3Q: Steve Perry, commercial director at Visa Europe, tells BR the company plans to deploy NFC technology locally from this year, taking advantage of a young market of early adopters »page 3
ROMANIA’S PREMIERE BUSINESS WEEKLY
JANUARY 29-FEBRUARY 5, 2012 / VOLUME 16, NUMBER 2
ROMANIAN EXPORTS THE LOOMING RECESSION IN THE EU, ROMANIA’S MAIN EXPORT DESTINATION, IS SEEING LOCAL SCOUTING FOR FOREIGN SALES IN EMERGING MARKETS »PAGE 12
RINGING THE CHANGES A new auction for GSM licenses, the roll-out of 4G technology, the likely merger of Romtelecom and Cosmote, and a possible takeover of UPC are all expected to shake up the local telecom market this year »page 8-9
NEWS
NEWS
MONEY
CITY
FILM REVIEW
Jucu comeback
The destination
Changing times
Fashion forward
Car parts manufacturer Bosch and electronic appliances producer DeLonghi are setting up shop in Jucu » page 4
Presidents can’t resign in times of crisis, Basescu said in his first speech since the start of the protests two weeks ago » page 7
The local banking sector is seeing a series of changes at the top of the management hierarchy » page 10
Romanian fashion creatives caught the attention of the international press, buyers and audience at Berlin Fashion Week. » page 13
Mission: Impossible – Ghost Protocol Cruise control: Tom’s back in fighting form in the fourth Mission: Impossible movie » page 13
www.business-review.ro Business Review | January 29 - February 5, 2012
NEWS 3
NEWS in brief
3Q Dr. Steve Perry PICTURE of the week
Wienerberger could invest EUR 22 mln in greenfield factory After investing over EUR 75 million in Romania in the past 14 years, Austrian bricks manufacturer Wienerberger has announced that it intends to build a new greenfield factory in Iasi. The project will require a EUR 22 million investment and currently the company is looking to obtain the necessary building permits, said Wienerberger representatives. The Austrian investor already runs three factories in Romania and employs 200 people.
Philip Morris Romania invests EUR 1 mln in local factory Cigarette manufacturer Philip Morris Romania will modernize its production facility in Otopeni by installing a new energy efficient cooling plant worth EUR 1 million. The investment, which is part of a broader program meant to reduce environmental impact, is expected to generate a 5 percent reduction in the factory’s energy consumption.
IT SAP starts recruiting for Timisoara nearshore delivery center After inaugurating a nearshore center in Bucharest last year, German company SAP has announced that it has started the process of hiring specialists for a new such center in Timisoara, where it will employ 60 specialists by the end of the year, up from the current 22. “Over the next 6 months we estimate we will recruit 35 people for the nearshore center in Timisoara and by yearend we will have a total of over 80 specialists,” said Gheorghe Olteanu, manager of the SAP Nearshore Center Romania.
MACRO Protests hit Romania’s rating, says Moody’s Rating agency Moody’s has stated that the
WEEK in numbers
60 k B-Max vehicles will be manufactured this year at the Ford plant in Craiova, according to Jan Gijsen, president of Ford Romania
26 national roads were blocked because of the heavy snow and blizzards last week, while 28 flights and 30 train connections were canceled recent protests in Romania, which have been the most extensive and violent over the past 10 years, have had a negative effect on the country’s rating because they make reform more difficult for the government. Moody is the first rating agency to take into account the protests in Romania. It has rated Romania Baa3, placing it in the category of countries recommended for investments, with a stable perspective.
European Rating Agency to be established this year Roland Berger Strategy Consultants and several financial institutions from the EU and Switzerland are trying to secure seed capital of EUR 300 million for a European Rating Agency that will be established this year as a private non-profit foundation. The new agency will function after the banking industry model and the rating process will be more transparent. Roland Berger, which is the initiator of this project, says that the critical number
of investors will be reached by the end of Q1, 2012.
Romania is ‘second most entrepreneurial country in Europe’ Romania has been ranked second in Europe, with 24.7 points, by the Global Entrepreneurship Monitor survey, carried out in 24 European countries. The survey measures citizens’ intentions to start a business of their own. The top country is Latvia, a shade ahead on 24.8 points. Countries in the Eastern European bloc rank highly in the survey, since Romania is followed by many countries from this region such as Poland, Hungary, Slovakia and Croatia.
POLITICS Cristian Diaconescu becomes new minister of foreign affairs Cristian Diaconescu was appointed at the end of last week the new minister of external affairs, following the dismissal of Teodor Baconschi from the position. Prime Minister Emil Boc announced last week that Baconschi had been fired after making allegations about the protesters on his blog. Diaconescu previously held the role between December 2008 and October 2009, when he was a member of the Social Democrat Party.
REAL ESTATE Government announces PPP for the general cadastre The government has approved the project for a public private partnership (PPP) for the implementation of the general cadastre, the Ministry for Regional Development and Tourism (MDRT) has announced. “Through this project we are looking for private companies that have the necessary financial resources to create the general cadastre,” reads a press release from the ministry. The minister stressed that Romania’s lack of a general cadastre makes it very hard to implement large-scale investment projects.
Courtesy of Visa
Mihai Constantineanu
INVESTMENTS
Winter wonderland? The first snow of the season has thrown national roads and railways into chaos, with 26 national roads blocked because of the heavy snowfall, and 30 train connections canceled. Romania was on orange alert, with blizzards affecting 545 localities in 21 counties
Commercial director, Visa Europe How will consumption fare this year in the EU and Romania given a possible downturn in the Euro zone? We look at the expenditure of consumers very carefully and we have a good sense of what is happening. It is very clear to me that two things are going on. One, each country is very different and there isn't a generic situation. Spain last year had negative consumer spending; from our data it now looks positive. Italy was positive; it's now looking negative. The UK’s broader line is positive, but for some weeks has been looking negative. France broader line, zero. There are more worries about the Euro than Visa is able to cope with. Society has a bigger issue but we can easily implement a currency as one country moves from a national currency to the Euro. We have more than 40 settlements of currency in our system so if there was a problem with the Euro and the authorities came up with alternative currencies, we could implement them the next day. How are Visa Europe’s Romanian operations performing in the region? Romania would be in my top two countries in terms of growth; a 30 percent growth is very strong. It has been from a low base. Over the course of the last couple of years, what I am most excited about here in Romania is the move away from cash towards point-of-sale spending. We are beginning to get through to people’s psychology that there is little point in taking cash out of the ATM for making an expense and buying goods at the supermarket. I think growth in Romania will continue to be strong. On the economic situation, I know you have elections later this year, but growth looks good: GDP growth of 2 or 3 percent, inflation at 3 percent, unemployment at about 8 percent. I have a positive outlook for the Romanian economy in the next few years. What new products have you proposed to Romanian banks? I think person-to-person payment is a great opportunity for obvious reasons, with so many Romanians working abroad; the ability to have remittances is a service at low cost. Coming in parallel is EMV chip technology that will bring contactless payments, and as you are such a young country, predominantly young people, you will adopt the new technologies quickly, so I think this year NFC (near field communication) will grow in Romania. By 2020, more than half of Visa transactions will be on a mobile device. ovidiu.posirca@business-review.ro
4 NEWS
www.business-review.ro Business Review | January 29 - February 5, 2012
INVESTMENTS
BUSINESS AGENDA January 30 11:00 Bulboaca & Asociatii organizes a round table to celebrate five years of activity in Romania at its headquarters in UTI building. Adrian-Catalin Bulboaca, managing partner of the firm, will attend. By invitation only. February 1-2 AgroAdvice organizes a conference on sustainable development in agriculture and environment at the University of Agronomic Sciences and Veterinary Medicine, in Bucharest. Dacian Ciolos, European Commissioner for Agriculture and Rural Development, will attend. By invitation only. February 2 18:00 Sika will organize a press conference to present its future business plan at JW Marriott Hotel. Ileana Nicolae, general manager Sika Romania, will attend. By invitation only. February 9 ∫EVENT 18:00 BR organizes the third edition of the Swiss Investors Forum. By invitation only. Details at www.business-review.ro/ events. February 16 - 17 IMM Forum An event dedicated to SMEs, will take place at Romexpo Exhibition Center. Representatives of the banking sector, consultancies, IT & software companies, together with members of public authorities will attend. More info at www.imm-expo.ro. February 22 ∫EVENT BR organizes the Annual Investment Awards at Athenee Palace Hilton Hotel. Details at www.business-review.ro/ events. February 28 - March 2 ROMENVIROTEC The International Exhibition for Environment Protection, Technologies, Equipment, Recycling and Alternative Energies, will take place at Romexpo Exhibitions Center. Public institutions and specialized companies will attend. More info at www.romenvirotec.ro. February 28 - March 2 Romcontrola The international exhibition for measuring and control equipment, will take place at Romexpo Exhibitions Center. More info at www.romcontrola.ro. February 29 ∫EVENT BR organizes the first edition of the Access to Finance forum. The event will focus on PPP, EU Funds and State Aid. Details at www.business-review.ro/ events.
De’ Longhi and Bosch check into Jucu after Nokia departure
I
talian white goods producer De’Longhi and German car parts manufacturer Bosch will invest in Jucu’s Tetarom industrial park. De’ Longhi has signed an agreement with Nokia Corporation to acquire the production unit in Jucu, Cluj, announced the Finnish company, confirming rumors on the media market. “De’ Longhi bought a large space including a production floor, distribution warehouse, training rooms and so on,” Anna Simai, senior communication manager, Nokia Central Europe told BR. The terms of the transaction, expected to be completed in the first quarter of this year, are being kept confidential. "I would say that an opportunity has been taken in Jucu; there is an existing factory and a well qualified workforce which can easily be retrained in other domains. I think all the elements were there for the transaction," Adrian Dimache, secretary general at the Italian Chamber of Commerce of Romania, told BR. “The fact that De'Longhi is entering Romania offers more security to the investment because its product is less vulnerable to cycles of fashion or purchasing power changes. De'Longhi products will be more marketable, more stable, than Nokia’s.” Dimache added, “Nokia should have been assessed right from the start as a volatile investment. The investments that are wanted in Romania mustn't be volatile. We mustn't get carried away by the name of investors. Some are here to exploit a situation seeking only their interest.” De’Longhi will integrate the production unit as a key part of its international development strategy. “Several companies showed an interest in acquiring the facility. De’ Longhi was the ideal buyer since they had a clear plan for the site and are interested in making it all happen in the near future,” said Simai. The Italian producer intends to adjust its manufacturing capabilities and diversify its production platform so as to balance the production in the Far East with production in Europe. In Europe, the white goods maker has a production unit only in Italy. The Italian group has revenues of ap-
From mobile phones to white goods: De’Longhi sets camp in the former Nokia plant proximately EUR 1.8 billion and is listed on the Milan stock exchange. In Romania, De’Longhi has been distributing all its lines of products, which include coffee makers, kitchen appliances, irons, air conditioning units, air treatment devices, portable heaters and similar, via local company M&N Italy Trading SRL. By opening a production unit on the Romanian market, the Italian company will be competing against producers such as Arctic, Electrolux and Miele. In line with the approach of these firms, De’Longhi could use Romania, which is part of the EU, as a regional hub from where it could export to neighboring countries. Suggesting possible reasons behind the firm’s purchase of the Nokia plant, Dimache said, “The purchasing price was not an important factor in De’Longhi’s decision. When you make a long-term investment, there are things you don't count as constant, such as the initial investment cost where the investment payback is subject to international standards. The small price is not the main factor that persuaded De'Longhi to establish operations in Romania, rather than in Vietnam or India where labor costs are lower,” he said. “Romanian law provides some fiscal advantages for investments of
a certain type, so De’Longhi will probably enter the standardized system for the promotion of investments which is set up by the government.”
Bosch opens production unit in Tetarom Park in Jucu German car parts manufacturer Bosch will also open a production unit in Jucu, as announced by Viorel Gavrea, general manager of Tetarom industrial park. “The contract with Bosch is ready and we are now waiting for it to be signed, after a certain file is approved by the Ministry of Finance,” Gavrea told the Transilvania L!VE television channel. The investment should create approximately 2,000 new jobs. The GM said that Bosch would set up its production facilities on 21 hectares in the Tetarom III industrial park, which previously included the Nokia production unit, where it will manufacture electronic components for cars. Investments made by the German producer could reach EUR 60 million, which is approximately the same investment made by Nokia in its production unit in Jucu. Bosch as a group posted a turnover of EUR 47.3 billion in the fiscal year 2010 and has 283,500 employees. Otilia Haraga
POLITICS
‘Presidents can’t resign in times of crisis’ says Basescu
T
here are far more Romanians who are discontent with the current situation facing the country than those who are protesting in the streets, and some no longer see the president as a partner, said President Traian Basescu on Wednesday, in his first public address since the beginning of antigovernment protests more than two weeks ago. He said that he perceived a "split" in some members of the public’s relations with the president, and added that it was his first obligation to regain the citizens’ trust where it had been lost. Basescu stressed that he would not consider the option of resigning unless it became obvious
that this was the solution. “My profession is ship commander and I have never missed a destination – I will not miss the destination with Romania either,” said the president. Referring to the austerity measures rolled out over the past couple of years, Basescu said he was aware of the situation faced by the nation but insisted that the measures were necessary and that Romania had emerged from recession thanks to the public's efforts. He added that he believes statistical data to be published in February will show GDP grew by 2.5 percent in 2011. Adding that “the people have done their duty”, the president stated that it was
the politicians’ turn to ensure stability and the continuation of reforms and the modernization process. He also urged politicians to adopt "modest and decent conduct". Basescu took most of the responsibility for the "failure" in presenting the new healthcare bill, the initial trigger for the protests, but added that a new bill was necessary. He insisted on the need to continue the fight against corruption, create jobs and improve the absorption of EU funds, as well as to make autonomous administrations more efficient and do away with the political nepotism. Simona Bazavan
6 NEWS
www.business-review.ro Business Review | January 29 - February 5, 2012
EVENTS
Jury convenes for first session of BR Awards
P
feisen Bank, and also the president of the jury; Florin Pogonaru, chairman of the Romanian Businessmen Association (AOAR); Bogdan Ion, managing partner, Ernst & Young Romania and Moldova; Wargha Enayati, managing director, Regina Maria, the Private Healthcare Network; Emma Popa Radu, managing director, Advent International Office in Bucharest; Aneta Bogdan, managing partner, Brandient; Dan Bulucea, country manager, Google Romania; Matei Paun, managing partner, BAC Investment; and Oana Petroff, managing director, Mindshare Romania. Follow www.business-review.ro/ events for more information on the nominated companies and updates on the event.
Oana Petroff
Aneta Bogdan
Wargha Enayati
Florin Pogonaru
Emma Popa Radu
All photos by Mihai Constantineanu
reparations for the seventh annual Business Review Awards kicked off last week with the first judging session. This year’s event will feature revamped categories, focusing on sustainability, retail, online development, tech innovation and entrepreneurship. One new category, Online Strategy for Business Development, recognizes the effective use of the online medium for the purposes of business development, in all business functions, while the Retail Strategy Award covers the many developments that have taken place in the local retail segment, in terms of expansion, investment and chosen market strategy. The Innovation in Technology Award acknowledges novel as well as innovationand research-driven electronic devices with a Romanian story. The International Expansion Award pays testament to the expansion model of companies started in Romania who have tested and distributed products/solutions/services/expertise on the Romanian market and then tried them in other countries. The Best Employment Effort Award recognizes the employment endeavors of companies, multinational or local, made on the Romanian market under the difficult economic conditions, while Best Business Initiative in SMEs celebrates the entrepreneurial effort of SMEs that have posted significant results in 2011. This year’s jury is made up of: Steven Van Groningen, president of the Foreign Investors’ Council (FIC) and CEO of Raif-
8 LINKS
www.business-review.ro Business Review | January 29 - February 5, 2012
Mihai Constantineanu
The telecommunication industry is going through a period of turmoil and by the end of 2012 the market may look entirely different.
Telecom market: what’s down the line in 2012? 2012 could be a bitter pill to swallow for telecom companies in Romania as the auction for GSM licenses, introduction of 4G technology, a likely merger between Romtelecom and Cosmote and a possible takeover of UPC should reach completion. The coup de theatre could come from any one of these four major events which have, at least in theory, the potential to shake the telecom market to its core. ∫ OTILIA HARAGA
would be “a change in the hierarchy of the operators on the market,” says Gabi Mustea, An uncertain outcome – this is the term that Director, Advisory, PwC Romania. many commentators are using when at“If Romtelecom and Cosmote merge, tempting to define the likely evolution of the new operator would become market the telecommunication market this year. leader and could come up with an attracAgainst a background of sliding revenues, tive offer both insofar as the structure of the the main challengers in this ecosystem may packages, which may include four-play witness, or be themselves, the agents of mabundles, and the commercial offer,” he adds. jor change. Their cumulated turnover would land “The telecom market in Romania is at a the new entity in first place by revenues, point where operators’ revenues have deahead of Orange and Vodafone, which are clined significantly. Profitability targets currently the top two on the market. remain their main concern and the events “The marketing strategy will most likethat will make the headlines will be in rely be channeled towards the acquisition of lation to the way they grow this indicator. new clients, with a complete service portfolio and a market approach which inIn this sense, we may see the main operacludes an integrated IT-telecom offer, since tors take over smaller companies, and it is already a known fact that Romtelecom launch new services or technologies, most has been successfully positioning itself as likely 4G,” says Adrian Ciobanu, managing an integrator,” adds Ciobanu. director of Reimens Group. The year started with bad news for After it became clear that Greek comRomtelecom’s main competitor, RCS&RDS. pany OTE (with a major 54.01 percent parThe firm lost the race for a telecom license ticipation) would not be buying from the it coveted in Hungary, after the telecom auRomanian state the remaining 45.99 perthority in the country rejected its offer on cent stake in Romtelecom, a merger bethe grounds it had some unpaid debts. tween Romtelecom and Cosmote (also part of the Greek group OTE) and listing on “RCS&RDS can reconsider its options and a strategy to acquire another operator in the stock exchange became a possibility. Hungary, that already owns a license, is not One of the implications of the merger
out of the question, expensive as it may be,” says Ciobanu. Back in Romania, the operator has other important issues to figure out. “One problem that RCS&RDS has is the repayment of loans, and the company’s liquidities are channeled in this direction. I think the RCS&RDS strategy on the Romanian market definitely targets acquiring new clients and to a lesser extent keeping the existing ones loyal,” says Ciobanu. “The launch of new TV services such as IPTV or, who knows, maybe 3D TV, is also possible.” In fact, as has already been rumored on the market and in the media, the operator may be trying to kill two birds with one stone: the acquisition of UPC would facilitate acquiring new clients and also providing new services such as 3D TV, which UPC already has in its portfolio. In addition, RCS&RDS would have more pull on the market since this transaction would have a big impact on the segments of landline telephony, fixed internet and TV. “From the information that I have, RCS&RDS has missed this train, possibly due to the way in which negotiations were carried out. If this acquisition had gone ahead, RCS&RDS would have had a sufficiently high market share to constitute a
monopoly – an example in this sense is the situation created with GSP and Antena 2 (ed. note: RCS&RDS failed to include these channels into the must-carry basic TV program package). Perhaps the market should be better regulated and in the future such situations should be avoided, so that clients are protected,” says Ciobanu. But, even if the takeover does not work out, RCS&RDS is a strong competitor on the market, which has yet to valorize all its assets. Ciobanu gives a tip: “The low penetration of broadband internet and the high capacity of the RCS&RDS backbone is an opportunity for the operator and this may be exploited more efficiently.”
Fighting tooth-and-nail over licenses After consultations with the industry, independent specialists and the European Commission, ANCOM decided to put up for auction in 2012 “the largest amount of spectrum that has ever been allocated in one single session in Romania and to organize, for the first time, a competitive selection, namely an auction,” says Catalin Marinescu, president of telecom regulator ANCOM. What is up for grabs? The authority is
www.business-review.ro Business Review | January 29 - February 5, 2012
LINKS 9 TELECOM MARKET H1, 2011
Courtesy of PwC
Courtesy of Ancom
Laurentiu Obae
Value of the telecom market in H1, 2011: RON 7.29 billion Mobile telephony penetration rate: 110 percent Fixed telephony penetration rate: 23 percent Fixed broadband internet penetration rate: 14.6 percent Mobile internet penetration rate: 28 percent
Adrian Ciobanu of Reimens Group
Catalin Marinescu of ANCOM
Gabi Mustea of PwC
ANCOM data for the first half of 2011
putting on the market the radio spectrum in the bandwidth of 900 MHz and 1800 MHz, currently being used by Orange, Vodafone and Cosmote. The licenses being used by Orange and Vodafone expired at the end of last year but, in order to ensure continuity, ANCOM decided to prolong them until December 31, 2012. The new licenses, obtained after the auction, will come into force on January 1, 2013. In the case of Cosmote, the new license obtained after the auction will enter into force on April 6, 2014. “The amount of spectrum that must be cleared will depend on the result of the auction. The actual price of the licenses will also be established after that,” says Marinescu. The allocation of the GSM licenses, an issue that should be solved in mid-2012, is like a thorn in the side to Orange, Vodafone and Cosmote. The reasons are serious. At least in theory, these operators may stand to lose. “I am convinced that current players will do everything in their power to hold onto their licenses, but surprises can happen anytime. If any of the big operators lost the license, that would dramatically reconfigure the mobile telephony market,” says Mustea. This auction opens the path to new competitors entering the Romanian market. In Marinescu’s words, “the auction will be open to any operator showing interest in it, from Romania and abroad, and the spectrum that is put up for auction will allow more operators than exist on the market right now to supply mobile communication services. ANCOM encourages new operators to participate in the bidding and enter the market.” But some pundits doubt the risks for the three operators are so high. “It is unlikely that Vodafone, Orange or Cosmote will lose their licenses. I don’t think anyone is making plans for this scenario,” says Ciobanu. However, he adds, “It would not come as a big surprise to hear of the takeover of Vodafone Romania or Orange Romania by another large European operator. Such rumors were flying about last year as well, but so far it seems the interested parties have not taken the plunge.” Also going under the hammer at the same date will be spectrum in the frequencies 800 MHz and 2600 MHz that the winners can use for 4G services. “The 4G wireless communication frequencies for LTE or WiMAX technologies have not yet been allocated,” says Marinescu. The reason is that they are being used by the Ministry of National Defense (MAPN), which has stated that it needs EUR 234 million in order to clear the bandwidth. “We have reason to believe that in the first months of the year the necessary legal framework will be in place for MAPN to make the spectrum
available,” adds Marinescu. The launch of 4G services in Romania this year is “very likely” and “can only be good news,” says Ciobanu. The reason is that “this would make a difference in the portfolio of any telecom operator and competition on this segment is very high since the potential is significant,” he says. “From
the viewpoint of the sales evolution, mobile data services will most likely top the list with a very good growth rate. Competition is tight also in this segment, but there are significant differences among operators. I am referring here to the quality and the 3G+ coverage of the service. The launch of 4G can only be good news,” he concludes.
Other pundits agree. “Access to internet speeds of up to 100 Mbps is very important for the development of the local market. Meanwhile, companies will continue investments in 3G networks but also in wireless internet coverage,” predicts Mustea.
otilia.haraga@business-review.ro
www.business-review.ro Business Review | January 29 - February 5, 2012
10 MONEY
Courtesy of BCR
CV Tomas Spurny 2009-present CEO, member of the board of administration, CIB Bank, Intesa SanPaolo Bank, Budapest, Hungary 2007-2009 CEO, president of the board of administration, PPF, Prague, the Czech Republic. 2002-2007 CEO, president of the board of administration, VUB Banka, Intesa SanPaolo Bank, Bratislava, Slovakia 2000-2002 CFO, member of the board of administration, Komercni Banka, Société Générale, Prague 1999-2000 CEO, vice-president of the board of administration, CCS, Prague 1994-1999 Principal associate, McKinsey&Company 1989-1992 Treasury analyst, European American Bank, New York, USA 1987-1989 Banking program trainee, Manufacturers Hannover Trust, New York
Banks face challenges and changes
tutions such as the IMF, World Bank and EBRD will try to prevent the exodus of Western lenders from emerging markets by creating a new initiative called Vienna 2.0. According to Reuters, cited by Mediafax, its goal is to slow down the pace of exposure reduction and the risk in order to avoid a financing crisis in emerging Europe and not to maintain exposure on these markets.
…and changes
The local banking system has been going through a period of significant challenges and changes as a result of the international turmoil in the past few months. New faces in the top management of some institutions and Austrian lenders’ intention to diminish their exposure to the Eastern Europe market are the hottest issues on the local banking market now. ∫ ANDA SEBESI
Challenges…. The Central Bank of Austria and the FMA – the authority that regulates the local financial market – published in November last year a set of regulations for lenders that have significant international business, like Erste, Raiffeisen and UniCredit Bank Austria. Authorities in Vienna asked the lenders to limit their Eastern European exposure in order to reduce risk, ensuring that future lending activity by the subsidiaries in the region does not exceed 110 percent of the deposits and financing attracted on each market. The reality is that the subsidiaries of European banks in Eastern Europe relied significantly on the credit lines from mothergroups meant to sustain their lending activity. According to the World Bank, this is proven by the high credit/deposits ratio posted by many countries like Latvia (240 percent), Lithuania (129 percent), Romania (127 percent) and Russia (121 percent). But the World Bank is also concerned about the
impact that the measures proposed by Austria may have on economies in the region. “It is worrisome that the bank regulators in Austria led the Austrian banks to limit their lending to their subsidiaries from Central and Eastern Europe, while many lenders from developed Europe announced independently their intention to reduce their operations in Europe and Central Asia,” said the World Bank report, quoted by Mediafax. Moreover, the European Commission is now analyzing if the regulations proposed in November last year by the Viennese authorities break European Union directives about the free circulation of capital, according to Austrian newspaper Der Standard, cited by Mediafax. The publication also says that many ministers of finance from Eastern Europe “have alerted” the European Commission through official letters, warning that these measures may affect economic growth in the region. Specialists say those countries that have a significant Austrian presence in their banking market, such as Romania, and
which have a financial system that is vulnerable to the Euro zone crisis, may suffer a significant deterioration in their financing conditions as a result of the proposal from Vienna. “Depending on how mandatory this directive is, it could significantly constrain the conditions for financing in Albania, Bosnia-Herzegovina and Romania – countries where the Austrian banks are very active,” cautions the World Bank report. According to the Annual Report for 2010 issued by the National Bank of Romania (NBR), Austria had a 16.3 percent participation in the share capital of credit institutions in Romania, at the end of December 2010, second among the countries that own such stakes on the local market, after Greece (25.5 percent) and followed by the Netherlands (11.8 percent). But there is also good news. Recently Erik Berglof, the chief economist of the EBRD, said that Austria had agreed to be more flexible about restricting lending activity in Eastern Europe. In addition, Central and Eastern European countries, EU authorities and international financial insti-
The local market was hit last week by the news that Robert Rekkers, one of the most long serving managers in the Romanian banking industry, has decided to resign from his position of general manager at Banca Transilvania, after almost a decade with the lender. He will be replaced by Peter Franklin, who has 37 years of experience in the financial-banking industry. During Rekkers’s tenure the lender became the third biggest bank in Romania. He managed to increase the value of the bank on the Stock Exchange from EUR 55 million in 2002 to EUR 1.7 billion in 2007. During his mandate, BT has always been a target for financial groups intending to enter on the local market. At the same time, Banca Comerciala Romana (BCR) extended its management board from five members to seven, by including the position of chief operating officer and a separate position for treasury, capital markets & group large corporates. The supervisory board of BCR has appointed Tomas Spurny, 46, chief executive officer of BCR, with April 1, 2012 as the targeted date of handover from Dominic Bruynseels, the current CEO whose mandate is expiring. There were also rumors at the end of last year that Guy Poupet would be replaced by Alexandre Maymat, regional director of the Cameroon branch of Societe Generale, said Mediafax, citing inside sources.
anda.sedesi@business-review.ro
www.business-review.ro Business Review | January 29 - February 5, 2012
STOCK MARKET REVIEW This week the markets were awaiting the outcome of the Federal Reserve meeting on Wednesday and the ongoing negotiations between Greek authorities and private bondholders. In Romania the market followed the developments of the international markets and moved higher, led by the Property Fund (FP), OMV Petrom (SNP) and SIF Oltenia (SIF5) with gains of 5 to 6 percent. The Ministry of Economy gave the promoting rights of the long awaited Romgaz IPO to the consortium formed by Goldman-Sachs, Erste-BCR, and Raiffeisen Capital&Investment. The Property Fund has been in a downtrend for almost a year, trending down from RON 0.67 to 0.41. But the slide ended on 6 January when the sellers finished their downside pressure and the buyers started becoming more aggressive. I expect this newly formed uptrend to encounter its first price resistance around RON 0.48 followed by RON 0.51. Chart 1
The price of SIF Oltenia (SIF5) looks like it is forming an ascending triangle with resistance around RON 1.21 and the first support around RON 1.12. The best trade is to wait for a break-out of this formation and transact in the direction of that break-out, with the price target RON 1.32 for upside break-out and RON 1.00 for downside breakout. With the international markets being on an uptrend I give more chance to the upside breakout. Chart 2
Important economic data next week: Mon 30 Jan. ROM – Economic activities trends (for January) Tue 31 Jan. CHINA – Official Manufacturing Index (for January) ROM – Unemployment Rate (for December) Wed 1 Feb. USA – ISM Manufacturing Index (for January) Thu 2 Feb. ROM – Romania National Bank – Interest rate decision Fri 3 Feb. EU – Retail sales (for December) USA – Unemployment rate and newly created jobs (for January) USA – Factory orders (for December) Next week I'm expecting the China manufacturing data to have an impact on the worldwide markets, as there are rumors of a bigger slowdown in China’s economic activity. After that market players will wait for the USA employment report on Friday which will outline the strength of newly created jobs in the USA. In Romania I'm expecting Mugur Isarescu to keep the rates on hold and the market in general to correlate with the international ones. Vasile Szakacs, Private consultant of stock market investments and owner of www.consultantabursa.ro which provides consultancy services for would-be Romanian and foreign investors.
MONEY 11
12 FOCUS EXPORTS
www.business-review.ro Business Review | January 29 - February 5, 2012
Recession forces local exporters to cast net wide After Romanian exports posted an encouraging 22.5 percent growth in the first 11 months of last year on the same period of 2010, companies are now facing a rough ride as the looming recession in the European Union, Romania’s main export destination, threatens their foreign sales. Emerging markets outside the EU are luring local companies but to what extent are they a viable alternative? ∫ SIMONA BAZAVAN
Looking to do battle on emerging markets Welcoming the export increase of 2011, at the end of last year President Traian Basescu recommended local exporters not “put all the eggs in the same basket”, meaning the EU market, and suggested they consider emerging economies like China or, more close to home, Turkey. The president also stressed the need for a new export strategy this year. Over 70 percent of Romania’s exports last year were to EU member states, which
HIGHLIGHTS OF ROMANIA’S FOREIGN TRADE
Agerpres
Their hand forced by a shrinking internal market, many Romanian companies had no choice but to turn to exports last year: 2011’s results were positive with the growth in exports surpassing that of imports and fueling economic growth. After falling between November 2008 and October 2009, exports have been on a positive trend. In the first 11 months of last year they reached EUR 41.74 billion (FOB), growing by 22.5 percent on the same period of last year, while imports grew by 17.8 percent (CIF) to EUR 50.39 billion. Overall, it is estimated that exports’ share of Romania’s GDP exceeded 30 percent last year. “It is a welcome evolution but exports’ share in the GDP continues to be low compared to the situation in other states in Central and Eastern Europe like Hungary, Slovakia and the Czech Republic,” Bogdan Belciu, partner, advisory, PwC Romania, told BR. 2012 did not get off to a promising start for the EU economy. For the whole of 2012, Eurostat’s forecast for growth in the EU is only 0.6 percent compared to 1.6 last year. With the word recession on everyone’s lips, analysts predict that Romania’s export growth rate will slow down this year, a trend which has been visible since the last months of 2011. “In 2012 I see the growth rhythm of exports decreasing. I hope that the slowdown will be reflected only in the growth rhythm and not in the volumes too,” Florin Pogonaru, president of the Romanian Businesspeople's Association, told BR. The slowdown will be caused by the possible recession in Europe, the most important market for local exporters. But exports are also affected by the exchange rate policy which is more stable than is normal, Pogonaru said. Belciu added that Romania’s agriculture will also have a say in the slowdown of exports as 2012 is expected to bring a far weaker performance than 2011. As for the breakdown of export, the cars and equipment category is projected to remain the most important in 2012.
Starting the engine: Automobile Dacia was Romania's largest exporter in the first nine months of last year makes the Romanian economy vulnerable In his opinion the authorities should opand dependent on demand from European timize their export promotion structures, markets. While official data show that exfocus on a specific number of markets ports outside the EU gained momentum in and consider a closer collaboration with the the last months of 2011, with their growth private sector. “We should ask ourselves if rate surpassing that of exports to the EU, for expansion on foreign markets the pritheir volume continues to be net inferior. vate sector is willing to invest money He added that developing an export alongside the state. Take for example the strategy that would encourage taking RoAustrian export support model which is manian goods to markets where they had done through export promotion centers a background in the ‘70s and ‘80s, like the which are financed 10, 20 percent by the former Soviet countries and North Africa, as private sector,” he said, adding that private well as emerging markets, is desirable. companies financially supporting such However this requires the state’s support, schemes would be a sign these companies local expertise, financial resources and, see potential in those markets. probably most importantly, time and paPogonaru added that local firms would tience. be interested in such partnerships with the “It is clear that the sustainable developauthorities if they were convinced that they ment of the Romanian economy depends would have a say in how those centers are on the success of Romanian companies and organized and their activity. products in establishing themselves on emerging markets,” Belciu concluded. What do the producers say? While a decrease in demand from the For local companies, selling outside the EU EU market is expected to affect large multimeans facing fierce cost competition and national companies – Romania’s largest exhaving to meet different legal conditions. porters – to a lesser extent as they have the “To an extent it is more difficult to export means to adjust their export strategy, small outside the EU – it takes more time to regand medium sized companies (SMEs) are ister the products, customs procedures more likely to feel the strains of a EU reare thorough and all the related tariff and cession. The costs of expanding to a new non-tariff barriers end up driving up the market outside the EU are considerably price of the products and making them less higher for such firms, thinks Pogonaru. competitive,” Mircea Turdean, president of
Exports: EUR 41.74 billion (FOB), up 22.5 percent y-o-y Imports: EUR 50.39 billion (CIF), up 17.8 percent y-o-y Balance of trade: EUR 8.64 billion deficit, down 0.5 percent y-o-y Trade with the EU: 71.3 percent of exports and 72.4 percent of imports Biggest exporting companies in Romania (first nine months of 2011): Automobile Dacia, Nokia, Rompetrol Rafinare, Renault Industrie, Petrotel Lukoil, Honeywell Technologies, Samsung Electronics, Petrom, ArcelorMitall Galati and Celestica Romania. Main exports: Cars and transport equipment (41.5 percent), other manufactured goods (33.4 percent), raw materials (7.1 percent), agricultural products (6.3 percent) Main imports: cars and transport equipment (34.3 percent), other manufactured goods (30.7 percent), chemical products (13.3), fuel (11.3 percent), food, beverages and tobacco (6.8 percent) Source: INS, Data from first 11 months of 2011 Farmec Cluj-Napoca, told BR. In his opinion the state could help by setting bilateral trade agreements and also by improving the way Romanian economic interests are represented abroad. “Embassies and consulates should be more than protocol institutions, they should really help businesspeople in their relations with partners from those countries (…), to develop common projects for both sides and to act as our spokespersons there,” said Turdean. Grigore Horoi, president of local meat producer Agricola Bacau, told BR that the authorities’ help is required in supporting the promotion of local producers abroad as well as financial support and a simplification of the exports restitution mechanism. “Selling in the EU involves dealing with very demanding markets with high quality standards which means big and expensive efforts. On the other hand, going outside the EU is difficult to handle because of other reasons. Different markets mean different standards and personalized shipments, which generates difficulties in the operational activities.
simona.bazavan@business-review.ro
www.business-review.ro Business Review | January 29 - February 5, 2012
CITY 13
FILM REVIEW
Mission: Impossible – Ghost Protocol DEBBIE STOWE Director: Brad Bird Starring: Tom Cruise, Jeremy Renner, Simon Pegg, Paula Patton On at: Cinema City Cotroceni, Cinema City Sun Plaza, Corso, Hollywood Multiplex, Movieplex Cinema Does Tom Cruise have a painting hidden away in an attic in one of his houses depicting a middle-aged decaying former action hero? How else to explain that at nearly 50 he is still prancing around in high-octane films looking barely a day older than in Cocktail? All the Cruise agility is called upon in the latest lucrative installment of stunttastic spy franchise Mission: Impossible, back after a five-year hiatus and impressing critics since opening late last year. We all know what’s needed here. Tom being lowered on a wire into a heavily defended building full of hostiles, some rubber face masks deployed so you think it’s Tom when it’s not or you don’t think it’s him when it is, stunts that are bigger and more ridiculous than last time and a bit of geek humor from the Q in Bond stable. If there are some good lines, charismatic villains and people
Mission: Impossible - Ghost Protocol is from the does-exactly-what-it-says-on-the-tin school of filmmaking
who you think are dead but aren’t really dead, even better. The plot? Mad Russian scientist wants to nuke the world, Tom goes rogue to stop him, the usual stuff. It’s not about the story but the stunts, and these are undeniably impressive. Highlights include Tom and geeky Brit Simon Pegg infiltrating the Kremlin and a cheekily preposterous scene where Tom scales the side of a 1km high skyscraper in Dubai with faulty suction pads. It’s all very silly and a lot of fun. The only slightly wrong note in the narrative is that for added comedy Benji (Pegg) has been promoted to field agent. Admittedly MI flicks require some suspension of disbelief but a hapless techie at the heart of dangerous black ops? Still, Pegg is likeable enough in the role that it doesn’t matter too much. Mission: Impossible – Ghost Protocol is from the does-exactly-what-it-sayson-the-tin school of filmmaking. We know what we’re getting. And given the success of MI4, we’ll probably be getting some more of it soon, no doubt presided over by a fresh-faced, twenty-something-esque Tom Cruise, while a portrait grows ever more battered and wrinkled, tucked away in a Californian mega-mansion. ∫
FASHION
Romanian fashion designers strut their stuff at Berlin Fashion Week ∫ DANA NICULESCU Romania was present for the second time at the international fashion fair, Berlin Fashion Week, between January 16 and 21. The costs of bringing Romanian designers to Berlin were covered by a state budget subsidy as part of the National Export Strategy, an initiative to promote Romania’s exports in the areas of design and manufacturing. Within the three sections of the fair, known as Premium Messe, Bright, and Seek by Premium, twelve Romanian companies exhibited under the brand names: Irina Schrotter, Carla Szabo, Lena Criveanu, Sepala by Mihaela Glavan, Lucian Broscatean List.05, Twenty (2) too, Ligia’s Accessories, Otilia Flonta, Bold Fashion, Patzaikin, DA BONTON and Zash. The Romanian pavilion was organized with the support of the Ministry of Commerce, Trade and Business Environment, the Romanian Center for the Promotion of Trade and Foreign Investments and the Association of Producers and Designers in the Textile Industry (FIT). In parallel, an economic mission organized in cooperation with the Romanian Embassy in Berlin made possible the presence of a few selected Romanian de-
signers’ collections on the Mercedes-Benz Fashion Week Berlin 2012 runway, among other international fashion names. Irina Schrotter’s individual fashion show for the fall/winter 2012-2013 season presented a woman wearing experimental and avantgarde cuts with an unexpected mix of fabrics and autumnal shades. Grouped under the name of Romanian Designers, another three fashion creatives caught the attention of the international press, buyers and audience. On his third outing on the Berlin catwalk, Lucian Broscatean continued in his characteristic style of mixing symmetric and asymmetric, long and short, white and black, art and utility, woman and man. Appearing for the first time at the Mercedes-Benz Fashion Week, Mihai Dan Zarug, the designer behind the streetwear brand twenty (2) too presented the collection “Victoire: la mort lente de l’esprit” in a very personal interpretation inspired by the surrealist melancholy of Claude Chabrol’s movies and a fundamental theme: the end of the world as it is today over narrated and the victory of the human spirit and creativity. In between the two unisex collections, Lena Criveanu brought onto the international catwalk the eternal elegance and femininity of a woman “In Tango Step”.
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Romanian Designers gathered Lena Criveanu, Lucian Broscatean, Twenty(2)too Without any doubt Romanian fashion design has more to say on the domestic and international market and can bring huge benefits to the local economy, but as the Berlin event shows, success may come with more state involvement. Unfortunately, Romania does not have a national body like Federation Francaise de la Couture du Pret-a-Porter des Couturiers and Createurs de Mode in France or Federazione Tessile e Moda in Italy to regulate clothing and accessories design within the textile industry. ∫
dana.niculescu@business-review.ro The entire version of this text at www.business-review.ro
Romanian designers at Berlin Fashion Week 1. Lena Criveanu, 2. Irina Schrotter 3. Lucian Broscatean, 4. Mihai Dan Zarug 3
4
www.business-review.ro Business Review | January 29 - February 5, 2012
14 CITY WHO’S NEWS
BR welcomes information from readers. Submissions may be edited for length and clarity. Feel free to contact us at editorial@business-review.ro
Marius Persinaru formerly Xerox’s vice-president of DMO channel operations, has been appointed chief commercial officer and general manager for technology and services for Central and Eastern Europe, Israel and Turkey (CIT). He joined Xerox Romania 15 years ago, going on to various management positions in logistics, tech support and operations.Persinaru led Xerox Romania and the Republic of Moldova between 2004 and 2009.
Stuart Evers is the new CEO of Euroweb Romania. He replaces Laurentiu Stan, who has held the reigns of the company for the past nine years. Evers has a 15-year background in telecommunications, working in various multinational companies on different markets.
Corneliu Fecioru has been appointed head of Wienerberger Romania’s operations, as member of the company’s board. He has over 15 years of expertise as an executive, 11 years of which were spent in the construction industry. Over the years Fecioru has held key positions in large companies such as Lafarge Romania and Gebruder Weiss. He graduated from the Technical University in Iasi, but also holds a bachelor’s degree in management from the University of Hertfordshire in Great Britain. Fecioru also went through several management development programs at IMD (Switzerland) and INSEAD (France).
private network currently comprises 18 policlinics and 6 hospitals in Bucharest and the rest of the country. ARE POZA
Mircea Sebe has been appointed by Lowe & Partners as BTL (below-the-line) director as a first step in the expansion of its BTL division under the name of Lowe Vibe, which is a result of demand on the market. Sebe has 12 years of experience in communication having worked on accounts such as Unilever, Heineken, Coca-Cola, Beiersdorf, BAT, ING and PPD (Diageo).
CINEMA Best Film Fest January 27-February 2, Cinema Studio The 12th Best Film Fest, organized by the Romanian Film Association in cooperation with the Romanian Association of Film Critics, presents the best movies of 2011 at Cinema Studio. Monday, January 30
Alexandru Zudor is the new managing director of research company Retailplus South East Europe. He will be responsible for consolidating the company’s business in Romania and the expansion process in Bulgaria and the countries from former Yugoslavia. He previously served as operations manager for two years.
Roxana Baciu has been appointed business development manager South East Europe at the same firm. She will be responsible for developing the Retailplus brand’s client portfolio in Romania and Southeast Europe. Baciu has extensive professional experience in retail having previously worked as marketing & communication manager at Nielsen Romania and editor-in-chief of Magazinul Progresiv.
10:00 – Pina (100’) 12:00 – Another Year (120’) 15:00 – Des homes et des dieux (129’) 19:00 – Best Intentions (105’) Tuesday, January 31 10:00 – Aurora (177’) 15:00 – Drive (95’) 17:30 – True Grit (110’) 20:00 – Crulic (73’)
formerly network operation and maintenance manager at Cosmote, has been transferred to a similar position in Romtelecom, according to media reports. Maiorescu will not keep his role at Cosmote too. He has over 20 years of experience in telecom as well as a background in technology and running operations and network maintenance.
10:00 – Midnight in Paris (100’) 14:30 – Best Intentions (105’) 17:00 – The King’s Speech (118’) 20:00 – Moneyball (133’) Thursday, February 2
Raluca Teposu
has been appointed CEO of the private health network Regina Maria. He has been working in the banking system for the past 10 years, formerly serving as deputy general manager of Banca Transilvania. The Regina Maria
ISSN No. 1453 - 729X
FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALIST Otilia Haraga JOURNALISTS Simona Bazavan, Ovidiu Posirca COPY EDITOR Debbie Stowe COLLABORATORS Anda Sebesi, Michael Barclay ART DIRECTOR Alexandru Oriean PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu
19:00 – Melancholia (130’) EXHIBITIONS Gobelins manufactures: four centuries of creations Royal tapestries (1600-1800) National Museum of Art of Romania The National Museum of Art of Romania is presenting 20 tapestries, including some of impressive size, created between the 17th and 19th centuries in the famous Gobelins Manufactures in Paris to decorate the luxury residence of the Kings of France, including Henric IV, Louis XIII, Louis XIV, Louis XV and Louis XVI. The exhibition is the first such in the country and has the support of the French Embassy in Romania, the French Institute in Bucharest and Mobilier national from Paris. It runs through to February 26. Opening hours: Wed-Sun, 10.00-18.00. Closed Mon & Tues.
Wednesday, February 1
Carmil Maiorescu
will be responsible for developing Willbrook’s client portfolio and managing its relations with its tenants after being appointed commercial leasing manager. Teposu has extensive professional experience in the local real estate market. She has previously worked as marketing and sales manager for GTC Romania, a position she has held since 2004. Between 2001 and 2002 she led the evaluation department at Colliers International.
Ionut Patrahau
CULTURAL EVENTS AGENDA
10:00 – Moneyball (133’) 12:30 – True Grit (110’) 16:00 – Crulic (73’)
PUBLISHER Anca Ionita EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Ana-Maria Stanca SALES & EVENTS Ana-Maria Nedelcu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat
Gobelins manufactures: four centuries of creations The renewal of contemporary tapestry, from 1950 to the present day National Museum of Contemporary Art The modern counterpart to the tapestry exhibition is on display at MNAC and presents works by Matisse, Picasso, Le Corbusier, Miro, Matta, Calder, Delaunay, Portzamparc, Arroyo and many others. The range and importance of the tapestries on display illustrates the history of this art in France, making the exhibition a first in Romania. To February 26. Opening hours: Wed-Sun, 10.00-18.00. Closed Mon & Tues. CIRQUE DU SOLEIL Saltinbanco February 9 16:00, Romexpo, Central Hall Cirque du Soleil will perform an exceptional new version of the show Saltinbanco, the ninth one since their first visit to Bucharest owing to public demand. Saltinbanco is the most performed Cirque du Soleil show, having premiered in 1992 and been revamped in 2007. Program: Wednesday, February 8; Thursday, February 9; Friday, February 10; Saturday, February 11; Sunday, February 12. For more details on hours and tickets price see www.eventim.ro.
ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.32 Office: 031.040.09.31 Fax: 031.040.09.34 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro