called for additional support, for in-

could face a complex environment marked by

pulmonary X-rays, could speed up diagnostic

stance extended payment deadlines for bank

lower sales and limited opportunities to raise

processes as it successfully assists radiolo-

installments or better restructuring terms for

new capital.

gists. Among the pathologies identified by

finance contracts.

“I think all companies, whether young

XVision are those directly related to pneu-

In the meantime, some 200,000 labour

or mature, small or large, should actually

monia, which is also caused by coronavirus,”

contracts had been suspended by mid-March,

prioritise cash preservation now, because

adds Dascalu from GapMinder.

according to the Labour Ministry.

www.business-review.eu Business Review | April 2020

30 ENTREPRENEURSHIP

Startups preparing for paradigm shift on remote work The option of working from home has made a comeback among large firms as authorities have ordered lockdowns of cities and countries in a bid to reduce the impact of the coronavirus pandemic. Work practices might change for the long term, and some of the solutions developed by startups could help paint a clearer picture of what’s coming. By Ovidiu Posirca

Demand for remote working and investment in collaboration technologies will grow beyond 2020

ight now, “we are in the middle of

plenty of infrastructure in place to help this

collaboration or RPA (robotic process automa-

the largest test of home-working in

transition, with reliable video platforms and

tion - ed.n.) applications for certain activities.

history,” suggested representatives

messaging tools being widely available.

The latter ones increase the efficiency of a company’s employees, and they can therefore

of real estate consultancy firm JLL. In various industries ranging from IT to finance and real

spend time on more value-adding activities

estate, companies are keeping their lights

MORE COMPANIES SHOULD EMBRACE REMOTE WORK

on by allowing employees to relocate their

“From my perspective, they are all part of a

Furthermore, remote working is some-

offices to their homes. And there is already

new working paradigm that includes remote

thing that can be done very easily, and more

once repetitive tasks are taken over by robots.

www.business-review.eu Business Review | April May 2016 2020

ENTREPRENEURSHIP COVER STORY 14 31

and more companies should embrace it. The

of Business, told the Wall Street Journal that

central role in navigating it,” Filip wrote in an

more difficult part will be changing a certain

desktop computers in office cubicles could be

analysis. The consultancy surveyed 100 CIOs

mindset many managers have, namely be-

replaced with augmented-reality headsets.

and concluded that we might see the current

ing skeptical about the productivity of their

No matter where you are, using the headset

crisis play out broadly in three waves. Firstly,

teams if they work from elsewhere. Given the

will let you access a virtual computer with

stability and business continuity must be

times we are living, such solutions, embed-

keyboards that float in the space before

ensured, while in the second phase compa-

ded into a company’s organisational culture,

your eyes. This could become a reality in

nies will have to institutionalise new ways of

would prevent many ventures from experi-

the future as the improved connectivity of

working. In the third wave, firms could use

encing significant slowdowns or even freez-

5G wireless networks becomes mainstream.

the knowledge gained during the crisis to

ing their activities,” Cristian Dascalu, partner

While 5G technology is still in its early stages,

prioritise tech transformations for resilience.

at VC fund GapMinder and co-founder of

smartphone makers have already launched

Filip points out that CIOs and digitiza-

terminals that can be enrolled in the network.

tion teams should remain committed to the

Companies are already using software

In Romania, authorities aim to launch a ten-

broader transformation goals they’ve been

robots to deal with mundane tasks, and this

der this year for the spectrum that telecom

working towards in data, cloud, and agile.

industry is set to grow going forward. You

firms will use for 5G.

Techcelerator, told BR.

“Gaps can be seen in indicators measuring

In the meantime, if you want to quickly

the degree to which businesses streamline

schedule a meeting or find out the top news

move your office to your home, you might

and automate their processes in Romania.

in the morning if you have a smart device

need a laptop, a smartphone to take video

Moreover, a significantly smaller share of

with a digital assistant such as Siri or Google

calls anywhere, and a good internet connec-

both SMEs and large enterprises in Romania

Assistant.

tion so you can use cloud-based apps quickly

leverage cloud computing tools or digital

to store documents or other materials.

solutions to analyse big data. This is a chal-

can already use voice-activated commands to

RPA and chatbots based on artificial intelligence are some of the proven technologies that offer solutions to users, says Marius

focus more on creative processes and busi-

CRITICAL ROLE OF CIOs IN THE NEW WORK PARADIGM

ness innovation.

The ongoing

Ghenea, investment director at 3TS Capital Partners. He adds that this way, humans can

Large multinationals which had recently

pandemic is a

announced the scaling back of home-working

huge challenge

practices are embracing this option until the

for medical pro-

outbreak passes. JLL analysts forecast that

fessionals across

demand for remote working and investment

the world. In

in collaboration technologies will grow be-

terms of the

yond 2020. But this doesn’t necessarily mean

economy, com-

that demand for office spaces will fall.

panies and their

“A focus on higher utilisation and densi-

employees will

fication of space has already driven efficien-

deal with many

cies and resulted in limited excess space in

uncertainties

optimised portfolios. Rising employment in

going forward.

relevant sectors will more than outweigh any

Alexandru

impact on demand from home-working,” ac-

Filip, manag-

cording to the JLL report.

ing partner at

Office developers have already adapted

consultancy

to tenants’ growing need for flexible work

firm McKinsey

spaces. This means that we are seeing more

& Company Ro-

modular office designs, separated rooms

mania, says that

for focused work and larger spaces where

Chief Informa-

employees can have a quick meeting or

tion Officers (CIOs) are “facing the greatest

lenge, but also an opportunity to steer proj-

where they can simply hang out during lunch

challenge of their careers.”

ects and business models in a new direction,”

breaks. The office of the future might not actually

“They have to manage infrastructure breakdowns, DoS (denial-of-service) attacks,

wrote the partner. Going forward, companies will acknowl-

need a physical desk. Arun Sundararajan,

and websites going down because of traffic

edge the importance of technology and

professor of technology, operations and sta-

load. Even as companies grapple with the cri-

digital channels that can shape development

tistics at New York University’s Stern School

sis, it is already clear that CIOs are playing a

in almost any industry.

www.business-review.eu Business Review | April 2020

32 INTERNATIONAL

2020: A year of global recession caused by COVID-19 The global economy is already in recession. The COVID-19 pandemic has grinded economic activity to a halt, so central banks and governments are looking for the best ways to help people and companies. By Aurel Constantin

Most countries have already launched programs and initiatives to help people and companies

he world economy was forecast to

swing in the first days of April. The peak for

under control, but Europe and North America

grow by 1.6 percent this year in the

most countries is expected in the second half

had not yet reached their peak.

most recent Reuters poll, at half of

of April, meaning that the economies could

the 3.1 percent growth forecast of January

only start their recoveries in late May or June.

The head of the International Monetary Fund (IMF) said on March 27 that the global

2020. â&#x20AC;&#x153;We have cut our global GDP forecast to

On April 1, the number of coronavirus

economy had gone into a recession that could

1.25 percent for the year,â&#x20AC;? noted the Goldman

cases worldwide had passed 900,000, with

be worse than the 2009 crisis. IMF Managing

Sachs economic research team. But they ex-

over 45,000 deaths and almost 200,000

Director Kristalina Georgieva said that the

pect Europe, Japan, Canada, and the United

recoveries. The US was the worst hit with

organisation was forecasting a recovery for

State to end 2020 in recession.

almost 200,000 cases and over 4,000 deaths.

2021, but that it would only occur if nations

China, South Korea, and Japan looked like

succeeded in containing the coronavirus

they had managed to keep the pandemic

spread and limiting the economic damage.

And these are just middle-of-the-crisis predictions, as the pandemic is still in full

www.business-review.eu Business Review | April May 2016 2020

INTERNATIONAL COVER STORY 33 14

“A key concern about a long-lasting impact

the EU’s economic output, but Germany and

of the sudden stop of the world economy is

the Netherlands blocked the plan. The pack-

the risk of a wave of bankruptcies and layoffs

age is still on the table and it will be negoti-

that not only can undermine the recovery

ated throughout April, as the coronavirus

but erode the fabric of our societies,” said

spread continues.

Georgieva in a telephone conference. Lower income countries were hit hard by

The European Parliament has already released EUR 37 billion in emergency funds and

the spreading coronavirus, with 81 nations

measures to help airlines, while the European

now seeking support from an IMF emer-

Central Bank announced emergency bond

gency financing program. The first to receive

purchases in order to put EUR 750 billion into

a support package was Kyrgyzstan, which

circulation.

obtained USD 120.9 million to deal with the

In Romania, the government approved

crisis. Even Romanian officials said that ask-

programs to help those who found them-

ing the IMF for support was an option, but

selves unemployed due to the COVID-19

they have not yet taken any such action.

crisis, opened credit lines for companies,

The IMF will put together a package of

and postponed bank installments for those

reforms that should be presented in mid-

in need. But more help may be needed

April, and they will be meant to provide debt

down the line since April will clearly be a

relief to the poorest countries. The reforms

lost month for the economy and the number

will be developed together with the World Bank. Emergency funding relief Most countries

of people hit by the crisis will only increase. By the end of March, over half a million people had lost their jobs either temporarily or permanently.

have already launched programs and initiatives to help people and

OIL GOES BACK TO 2000

companies. US presi-

Oil prices saw big

dent Donald Trump signed a USD 2 trillion coronavirus relief bill, in an attempt to stop the economic destruction. This stimulus package is the largest in US history. The plan includes one-time payments to citizens at USD 1,200 per adult and additional

drops in March as well: international benchmark Brent was down from around USD 58 per barrel in February to USD 20, a price that sends the price back to 2002. West Texas Intermediate (WTI) fell below the USD 20 level. The oil industry’s problems come not just

payments for children. It also strengthens

from the coronavirus crisis. Global demand

unemployment insurance, offers additional

had been on a downward trend since Febru-

healthcare funding as well as loans and

ary, when China was already fully closed.

grants to businesses to deter layoffs. Trump

OPEC nations started talks with Russia to

signed the bill into law a day after data had

lower production in order to keep the price

shown unemployment claims jumping to

from decreasing, but Russia rejected their

a record 3.3 million as businesses across

requests. Saudi Arabia was quick to answer

the country closed down to slow the virus

and decided to increase production by 2.6

spread. The bill also offers a USD 60 billion

million barrels of crude oil per day starting in

bailout to airlines and USD 500 billion in

April, and cut prices for customers in Europe,

lending for companies.

a crucial market for Russia’s oil industry.

The European Union has not yet managed

“A KEY CONCERN ABOUT A LONG-LASTING IMPACT OF THE SUDDEN STOP OF THE WORLD ECONOMY IS THE RISK OF A WAVE OF BANKRUPTCIES AND LAYOFFS THAT NOT ONLY CAN UNDERMINE THE RECOVERY BUT ERODE THE FABRIC OF OUR SOCIETIES,” KRISTALINA GEORGIEVA, FMI MANAGING DIRECTOR

In just a few days, crude prices fell 30

to agree on the scale of the support. Mem-

percent. Russia was not impressed, as it said

Central Bank reported that the economy

ber states like Italy, France, and Spain have

that its economy did not rely on oil as much

would be pushed into recession if the barrel

pushed for a credit line worth 2 percent of

as Saudi Arabia’s did. Yet in 2019, the Russian

price fell below USD 25. Saudi Arabia’s extrac-

www.business-review.eu Business Review | April 2020

34 INTERNATIONAL

tion costs are the lowest in the world and it

the market entered into a correction that

start of the year. The massive rescue funds

may last longer on cheap oil, while Russia

lead to a severe crash in March. On March 23,

announced by governments in recent days

will have more difficulties.

DJIA was down to 18,591 points, a 37 percent

helped to lift share prices, but in the short

crash, and S&P 500 dropped 2,237 points or

term things are not looking good for the

spot. They have the highest production

34 percent.

markets.“Despite the monetary and financial

costs, above those of Russia or Saudi Arabia,

After the financial stimulus package was

stimulus, we expect volatility of equities to

and prices like USD 25 per barrel are forc-

announced, the market managed to recover

remain elevated as long as the duration and

ing them to halt production. Still, these are

some of the losses. At the end of March, DJIA

impact of COVID-19 remain unknown, oil

smaller companies that can go in and out of

was up to 21,917 points and S&P 500 to 2,584

prices stay depressed, and earnings visibility

business as prices dictate. So when prices go

points – but that doesn’t mean that they can’t

is murky,” said a report by US Bank Wealth

back up, US shale production will also make

fall again.

Management.

US producers of shale oil are also on the

a comeback.

The S&P 500 was down 20 percent for the

Meanwhile, investors are seeking refuge

year to the end of March, the Dow Jones fell

in gold. The precious metal went up to a

producers have integrated businesses, mean-

23.2 percent, and Nasdaq dropped 14.2 per-

maximum of USD 1,679 per ounce on March

ing they refine the oil they extract them-

cent. President Donald Trump said on April 1

9, after starting the year at USD 1,528. At the

selves in Romania or other countries. This

that Americans should prepare for what was

end of the quarter gold was at USD 1,578 per

can make it easier to go through times when

going to be “a very painful two weeks” as the

ounce, 5 percent higher than at the beginning

oil prices are very low, although it is not a

pandemic paces toward a peak in the US.

of the year.

In Romania, the main gasoline and diesel

Gold will surely remain a refuge instrument this year since central banks are printing trillions of dollars in new money and triggering inflation. But there is a problem with the supply of gold bars and coins, since all major gold refineries in Europe are closed due to the coronavirus lockdown. Moreover, the passenger planes that usually moved the bullion are grounded and online shops are out of stock. Rob Halliday-Stein, managing director of BullionByPost, one of the largest bullion traders profitable situation.

The Energy sector was the S&P 500’s big-

in the UK, told CNN Business that sales of

gest laggard in the first three months, having

gold coins had increased five-fold in the last

are good times, with prices down at the

dropped 51 percent. This coincided with the

month. He also said that investors should

pump. Gasoline fell to RON 4.5 per liter and

decline in crude oil prices, with domestic

be wary of buying gold if it is not yet in the

diesel to RON 4.7 per liter and they may

West Texas Intermediate posting its single

hands of the seller. Since the supply chain is

drop even further. But due to the COVID-19

largest quarterly and monthly declines on

disrupted, it is difficult to predict when more

crisis, demand was down by over 50 percent

record, settling more than 66 percent lower

stock will become available.

in March, since people are confined to their

for the year to the end of March.

For customers, on the other hand, these

homes and not allowed to travel.

The European STOXX 600 recorded its

What nobody knows is when the crisis caused by COVID-19 pandemic will end.

worst quarter in 18 years, in which it lost

Hopes are high for a relief in May, when

STOCK MARKET CRASH

about USD 2.8 trillion in market value. FTSE

shops and stores should start reopening,

The global stock market started to crash on

100, the United Kingdom’s main index, fell

but nothing is certain. If the lockdown lasts

February 20, when it was obvious that the

22 percent in the first quarter of the year to

through April into May or June, the effects

COVID-19 crisis would hit worldwide. On

5,463 points. German index Dax 100 dropped

on the world’s economies may be worse than

February 12, Dow Jones Industrial Aver-

even further, by 28 percent in the first three

anyone can imagine. And governments all

age and S&P 500 index had closed at record

months, to 9,532 points.

over the world will have to find ways to keep

highs. DJIA hit over 29,500 points and S&P 500 reached 3,380 points. One week later,

Globally, many indexes remain more than 20 percent below their value at the

people and families from starving, not businesses from closing down.

www.business-review.eu April2016 2020 Business Review | May

COVER STORY TECH 35 14

Personal computers not backing down as staples of technology market The end of Microsoft’s support for the Windows 7 operating system boosted PC sales around the world. The global PC market grew by 2.7 percent in 2019, according to IDC, the first year of growth since 2011. By Aurel Constantin share of 7 percent last year, dropping from 7.1 percent in 2018, Acer with 5.7 percent (down from 6.1 percent), and Asus with 5.5 percent (down from 5.9 percent). Together, the six vendors hold almost 82 percent of the global market.

GENERATION CHANGE A major change over the last decade has been the growing use of smartphones. The largest phones today are as big as the first tablets, with 6.5-7-inch screens. Worldwide smartphone sales reached 14 billion units in Romania’s PC market is a bit different from the global one

2019, 6 times higher than PCs sales. And the biggest change is yet to come: as the younger generation mostly interact with technology

otal worldwide shipments of PCs in

had been predicted back in 2010, when Apple

through smartphones, they will be used to a

2019 reached 266.7 million devices

launched the iPad. Even though smartphones

touch screen rather than a keyboard. So, even

according to IDC, while Gartner has

have taken over a big part of the technology

if they will still use some form of keyboard,

the number at 261.2 million. Gartner esti-

use, tablets haven’t managed to surpass the

they may end up using touch screens and

mates the yearly growth at only 0.6 percent,

laptop’s power for work use.

Virtual Reality - or whatever will come next -

but still higher compared to 2018. The latter

Of course, the market is changing and so

in their workplaces. Romania’s PC market is a bit different from

does not count Chromebooks (notebooks

is the PC. Touch screens, foldable devices,

using Chrome OS) as PCs. The growth in sales

dual-screens – all kinds of hybrid devices

the global one. Lenovo is still number one by

is most likely to continue for the first quarter

originated from the old laptop. Shrinking

market share, but it is competing against HP

of 2020, since support for Windows 7 has

in size, laptops are now able to provide the

in the corporate sector and with Asus on the

stopped. Aurel Netin, CEO of Lenovo Roma-

processing power of a graphic station or a

consumer market. Asus is a strong competitor

nia, sees one more reason for the increasing

video editing machine and they also address

in the consumer segment worldwide, but it’s

sales of the last year, especially in the last two

the need for entertainment with great video

also working on new lines of computers for

quarters: retailers gathered larger stocks in or-

imagery. Not to mention their power to keep

professionals in the creative industries and

der to keep up with the demand expected in

up with the latest games.

other business sectors. The Romanian market

the first months of 2020, due to the fact that

Lenovo is the leader of the market, hold-

is stable, but not as big as it could be based

Windows 7 support was about to end. “There

ing a 24 percent share of the total number of

on its potential. It stands at around 700,000

were also some concerns around the fact that

units shipped, followed by HP with 22 percent

PC units sold every year. In 2008, before the

import tariffs for goods from China may rise,

and Dell with almost 17 percent, Gartner data

economic crisis, the market stood at over 1

and that led to some distributors asking for

shows. All three have recorded increases

million units per year. This means that Ro-

more devices than usual to make sure they

compared to 2018 numbers, and estimates

mania still has a lot of room to grow. The PC

have enough products for their customers,”

say that the top three producers will continue

will hold on to its market for the foreseeable

says Netin. Although the increase was pro-

growing as the market consolidates to a small

future. While smartphones and tablets are

voked by the need to upgrade old software,

number of vendors. Other important play-

the “users” of content, the laptop is still the

PC sales show that this device is not “dead” as

ers on the market are Apple, with a market

maker of most of the content.

www.business-review.eu Business Review | April 2020

36 MEDIA

Fake news and manipulation in times of crisis By Romanita Oprea

These days, in full COVID-19 pandemic, 85 percent of Romanians get their information through the TV, 60 percent use online press as an additional source of information, while 54 percent say Facebook is their alternative source. Data came from a survey conducted by Unlock Research during March 14-17, 2020 on a sample of 628 people in large and medium urban centres.

0 percent of Romanians said that their life had totally or partially changed in the last week, a situation that may ac-

celerate the spread of fake news and manipulation, especially when anxiety and fear run high. But are Romanians easier to manipulate than people in other countries? Crenguta Rosu, managing partner at DC Communication, said that some years ago she might have been tempted to say yes. The last three-four years, with Brexit and some obvious, welldocumented interventions in electoral cycles in countries that were accustomed to critical thinking and strong democratic watchdogs have demonstrated that the vulnerability is there and that it’s big for everybody. “In a way, the degree of manipulation is ultimately irrelevant as long as there is any manipulation at all. We are vulnerable to it due to the lack of critical thinking skills and the absence of a culture of debate, asking questions and accommodating others’ points of view. We eat up information that confirms our biases and then, boom: manipulation happens,” said Rosu. In an era of full manipulation from all sides, one must be really careful what one believes

In her turn, Corina Vintan, founder and managing director at Links Associates,

www.business-review.eu Business Review | April May 2016 2020

COVER MEDIA STORY 37 14

believes that we are equally exposed to fake

sive content. And this is almost impossible for

seems to have a direct correlation with media

news as other countries. And this is because

an ordinary reader,” Vintan explained.

literacy levels: countries with very little corruption have high media literacy scores.

we have an unregulated digital world where any kind of opinion or situational truth is

THE NEW REALITY?

Romania ranks among the last 10 countries in

treated as fact. Therefore filtering out fake

Vintan’s point of view is supported by

the Index, with a score of 36, while the most

news has become very challenging even for

Ana-Maria Diceanu, managing director at

media literate country (Finland) gets a score

the most highly trained and educated com-

Brain4Strategy, who says that fake news and

of 78.

municators. “There have been many cases of

manipulation are a global phenomenon and,

serious sources and journalists that fell into

when they produce panic, the effect is unde-

dulescu, editorial director at Biz magazine,

the fake news trap. It is thus much more diffi-

sirable as everything may spiral out of control.

manipulation in the media and fake news

cult for the general public to discern between

She believes that media literacy is the most

have proliferated massively over the past few

what is reliable and what isn’t in terms of

useful tool, but Romania is unfortunately not

years and we are seeing it all over the world,

information. In order to resist manipulation

among the best educated countries in this

as this type of toxic narrative has become

through fake news one needs to know which

regard. According to the 2019 Media Literacy

“the new normal”. “The problem is massive,

sources are credible and which ones are

Index, the higher the corruption perceptions

largely taking place through social media,

not, to check information with two or three

and distrust in journalists are in a country,

mainly Facebook, which has become the

sources and have a critical approach on explo-

the lower its media literacy is. Corruption

platform of choice for social media manipula-

Furthermore, according to Loredana San-

tion,” Sandulescu says. And if we look at the COVID-19 situation,

“THE MAIN PROBLEM IS THE LACK OF MEDIA LITERACY. THERE ARE FEW PROGRAMS IN SCHOOLS ADDRESSING THIS ISSUE,” ANA-MARIA DICEANU, BRAIN4STRATEGY

“WhatsApp is the leader in distributing fake news these days. I think I receive at least one fake audio or text message per day. Every time I see these in one of the groups I am part of – either friend or parent groups – I make them aware of the fact that they should verify every piece of information they share, especially these days, as the president’s Emergency Decree says that distributing fake news is punishable by law,” Ana-Maria Diceanu points out. In turn, Crenguta Rosu highlights the

www.business-review.eu Business Review | April 2020

38 MEDIA

fact that for the regular person who is not

lem is that we don’t have a mature, indepen-

with an emotional resonance. “One com-

accustomed to discerning between the vari-

dent mass media. “We have independent

mon source of fake news comes from various

ous sources of information, identifying the

media initiatives, but they are young and

facts reproduced in the media without the

credibility of the source and the validity of a

not known by the general public. Instead,

process of fact-checking, a second source

claim is a new skill or one they never thought

we have a very biased traditional media that

is the reporting of medical and scientific

they would need. The norm was “I’ve read

is easily penetrated by internal and foreign

it/seen it on TV – it must be true,” remem-

propaganda. To this organic weakness of the

ber? Then media moved online, TV moved

traditional media we can add the sales and

online, and social channels are online. For

marketing pressures in the daily run for clicks

the normal person these are all in the same

and visitors,” Vintan explains. Let’s not forget

place, as sources of “what’s new.” “A recent

the fact that the Romanian public, as well as

study on media, published by Reuters, found

the western one, have a very limited appetite

that more than one third of people are getting

for facts, figures, and evidence, and this is

their news from social channels, so whatever

something unprecedented in recent history.

is on their Facebook wall represents their

But this growing consumption of sensational-

news universe. So I would rephrase the ques-

ist media has its flip side. The 2019 Edelman

tion, because in the end those spreading fake

Trust Barometer revealed that 73 percent

news are the people, and the online channels

worry that misinformation, fake news and

developments which are taken out of context,

are just facilitating this process. I disagree

digital bots are modern weapons of propa-

without a proper critique of the full research.

with the overall blame on social media, which

ganda.

Fake news is a powerful tool used in shaping

is a tool. It is the people who choose to do the

Why this phenomenon? In Loredana

audience opinions and perceptions, and un-

sharing of fake news. Social channels in the

Sandulescu’s opinion, the situation we face is

fortunately things seem to be out of control.

hands of people with no discerning skills are

mainly due to political interests (when flawed

At least so far,” said Biz’s editorial director.

indeed possible sources for fake news,” added

and politicised press is involved), commer-

Taking all this into account, one must

the DC Communication representative.

cial reasons or simply click bait - fake news

wonder: how easy is it to spread panic? Well,

articles are published by media outlets willing

it’s pretty easy and fast. “Panic has multiple

MASS MEDIA TAKES OVER

to obtain easy gains: website traffic growth

stages. In the first stage everybody tends to

According to Corina Vintan, the main prob-

through sensational breaking news stories,

believe and share whatever information they

www.business-review.eu Business Review | April May 2016 2020

COVER MEDIA STORY 39 14

find. In any situation there will be always

authorities seem to be acting more quickly

better. On the other hand, “one of the at-

some people that will panic more and start

on lockdown measures and being more cau-

tributes of crisis management governance is

doing irrational things that go against the

tious than those in Italy, Spain or the UK, but

accountability and, in this aspect, Romania

common good. If we have learned anything

she points back to the Colectiv case and the

lacks examples of how state representatives

from crises of the last years, it is that human

tragedy that occurred later on. With these

become accountable after catastrophic crisis

beings have tremendous resources of kind-

memories still fresh in her mind, she’s taking

handling. The triangle of a good crisis com-

ness, solidarity, and creativity. In the current

it all with a grain of salt and is just hoping that

munication strategy is promptitude, trans-

situation of the first pandemic crisis in many

they don’t repeat the mistakes of the past.

parency of facts, and empathy. I think the last

years, with severe consequences on the

Corina Vintan believes that there’s been

two are still challenging for Romanian state

worldwide public health and economy, after

obvious improvement in this sense and that

representatives regardless of their political

panic we can see how solidarity and common

there is huge willingness to communicate

colours”.

sense are taking the stage. A very important role will be played by official communicators. They have to keep us informed in a truthful, perseverant, and empathic manner in order to keep social anxiety at a very low level,” said Vintan. As Sandulescu notes, our brains can shortcircuit when faced with something scary or unknown. “When people feel their survival is threatened, they react in various ways and start acting as if they are still in control, which leads to even more panic.” So have state representatives and other big countries’ institutions learned from the past and from their previous mistakes so as to properly communicate during a crisis? “We are seeing a worldwide crisis of an unimaginable magnitude, which is testing authorities’ capacity to communicate everywhere. We also have to ponder the actions that are the subject of communication, to analyse the availability of relevant information, its clarity, structure, format, timing, rhythm, speakers - all of these end up impacting the credibility of the whole crisis containment efforts,” Crenguta Rosu points out. Moreover, what she could see was an effort by the authorities to deliver the information in a controlled manner. This is not a bad idea as to contain rumours or panic, but if it is taken too far it can raise a lot of questions. “Overcontrol is as bad as lack of control in terms of rumour containment and credibility. This type of controlled information flow has to be easy available and backed by places where information is updated and questions are promptly answered, a higher (than today) frequency of contact, clearer messages and presentations, simplification and repetition, more channels to reach more people. Some of these criteria are not being met,” Rosu adds. In turn, Sandulescu thinks that Romanian

“THE INSTITUTIONS ARE RELYING ON POLITICAL PARTIES’ COMMUNICATIONS SPECIALISTS. ARE THEY EXPERIENCED AND TRAINED PROFESSIONALS? SOME OF THEM ARE, SOME OF THEM ARE NOT,” CORINA VINTAN, LINKS ASSOCIATES

www.business-review.eu Business Review | April 2020

40 INTERVIEW

People in the music industry need to stick together in order to survive Recently, the Romanian Concert and Cultural Event Organisers’ Association (AROC), which represents the biggest companies in the cultural events industry, asked the government for measures to protect the industry as it is heavily impacted by the COVID-19 pandemic. BR talked to Codruta Vulcu, AROC President and Director of the East European Music Conference, the ARTmania Festival, and the BlajaLive Festival, about the state of the Romanian music industry.

ABOUT Codruta Vulcu was the winner of the “Excellence and Passion Award” at the European Festival Awards - the first Romanian to be acknowledged in the prestigious festival’s 11 years. She has more than 16 years of experience in the music industry and a vast portfolio of events, including the logistical and operational planning of the official ceremonies held last year by His Holiness Pope Francis on the Liberty Field in Blaj.

By Romanita Oprea ing national and international performers to music industry professionals, as well as to the audience, gathered in Sibiu, a true festival city.

Can rock music be a successful business in Romania? If so, how? With lots of perseverance, after successfully creating a good and original music product that can gather a community around it. Since Romania is a country that can be described as never boring, if there’s a principle that can help one succeed in Romania, it might be this one: be resilient.

which will tackle the hottest topics faced by

You once said that as AROC president you made a priority out of “opening the dialogue with Romanian authorities and convincing them of the vital role that cultural entrepreneurship has in the development of a healthy and free society.” What are the main accomplishments you’ve had from this position so far?

the live music industry, the current COVID-19

Since its establishment, AROC has managed

context and the best ways to adapt to this

to do an important thing, which hadn’t been

& Showcase Festival (EEMS) was launched

unprecedented situation.

accomplished by anyone else: to bring to the

with the aim of promoting a healthy debate

EEMC is organised in partnership with AROC,

table the most important Romanian event

between the Eastern European music sector,

which was established with the aim of bring-

organisers who agreed to put aside their

international experts, and state authorities

ing legislative changes to the local events

personal business interests and started to also

involved in the legal regulation of the events

industry after the 2015 Colectiv Club tragedy.

focus on the common good of our industry

industry, which has witnessed incredible

AROC comprises the most important event

in general. Besides this, we’ve managed to

growth in recent years. This conference,

promoters and festivals in Romania. The East

stand out as a united industry in our talks

which was the first of its kind from a structur-

European Music Showcase festival, which is

with the Finance Ministry and the Economy,

al point of view and the first to bring interna-

part of the main conference, presents emerg-

Energy and Business Environment Ministry,

Apart from the main event (ARTmania), you are also organising the East European Music Conference. What do you expect from this event and what are the new things it could offer in 2020?

tional speakers, will continue to gather top

The East European Music Conference (EEMC)

representatives from the European live music industry for a series of panels and workshops

www.business-review.eu Business Review | April May 2016 2020

COVER INTERVIEW STORY 41 14

especially now in this difficult period that

From a personal perspective, this temporary

also dear to me from a musical point of view:

the COVID-19 pandemic has caused. I believe

situation allows me to think more about some

Nightwish. In 2000, a friend came back from

it’s truly important for state authorities to

projects that I’d been postponing for a long

a trip abroad with a CD that he had bought in

acknowledge us as an industry and to under-

time or on which I’d worked less than I would

a music store at the shop assistant’s recom-

stand the role we play in the economic, social,

have liked to in the past years. I’d like to finish

mendation. At that time, there were only a

and cultural development of our society.

my PhD, to restart my photography studies,

few female fronted rock-metal bands, and

so I can start working with artistic photogra-

Nightwish was a pioneer from this point of

serious negative impact which the current

phy again. I’ve also made a list of 50 books I

view. And since I was listening to a lot of

context has over every component of our

plan to read by the end of the year, most of

classical music and opera during that time, I

only and most important problem, and that

which are written in German. Since we are

liked the band even more, as the mix between

it’s true for the worldwide music industry.

forced to go through this situation, I want

rock music and the female opera voice was

Though it is a painful process, I hope for all

to at least come out of it with better German

fascinating to me.

of this to bring at least some positive aspects.

skills. This context, regardless of how restric-

For example, I wish we could experience a

tive and damaging it may be, can be a chance

reset of principles and guiding values, that

for all of us to learn new things and bring out

If you were to create a top 5 of your favourite musicians, what would it include?

we can remember these times later and to go

the best in ourselves. For example, in recent

Peter Hammill & Van der Graaf Generator,

from a self-centred culture towards one that

days I’ve managed to rediscover some music

Max Richter, Ludovico Einaudi, Boards of

shows us that only together, through collabo-

composers that I hadn’t listened to since

Canada, Ólafur Arnalds, and The Cure.

ration, will we be able to survive as a species.

University, as well as listen to some albums

Who haven’t you managed to bring to ART-

This time, we really need to stick together.

which I used to love.

mania, but you’d like to in the future?

It’s vital to help authorities understand the

industry. We’ve managed and still continue to shed light on the fact that the current situation is affecting not just event organisers, but also equipment suppliers (technical and logistics), ticketing companies, and especially freelance professionals from this area, whether those in the production and logistics areas, photographers or others who made a living from projects carried out by the local music industry.

What do you think are the Romanian music industry’s biggest problems? In the current context, I think survival is the

It is said in western culture that the

King Crimson for sure. There have also been

What are your objectives for 2020?

Chinese glyph used for the word “crisis” is

other bands I wanted to bring to the ARTma-

I initially had lots of plans for 2020. To have

actually made up of two glyphs, one being

nia stage for a long time, but I was able to do

a special ARTmania Festival anniversary edi-

“danger” the other “opportunity”. Though

so eventually. For example, I’d been trying

tion, with several stages, with world-famous

it won’t be easy, I truly believe that with re-

to bring Dream Theater since 2007, and I

headliners and various alternative public

silience, hard work and good faith we will be

finally managed to do it in 2019. Also, the first

and private events that would tackle areas

able to come out of this unprecedented crisis

request for Porcupine Tree was sent in 2010

approached by the festival throughout its

much stronger, as individuals and as a society.

(their last year as a band), but I managed to bring Steven Wilson to ARTmania in 2018.

15 years of existence. By the end of March

What do you think it takes for a Romanian

healthy, ourselves and our parents, grandpar-

Which artists have impressed you the most and why?

ents, friends, and loved ones, and that we’ll

When I was a student I really used to love

Having an original and high-quality product.

still have a national economy when this crisis

listening to the albums of Van der Graaf Gen-

Besides these, it is important for artists to

ends, so people will also be able to afford to

erator and Peter Hammill (with The Fall of

understand the way the music industry and

think about beauty, art, music, and not just

the House of Usher, for example), Mari Boine

music system work, the specific roles of vari-

about survival. Just like everybody else, we

or Jan Garbarek, with his Nordic nostalgia. I

ous people working in this system and how

are closely looking at the latest developments

also used to listen to a lot of classical music,

can they help the artist – such as the role of a

and hope this critical period will pass and

especially to Wagner, as well as Vangelis.

band manager, a tour manager or a promoter/

things will start to improve in the near future.

Besides them, the first band I worked with is

booking agent.

2020, all we hope for is that everybody stays

rock band to achieve international success?

www.business-review.eu Business Review | April 2020

42 INTERVIEW

“Find your voice and don’t waste time comparing yourself to other artists!” French-British artist Emily Gonneau started her music career at EMI. She left to found Unicum Music, her own artist label, management and publishing company, and Nüagency, a digital communications agency advising artists, festivals, and venues. She is the founder of La Nouvelle Onde, an organisation that identifies and highlights the industry’s next generation execs, a JUMP Expert, and member of MaMA’s editorial committee. Emily Gonneau will be a speaker at next year’s Mastering the Music Business. By Romanita Oprea dinated strategic projects for a huge region (Continental Europe also included countries like the Middle East, Turkey, and South Africa), attended Country MD (Managing Director) meetings and business reviews; in Paris I was a Product Manager releasing records on a national level. In terms of context, the artists, market, and office dynamics/politics were completely different. Being half French, half British, I felt more French in London and more British in Paris, but that’s the story of my life.

You graduated from SciencesPo Paris after earning a BA in History at the Sorbonne. What made you change your professional path and choose music?

a record, how the recording industry works

How did you decide to go out on your own?

on a big (major label and international) scale,

I loved what I was doing, but I realised that

how to survive on the declining end of a rap-

I wanted to explore new facets of the music

idly changing environment. But maybe more

industry, going beyond recording into artist

I was interning for Dior in NYC and just

importantly, my boss gave me the absolute

management and publishing. I also noticed

started going out to gigs every single night

freedom to explore and experiment in my job

over the course of a few years that the only

from 5pm to 4am, Monday to Sunday, when I

from the very beginning, and that was key in

ones getting promoted among all product

suddenly realized there was actually a whole

building my confidence and making me feel

managers were the guys, while the ladies

industry behind the music, with real jobs.

like I was in the right place at the right time.

were systematically overlooked and had to deal with toxic workplace dynamics. So

From there on, it became an obsession to get a foot in the door, which happened in a mes-

I thought I might as well cut my own deal

whether I just got lucky or I created my own

What were the most important things you learned there that helped you later on in your career?

opportunity (probably a bit of both), but I

So much: plan for everything, but adapt to

wrote to the CEO of EMI Continental Europe,

what you cannot control; nurture good inter-

whom I’d seen on TV with a down-to-earth

personal relationships and approach people

What do you do differently at Unicum Music?

take on piracy. I was lucky it was at that mo-

and opportunities with an open mind; know

The philosophy is the same whether we man-

ment when they were thinking about creating

your worth and reclaim your time; listen to

age an artist, publish them or release their

a Project Coordinator to the CEO position; I

your gut and think long term - just to name

record: devise personal, tailor-made strate-

started a week after my interview.

a few.

gies adapted to them and what makes them

How would you describe your experience at EMI?

What were the main differences between the London office and the one in Paris?

while taking the time to really develop them

Essential. I learned so much. How to release

My jobs were different: in London, I coor-

going for volume with a high turnover.

sage-in-a-bottle type situation. I don’t know

rather than stay somewhere with no room for growth.

unique, with a strong focus on digital/tech in the long run. It’s the complete opposite of

www.business-review.eu Business Review | April 2020

44 GOOD NEWS

Pandemic won’t put a stop to innovation & optimism What’s been made crystal clear up to this point is that no country in the world was ready to fight this pandemic. By the time this month’s Business Review went to print, Romania’s government had not presented clear numbers regarding the supplies doctors and hospitals needed. But several Romanian companies have shifted their workflows in order to help out. By Oana Vasiliu fluorescent tubes, the robot can destroy any viruses, bacteria, and fungi as a result of the action of ultraviolet radiation on their DNA and RNA. The prototype created is the result of the Modulab team’s initiative to adapt the projects they had in progress in an attempt to contribute to the global effort to control and stop the SARS-COV-2 pandemic.

RECONVERSION Chimcomplex starts production of biocide substance for disinfectants recommended by the World Health Organization. The company has repurposed its industrial production lines over recent weeks in order to prioritise the production of sodium hypochlorite, an essential product in the fight against the Coronavirus pandemic. Hypochlorite production has We fight together

started at the company’s Ramnicu Valcea and Onesti plants in an effort to slow down and

INNOVATION

(Chemical, Biological, Radiological, Nuclear)

First UVD robot used to automatically clean

and Ecology Research has launched the first

up the Prof. Dr. Matei Bals National Institute

Romanian isolation chamber - an evacua-

Farmec has already started to make two new

of Infectious Diseases. The robot was a col-

tion system for personnel contaminated with

sanitising products for personal use: a hand

laboration between Bucharest Robots and the

biological agents - BIOEVAC. The product

sanitising lotion and a disinfectant gel. These

Suport Association, together with the Emer-

developed by the military researchers meets

two products will be produced as a mat-

gencies Department. According to them, the

the security standards for the prevention of

ter of urgency with the company’s existing

UVD Robot technology is effective in fighting

contamination risks in the isolation area and

resources and deliveries will be prioritised

bacteria, viruses, fungi, and other pathogens.

on the patient’s transport route.

to meet demand from state institutions.

The robot that uses the UVC light spectrum

A Romanian prototype of an autonomous

limit the spread of COVID-19 in Romania. Cluj-Napoca-based cosmetics producer

Depending on the available stocks, Farmec’s

is completely autonomous, works without

disinfection robot is looking for investors. A

products might also be distributed through

any human intervention, and can disinfect

team of Romanian researchers from the Mod-

sales channels to final consumers.

several patient or operating rooms at higher

ulab research and development laboratory

Likewise, Romanian cosmetics manu-

productivity rates than other methods, thus

in Bucharest has created the first functional

facturer Gerocossen will begin making two

protecting medical staff.

prototype of an autonomous and no-contact

biocidal products for human hygiene. The

disinfection robot, with the help of UV-C

company has decided to adapt part of its

first Romanian-made evacuation system for

radiation, which has been proven efficient

production process in order to offer sanitary

contaminated individuals (isolation cham-

in destroying pathogens, including the new

products, disinfectants and biocidal products

ber). The Center for Scientific CRBN Defence

coronavirus. Equipped with high-flux UV-C

for human use.

The Defence Ministry has announced the

www.business-review.eu Business Review | April 2020

46 MUSIC

Technology gives piano lovers the chance to experience famous live performances At the beginning of March, the Business Review Awards Gala surprised us with a live concert of Genti Rreza’s interpretation of Beethoven’s 80th Sonata; Edvard Grieg’s Piano Concerto in A Minor, in the interpretation of Genti Rreza, who hands it over to Lee Warren and Schumann’s The Smuggler performed by Yuja Wang. Senia Music brought all of them to our gala through a Steinway & Sons Spirio piano. By Oana Vasiliu

The new Steinway & Sons Spirio piano got the audience mesmerized

erhaps “the world’s finest high-reso-

so intimate as the live experience of a piano

from one place, so it cannot be interrupted

lution player piano” is not enough. “A

playing a sonata to technology, representa-

by technology. If anything, this technology

masterpiece of artistry and engineer-

tives of Senia Music - the exclusive retailers

allows for more intimate moments with your

ing in your home, Spirio enables you to enjoy

of the prestigious Steinway & Sons brand in

music! You can listen to your favourite song

performances captured by great pianists –

Romania - explained that “the experience

being played by the Spirio while sitting in the

played with such nuance, power, and passion

remains just as intimate for both the artist

pianist’s seat and imagining what they were

that they are utterly indistinguishable from

and the public, if not even more so. There is

feeling when they were recording or getting

a live performance” may be a more appropri-

this trinity that we can consider between the

really close to its keys and strings so as to feel

ate description. In short, pianists can now

composer, the pianist, and the audience – the

the sound vibrations.”

record, edit, playback, search, and save their

intimacy arises therefrom. The pianist can

In Romania, classical music audiences

performances, delivering the most accurate

play freely when they record their perfor-

have already met the Steinway & Sons Spirio

reproduction of a live performance ever

mance on the Spirio, because they have faith

piano, at its official launch back in 2018 during

achieved on a piano using an iPad and an app.

that this incredible instrument will capture all

the George Enescu International Music Con-

Moreover, the piano can also play on its own

the nuances they are creating.”

test. It’s a whole new experience for the pub-

like a speaker, but with real acoustic sounds.

And the experience gets even more in-

lic when the piano basically plays itself, and

Their music library, with performances cap-

tense: “Even a performance that was recorded

people can enjoy famous concerts or they can

tured at the Steinway Studios, is regularly and

and is then played is not the same every time,

play, record, and experience the music again

automatically updated, featuring everything

because there are different people listening

as their own audience. And Senia Music has

from Bach to Irving Berlin or Billy Joel.

to it; or it’s the same people but in different

asked us to stay tuned because more surprises

dispositions. The intimacy does not stem

may arise from this Spirio experience.

Asked why this need to connect something

BR/04/2020

Articles inside

CORONAVIRUS OUTBREAK RESHAPES LOCAL WORKFORCE MARKET

ROMANIA’S CITIES IN FIERCE COMPETITION TO ATTRACT MONEY AND SOULS