ROMANIA’S PUBLIC SECTOR “TOO EXPENSIVE” - WORLD BANK; SEE NEWS ON PAGE 4 LINKS
ENTREPRENEUR
BALANCE
The Ministry of Communication and
From a start-up funded with 2,000
Reading, cycling and sports initiatives
ANCOM are disputing over who will
Deutschmarks, Corneliu and Adrian
are signs that Romanians are finally
pay compensation for the radio fre-
Bodea’s business, Adrem Invest - com-
emerging from communism and em-
quencies that have yet to find a buyer
petes with the global big guns
bracing ways to change the society
See page 8
See page 9
See pages 10-11
BUSINESS REVIEW
www.business-review.ro
ROMANIA’S PREMIERE BUSINESS WEEKLY
AUGUST 23 - 29, 2010 / VOLUME 14, NUMBER 30
SMALL IS THE BIG IDEA
LAURENTIU OBAE
Mic.ro, a proximity retail network, has taken over discount retailer miniMax which owns 31 stores across the country. Locally owned Mic.ro, which currently has 76 outlets, is betting on the benefits of proximity stores serving small areas in city neighbourhoods and plans to expand further to reach 300 locations by year-end. see page 12
WEEK IN REVIEW MATERNITY WARD TRAGEDY AND ROMA REPATRIATION IN INTERNATIONAL HEADLINES
A new tragedy has put the poor state of the Romanian health system under the international lens. A deadly blast in the maternity ward of Bucharest’s Giulesti hospital on Monday evening left five babies dead and six in a serious condition. The management of the hospital has been suspended until an investigation into the incident has been completed. Read more on page 6
BUSINESS REVIEW
France has announced it will repatriate a group of Roma from its territory, with 79 arriving back in the country last week and 292 more to come. President Traian Basescu said he understands France’s position on the matter and that the two countries will cooperate to find a solution. Read more on page 7
EVENTS
Business Review events coming up this fall Is Romania still attractive to foreign investors? What is their experience in Romania so far and where will future investment projects be coming from? Business Review will offer a perspective on these issues and others this fall when the Business Review Country Focus events will resume. Following an established tradition, the events offer a discussion and debating opportunity for the local business community by bringing together top local and regional industry leaders, top managers and representatives of embassies and public institutions. The second edition of the Austrian Business Forum will take place on September 23 at InterContinental Bucharest and will be followed by the French and Turkish Business Forums. Real estate, construc-
BUSINESS REVIEW / August 23 - 29, 2010
tion, consumer goods and telecommunication haven’t had their best year in Romania, and foreign firms working in these areas have taken various measures to keep up with developments on a market in a downturn. But while some have delayed investment plans, others are targeting business opportunities in new fields. To find out their views on the local business environment, join the upcoming Business Review Country Focus events. This summer Business Review organized the first event in a series dedicated to the energy sector. Focus on Renewable Energy offered a business perspective on topics related to investing in renewable energy, moving a step further to offer specific insights on the challenges that providers of
services and equipment have to face in the Romanian energy sector. The series will continue this fall with the Focus on Power and Focus on Oil & Gas events. Also this autumn, the Legal Business Series will proceed with the Tax and Law and Fiscal Dispute and Litigation events. These are business breakfast events dedicated to the economic community that is interested in getting expert opinions and advice on relevant legal business aspects. Besides continuing our traditional series of events stay in touch to learn about new ones to come. For more information about all our events, please visit www.business-review.ro/events/.
TALK TO US ! Search for Business Review on LinkedIn - Business Review group Facebook - Business Review Twitter - BR_RO or connect via www.business-review.ro
B USINESS R EVIEW AUGUST 23 - 29, 2010 / VOLUME 14, NUMBER 30
Founding Editor BILL AVERY Editor-in-Chief SIMONA FODOR Senior Journalists DANA CIURARU ANCA IONESCU OTILIA HARAGA Journalists SIMONA BAZAVAN CORINA DUMITRESCU Copy Editor DEBBIE STOWE Photographer LAURENTIU OBAE Layout BEATRICE GHEORGHIU
Executive Director GEORGE MOISE Sales & Events Director OANA MOLODOI Marketing Manager ADINA MILEA Sales & Events IULIAN BABEANU CLAUDIA MUNTEANU Research & Subscription ALEXANDRA TOADER Production DAN MITROI Distribution EUGEN MU{AT
No.10 Italiana St, 2nd Floor, Ap.3 Bucharest - Romania Tel. Office: 031.040.09.31 Tel. Editorial: 031.040.09.32 Fax: 031.040.09.34 E-mails: firstname.lastname@business-review.ro; Audited 1H 2007
ISSN No. 1453 - 729X Printed at: MASTER PRINT SUPER OFFSET
Business Review is a founding member of the Romanian Audit Bureau for Circulation (BRAT)
3
NEWS
BRIEFS
FIRST STAGE OF CHINA TOWN PROJECT FINISHED, SECOND STAGE INAUGURATED é China Town Romania, a company controlled by Chinese investors, is moving onto the second stage of its real estate project in Afumati, near Bucharest. The project will necessitate an investment of EUR 100 million, Mediafax writes. The first stage of the scheme is completed, and contains 350 modern commercial spaces. By February 2011, another three warehouses will be erected. In total, 1,240 stores will be opened with an investment of EUR 41 million, according to the Chinese-Romanian Chamber of Commerce and Industry. The second stage of the project will require an investment of EUR 50 million. The works will be finished between 2011 and 2013. FAMILY FROST PULLS ITS BUSINESS-ON-WHEELS FROM ROMANIA é German company Family Frost, which launched a new business model – a network of mobile stores – has announced it will withdraw from the Romanian market, following a reorganization strategy at the level of the group. The company entered the local market in May 2008 and invested EUR 10 million in vans that sold products such as icecream and frozen food in the main districts of Bucharest. 4
LAURENTIU OBAE
IPHONE 4 AVAILABLE TO LOCAL TECHIES IN TWO ONLINE STORES é The iPhone 4, the latest phone launched by the American tech company Apple, has hit local stores. Two online retailers, eMag and Pcfun.ro, stock the model. Pcfun.ro sells the iPhone 4 for RON 5,225 (EUR 1,232) for the 16GB version . The eMag.ro price for the 16GB model is RON 4,989 (EUR 1,176). The iPhone 4 has been long awaited by gadget lovers around the world. However, its launch did not go off without problems. Users have complained about display and reception issues with the phone.
Raiffeisen Bank Romania sees net profit fall by 5 percent in H1
Steven van Groningen, CEO at Raifffeisen Bank Romania
Raiffeisen Bank posted a net profit of EUR 49.98 million for the first half of 2010, down by about 5 percent against the same period last year. The bank has also announced an operational profit of EUR 83.8 million. Raiffeisen’s gross income for the same period of 2010 dropped by 12 percent on H1 2009, to EUR 210.4 million, mainly due to a de-
crease in income from treasury activity, according to bank representatives.Loans to customers during the first six months of 2010 amounted to EUR 2.7 billion, up by 6.7 percent against the same period in 2009, while customer deposits exceeded EUR 3.4 billion, up 5.2 percent compared to June 2009. The bank’s total assets dropped by around 2 percent,
from EUR 4.67 billion in June 2009 to EUR 4.57 billion in June 2010. “I am satisfied we have again managed to achieve good results that are very close to the ones we posted last year, despite the fact that the economic situation in Romania has continued to worsen,” said Steven van Groningen, CEO of Raiffeisen Bank. “The decrease in revenues was only due to trading activities, whereas the revenues from purely banking activities have slightly increased, which means that we performed very well in our core businesses.” He added that the lender had managed to control its costs. “Provisions dropped sharply, and we have more effectively managed our expenses, thus preserving our profitability. We owe this good result to the solid position the bank has on the market, to our prudent risk management policy in the past years, and to our balanced exposure in terms of segments and industries,” said van Groningen. Simona Bazavan
Aviva assets grow to nearly EUR 150 mln The total value of assets under the administration of Aviva reached nearly EUR 150 million (RON 600 million) after the first half of this year, as the company posted a growth of 21.4 percent compared to the end of 2009. “Naturally, savings and investments are as important as security, which can be seen in Aviva’s sales in 2010. In the first semester, sales were split equally among security
Aviva sees hike in asset’s volume, despite crisis
products and saving products,
meaning the unit-linked ones,” said Mihai Popescu, CEO of Aviva Romania. The insurer has invested approximately EUR 60 million (RON 243 million) in the development of companies in Romania to date and at this point the company is about to increase its capital by another EUR 7 million (approximately RON 30 million). Otilia Haraga
Romania’s public sector ‘too expensive’ – World Bank Romania is lagging behind other European countries for quality and cost-effectiveness of public services, said the World Bank (WB). According to bank officials, the country’s public sector “is simply too costly within the government’s capacity to raise revenues which requires administration retrenchments to affordable levels”. “The WB supports the reform of the administration because it's important and urgent. It's important not just to save money now, but to foster medium-term economic growth. It's urgent because, with the crisis, the country cannot afford to keep wasting resources through in-
efficient and inequitable processes. Too often people do not realize how difficult some decisions are and this increases resistance to change. Therefore we will also work with the government to find ways to explain the key reforms and build broad coalitions,” said Francois Rantrua, World Bank country manager for Romania. Several ministries and the WB are undertaking a Functional Review program. Through this assessment program, the bank reviews the quality of policy-making and barriers to effective policy implementation, as well as the horizontal issues with cross-cutting impact on the
overall performance of the public sector. This October the bank will conclude its assessment of the center of government, competition, pre-university education, transport, agriculture, rural development and public finance. After the completion of the second phase (October 2010-March 2011), which will include the analysis of a new set of sectors, the overall recommendations will be included in an Action Plan which will be prepared by the government and endorsed by the European Commission. Simona Bazavan BUSINESS REVIEW / August 23 - 29, 2010
NEWS
Ardaf reports RON 9 million first-half profit
Diplomatic tit-for-tat breaks out as Romania expels Russian diplomat
From Russia with ... economic threats
Ardaf reports a 254 percent increase of travel insurance abroad in H1
Insurer Ardaf has reported a RON 9 million profit for the first half of this year, and total subscribed premiums worth RON 141 million. Travel insurance abroad increased in volume by 254.5 percent, insurance for railroad transport grew by 98.8 percent, while general civil liability went up by 11.2 percent.
BUSINESS REVIEW / August 23 - 29, 2010
In the first half of this year, the company continued the process of portfolio diversification and increased the size of its fire and natural disaster insurance from 4.8 percent to 5.3 percent of its total portfolio. CASCO insurance represented 33 percent of its portfolio, while general civil liability stood at 2.7 percent. Simona Bazavan
Romania has responded in kind to Russia’s decision last week to declare Romanian diplomat Gabriel Grecu persona non grata and give him 48 hours to leave the country. A diplomat from the Embassy of the Russian Federation to Bucharest holding the same diplomatic rank as Grecu, first secretary, was declared persona non grata on August 17, according to a press release from the Romanian Ministry of Foreign Affairs. Russian special services had detained Grecu on accusations of attempting to obtain classified military
information on August 16, according to the Russian Federal Security Service (FSB) press office, quoted by AFP. Grecu was allegedly caught “red-handed” and "items of spying equipment that fully reveal his hostile activity against Russia have been confiscated", according to a FSB spokesperson. Romanian authorities condemned the “serious violation” of diplomatic protocol in detaining the Romanian diplomat and the “inadequate treatment” to which he was subjected. In response to Romania’s reaction, Konstantin Kosachyov, chairman of the Russian State Duma International Committee, said that bilateral relations between the two countries could deteriorate, according to the Voice of Russia site. He added that Grecu had been expelled because he was found spying for NATO and not for Romania. “The fact that Romania acted as the conductor of other than its own interests is shocking and deplorable,” Kosachyov said. Simona Bazavan
5
NEWS
BRIEFS CENAVODA-CONSTANTA HIGHWAY TO BE FINISHED BY END OF 2011 é Transport minister Radu Berceanu said last week that the Cernavoda-Constanta highway in south-eastern Romania will be finished by the end of 2011, according to Mediafax. He added that the works are behind schedule, partly because the discovery of several archeological sites. CC FINES PRIVATE PENSION FUNDS EUR 1.2 MILLION é The Competition Council (CC) has fined several managers of private mandatory pension funds (second pillar) EUR 1.2 million for agreeing to divide up equally customers who signed contracts with two funds in the initial phase of the process. Romanian law stipulates that such customers should be distributed randomly. Some 78,000 participants signed contracts to join up with two or more funds. The biggest fine was given to ING Pensii.
6
Giulesti maternity ward explosion leaves five babies dead, six severely injured An explosion at Giulesti hospital in Bucharest last Monday evening left five newborn babies dead and six severely injured. The maternity ward case has been taken up by the Criminal Section of the High Court of Cassation and Justice, with prosecutors starting a criminal investigation for third degree murder and serious injury infliction. An electrical fault, probably caused by botched repairs to the air conditioning system, is the suspected cause, reports Mediafax, quoting legal sources. It has also been claimed that the fire would not have started if the room where the explosion took place had been monitored by the nurse who was supposed to be on duty there. The injured babies, who are suffering from severe burns all over their bodies, are now being cared for at the Grigore Alexandrescu hospital. Giulesti’s maternity ward has been completely evacuated and
The state gave RON 5,000 per deceased infant
patients sent to Grigore Alexandrescu hospital and Filantropia. On August 18, a team of ten Israeli doctors arrived at the Grigore Alexandrescu hospital to help with the treatment of the injured, according to the Associated Press. The doctors flew to Bucharest at the invitation of the Bucharest City Hall. The bereaved parents will receive state compensation of RON 5,000 while the families of the injured babies will be awarded RON 3,000, according to Mediafax. The accident at Giulesti hospital has drawn attention to
the precarious situation of the health system in Romania, both in the national and international press. Reuters reported that, “Romania is one of the European Union's poorest countries and its medical services are considered among the worst in the bloc.” On the subject of the current exodus of qualified medical staff from Romania, President Traian Basescu said on a televised talk show on August 5 that it was everyone’s right to seek better working conditions. The entire management of Giulesti hospital has been suspended until the investigation is completed, by the order of mayor Sorin Oprescu, as requested by the health minister, Attila Cseke. The interim manager is Victoria Nicolau, MD anesthesiologist. According to Mediafax, Cseke has also declared that all Romanian hospitals will be inspected with regard to their anti-fire measures. Corina Dumitrescu
BUSINESS REVIEW / August 23 - 29, 2010
CALENDAR/WHO’S NEWS
EVENTS, BUSINESS AND POLITICAL AGENDA AUGUST 30
é Athenee Palace Hilton Bucharest organizes an event to mark the han-
dover of the hotel’s management. By invitation only.
SEPTEMBER 23
é Business Review organizes the second edition of the Austrian Business
Forum at InterContinental Bucharest. For more information visit www.business-review.ro/events/.
SEPTEMBER 27
é The ICC Young Arbitrators Forum and Tuca Zbarcea & Asociatii organ-
ize the Competence – Competence Principle – Recurring Issues seminar at InterContinental Bucharest. Attendance is free of charge.
SEPTEMBER 28
é ICC and Tuca Zbarcea & Asociatii organize the Efficiency of Complex
Dispute Resolution in the Current Economic Climate event at InterContinental Bucharest. For more information visit www.businessreview.ro/events/.
OCTOBER 7
é Business Review organizes the second edition of the French Business
Forum at InterContinental Bucharest. For more information visit www.business-review.ro/events/.
OCTOBER 21
é Business Review organizes the Turkish Business Forum at InterConti-
nental Bucharest. For more information visit www.businessreview.ro/events/.
WHO’S LINDA GRIFFIN is the new GM of Athenee Palace Hilton Bucharest as of 1 September. Griffin comes to Romania after serving as cluster general manager in Turkey for Adana & Mersin Hilton SA Hotels. She is taking over from Friedrich W. Niemann, who has held the position for the past five years and who will leave Romania at the end of August. He has been promoted to general manager of the new Waldorf Astoria hotel in Berlin. Griffin is a 21-year veteran of the Hilton Worldwide and began her career at the Hilton Toronto, moving on in 1993 to the Hilton Toronto Airport as front office manager. Over the years she has worked in Puerto Rico, Turkey, Japan, Australia, the Caribbean, Africa, Egypt, and
NEWS throughout Europe. EVGUENIA STOICHKOVA has been appointed operations director of Coca-Cola Company for Romania, Bulgaria, the Republic of Moldova and Albania. She is taking over from Dragos Militaru who left the company earlier this year after 15 years. Bulgarian Stoichkova joined the firm in 2004 as market manager for Bulgaria. After about three years she was promoted to area marketing manager for Romania, Bulgaria, the Republic of Moldova and Macedonia. In June 2009, Stoichkova was appointed brand director of still beverages for South-Eastern Europe. She has also worked for Danone for 10 years. Stoichkova is a graduate of the University of Mining and Geology in Sofia and the COPERNIC economic program in Paris.
Business Review welcomes information for Who’s News from readers. Submissions may be edited for length and clarity. Feel free to contact us at editorial@business-review.ro
Romanian politicians react to France’s repatriation of Roma Roberta Anastase, president of the Chamber of Deputies and former Member of the European Parliament, has criticized France’s decision to repatriate 300 Roma living in France to Romania, their country of origin. Anastase added that there were two different ways of regarding the Roma situation: as a national or a European issue. “As a MEP, I proposed the creation of a European agency for Roma people, to consider these specific policies of integration, starting with the premise that this community is a nomadic one and which cannot hold on a certain territory,” continued Anastase. President Traian Basescu said last week that Romania understood France's position regarding the expulsion of the Roma and that the two countries would cooperate in order to find a solution, reported Mediafax. "We understand the French government's position. At the same time, we support, without reservation, the right of any Romanian citizen to circulate without restriction within the European Union,” said Basescu. As a solution, he suggested the deployment of Romanian BUSINESS REVIEW / August 23 - 29, 2010
police troops to France, as happened last year in Italy, when the country was confronted with the same issue. Mircea Geaona, president of the Romanian Senate, told RFI that Romania's reaction was “weak” and “unconvincing,” compared to that of France. Geoana said he considers the current situation of the Roma people to be a matter of the highest interest, which should be discussed between the two countries' presidents and ministers. Like Anastase, Geoana denounced the repatriation of the Roma as a superficial solution to the problem. France announced the expulsion of a total of 700 Roma people, to either Bulgaria or Romania. Last Thursday, a group of 79 Roma returned to Romania, followed by 292 more, arriving in Bucharest on August 20 and 26. The flight on Thursday was France’s 25th such repatriation since the start of the year. The Roma have accepted voluntary repatriation for a sum of EUR 300 per adult and EUR 100 per minor. They will be allowed to return to France, however, if they choose to do so. Corina Dumitrescu 7
LINKS
Ministry of Communications and telecom regulator disagree over compensation for unused radio frequencies
Otilia Haraga The draft bill on compensation for the freed radio bandwidth of 36003657/3700-3757 MHz was forwarded by the Ministry of Communications for approval by ANCOM on July 14. “Compensation of RON 92,420,939 (in excess of EUR 21.8 million), to which is added VAT worth RON 14,756,286 (approximately 8
STOCKEXCHANGE
The Ministry of Communications has put together a draft government decision to ensure compensation in excess of EUR 25 million is paid to the National Company of Radiocommunications SA (SNR) for the radio frequencies it freed up in 2008. These frequencies were to be put up for sale to provide internet services in rural areas. However, so far no one has shown interest in buying them. Moreover, the draft stipulates this sum should be paid from the budget of the National Authority for Administration and Regulation in Communications (ANCOM), which has rejected the bill.
Mobile internet is gaining ground in the preferences of users, both in Romania and abroad.
EUR 3.4 million), is approved for the National Company of Radio-communications SA, for investments made with a view to clearing frequency bandwidth 3600-3800 Mhz,” states the draft that was to land on the governmental table. However, how this could be done is not known, as the authority’s budget is approved by Parliament which must give its consent. Contacted by Business Review, the Ministry of Communications, which drew up the draft, did not answer. “Under the legislation in force, the Ministry of Communications does not have prerogatives concerning the sums available in the budget of ANCOM, this in fact being a requirement of community norms to ensure the independence of the authority in regulating electronic communications,” Catalin Marinescu, president of ANCOM, told Business Review. This year, ANCOM’s budget is approximately RON 290.9 million (nearly EUR 70 million). This means that more than one third of the authority’s budget would be granted as compensation to the SNR. ANCOM has snubbed the draft, citing various reasons. “ANCOM has rejected the draft of the government
decision for granting a sum as compensation to the National Company of Radio-communications SA, regarding the value of the investments made for releasing bandwidth in the frequencies 3600-3657/3700-3757 MHz,” Marinescu told Business Review. He explained that when it vetoed the draft, ANCOM took into consideration several legal aspects. “One of these is that the sums that were owed to the SNR came from the license tax that should have been paid by the winners of the new licenses for using the radio bandwidth, licenses that were to be granted in the frequencies cleared by the SNR. In other words, the costs of changing the use or the reorganization of some radio frequency bandwidth would be supported through the state budget from the license taxes and not from the budget of ANCOM, a budget approved through a Parliament decision,” says Marinescu. The license tax is thereby paid to the state budget by the beneficiaries of the licenses and part of it should be returned as compensation to the SNR. “ANCOM is not part of this circuit, so the one who cashes in the tax (the state budget) should also honor the obligation for compensation. This however cannot surpass 50 percent of
the cumulated value of the license taxes (EUR 7.5 million), according to the same legal stipulations,” says Marinescu. Moreover, ANCOM is an institution financed exclusively through its own revenues and the budget of the authority is approved through government decision, according to the stipulations of the government emergency ordinance nr. 22/2009 regarding the foundation of the institution. At the end of 2008, ANCOM started procedures for a public auction to grant licenses for the use of radio frequencies for systems of the BWA type (access on broadband radio support) which were to function in the bandwidth cleared by SNR. The deadline within which the interested companies were supposed to submit their answers was February 2009. However, at that time no one had submitted offers to obtain the licenses. Since no one benefitted from these licenses and no taxes for the license were cashed in, there was no income source and the SNR could not be compensated. Therefore, at this point, the use of the bandwidth cleared by the SNR is uncertain, as the public bidding ended in no license being granted. Previous data from ANCOM show that the number of active connections to mobile points for broadband internet access reached 2.5 million at the end of 2009, which represents a 66 percent growth compared to the value posted at the end of 2008. “As Romanians are more and more attracted to the use of broadband internet and mobile internet, we estimate this segment will continue its growth over the next period, which will also trigger a growth in the degree of penetration at a national level,” predicts Marinescu. ANCOM data also indicate the number of fixed broadband internet connections registered at the end of 2009 had increased by 12 percent compared to the same period in 2008. So, on December 31, 2009, there were 2.8 million connections to broadband internet at fixed points, of which 2.5 million were supplied to individual clients. At the same time, the degree of penetration for broadband internet at fixed points reached 13.1 percent per 100 inhabitants and 34.2 percent per 100 households. BUSINESS REVIEW / August 23 - 29, 2010
ENTREPRENEUR
Brotherly love engineers a boost for business Corneliu Bodea, VP, and his brother Adrian Bodea, president of Adrem Invest, started a business in industrial applications back in the 90s with just 2,000 Deutschmarks. Now the company competes with names like Siemens and ABB, reached a EUR 10.4 million turnover last year and has plans to develop a COURTESY OF ADREM INVEST
specialized department in alternative energy this year. Dana Ciuraru
Corneliu Bodea and Adrian Bodea seek new segments to develop Adrem Invest’s business
Corneliu Bodea, VP of Adrem Invest, founded along with his brother in the early 90s – the beginnings of the private sector in Romania – Adrem Invest, an engineering company with expertise in industrial applications. “The idea came from my brother, Adrian, a physician who wanted to use the experience he had gained while working as a researcher at the IFA-Magurele. Research programs in which he had to deal with vacuum technologies whetted his appetite to try to develop a business in a niche area. The next step was to consider the Romanian market at that time and the conclusion was clear: the field of industrial applications was hardly developed. Moreover, the need for retrofitting the industry was something that convinced us that we should establish the company,” Bodea tells Business Review. According to him, in the early years the company acted as local representative for BOC Edwards
group – the largest manufacturer of vacuum equipment in the world at that time. The firm’s activity evolved very rapidly, and in 1995 it became a provider of its own solutions for vacuum applications in industry. After four years, in partnership with Whipple & Bourne, a manufacturer of protective equipment for electrical distribution networks of medium voltage, Adrem Invest began to improve its expertise in the energy field by developing its design capacities and technological engineering. From 2000, the firm expanded its activity and became the local provider of automation solutions for electrical distribution networks, launching an automation division. In the past 10 years, this division has evolved steadily to see the company being recognized as a local market leader in providing SCADA (Supervisory Control and Data Acquisition) solutions for industrial
BUSINESS REVIEW / August 23 - 29, 2010
automation for utility networks. Some of the major power distribution companies in Romania have chosen SCADA solutions developed by the firm, including: RADET, Transgaz CFR, Enel and Transelectrica. “In the past 10 years, Adrem Invest has been involved in major industrial projects and the modernization of infrastructure in Romania and Finland, South Africa, Portugal, Italy, South Korea, China, Turkey, Ukraine, Russia and Moldova. Because of the size of such projects, the financial turnover of the company was often affected by market fluctuations, so the company has built a business strategy aimed at overcoming the economic challenges of each period and providing a strong working capital. With the first signs of the global economic crisis in 2008, the company decided to invest in a business that brings a steady cash flow and gives it stability through the integrated services
division,” says Bodea. He adds:” The opportunity came from CEZ Romania which decided to outsource its management and meter reading services. Our company won the auction and thus became the partner of CEZ Romania, signing a EUR 32 million contract last year for a period of four years. So this division offers its services to 1.3 million clients in seven counties – Olt, Gorj, Mehedinti, Dolj, Teleorman, Valcea and Arges.” The competition is fierce in this sector. The firm has to compete with big names such as Siemens, ABB, Danieli, Eximprod and Energobit. Corneliu Bodea remembers the most difficult year in the company’s activity. “I think the most difficult time was in 1997, the first and only year in which we recorded losses as a result of the leu’s devaluation of more than 100 percent. For me, the early period at Adrem Invest was divided into three parts: the first period in which we were wondering what money we would collect tomorrow, the second when we wondered what money would come next month and the third in which we wondered what money we would make over the next six months”. The business’s plans will not stop here despite the crisis. “This year represents a new stage in the development of Adrem Invest, a year in which the company will focus on developing processes engineering by creating a specialized department in alternative energy. Some projects which will be developed within this department are highly efficient cogeneration, solar and modern solutions for hydro power generation,” says Bodea.
Adrem Invest é Initial investment – 2,000
Deutschmarks é Turnover 2009 – EUR 10.4 mil-
lion é No. of employees – 535 é Largest investment realized so
far is of about EUR 1 million
9
BALANCE
The times, they are a-changin’ – social activism gains momentum Romanians often refer to themselves as a passive people, an attitude seen as a hangover from the communist years, when little could be done to protest against the government’s restrictive decisions. Twenty years have passed since the fall of STELIAN PAVALACHE
communism, however, and a general hunger for doing, changing and contributing can
Book readers start revolution of common sense at Lecturi Urbane
be felt in the air. It might have
which appeared in the spring of 2009 “over a beer,” according to Dan Dumitrescu, founder of Civika, the brainchild of him, Andrei Rosca, creator of Bookblog, and Adrian Ciubotaru, blogger, activist and writer. In the first stages of Lecturi Urbane, a small group of people went to the subway daily and read, so as to encourage other passengers to follow suit. When autumn came, Ciubotaru and Dumitrescu decided to take the project to a new level, turning it into a true community event. More focus was put on communication and the group decided to offer books to passers-by, who were encouraged to read them and pass them on to others. Over a hundred people came to the first edition of Lecturi Urbane and a national television channel joined in to film how volunteers had transformed subway trains in genuine libraries on wheels.
taken a long time for people to start fighting for their rights, but given the rate with which social activism is developing, the tide has definitely turned. Corina Dumitrescu Civika is a social platform launched in 2009 to bring together community projects and activists. One of its best known projects is Lecturi Urbane (Urban Reading), 10
Now, Lecturi Urbane is a project of national proportions, taking place in over twenty locations across Romania, with local young people deciding to do something that counts for their communities. “In Tecuci, a 17-year-old girl organized Lecturi Urbane, and took care of absolutely everything, including approvals from the local town hall,” says Dumitrescu. Lecturi Urbane is no longer restricted to public transport, but is taking place on the streets and in parks as well, conquering more public spaces as it grows. Thousands of volunteers have contributed to the success of the project and thousands of books have been distributed so far. Amusingly enough, Ciubotaru recalls, he has also received books with the Lecturi Urbane stamp on their back from strangers in the subway, unaware of his connection with the project. Both Ciubotaru and Dumitrescu
have revealed that as autumn comes, Lecturi Urbane will develop even further, but for the moment they are being tightlipped about how. One aspect that will certainly be implemented in the future is the transformation of Lecturi Urbane into a NGO for whose further development more funds will be needed, Ciubotaru explains. The man with the story behind the Lecturi Urbane project, as Dumitrescu, his partner, describes him, Ciubotaru says his enthusiasm for the project stems from the fact that while growing up, he did not have the opportunity to volunteer as young people in Bucharest and larger Romanian cities do now. Lecturi Urbane is a project to which anyone from anywhere across Romania can contribute and help make grow. It is said that success does not come without criticism. Some have claimed that the popularization of reading might result in its trivialization. “And what is so wrong about that?” responds Ciubotaru. Reading is no longer an activity exclusive to elites, he explains, and by making it popular, one can only hope that it will help open the minds of the majority and also encourage more civilized behavior among people. Ciubotaru calls Lecturi Urbane “a franchise of common sense,” situated between an organized event and a flashmob, at the basis of which is the Broken Windows Theory, which posits that if a building has broken windows which are not fixed, it will encourage illegal behavior in the area. More precisely, people respond to their environment: if people see others behaving in a civilized manner, they will do the same. So if a group of noisy people enter a quiet subway wagon in which people are reading, they will lower their voices, explains Ciubotaru. Lecturi Urbane is a growing success that might someday go beyond the borders of Romania and of whose success Ciubotaru hopes to talk about in international conferences in three years’ time. Considering the splash that the event is making, that day may come even sooner. BUSINESS REVIEW / August 23 - 29, 2010
BALANCE
DOROTHEA KETTLER
Bikers silently march in downtown Bucharest for traffic rights and a less polluted environment
Another successful Civika project is Bikewalk. 19-year-old Ariel Constantinof, project manager for www.amdoar18ani.ro and www.motivonti.ro, initiated the movement (www.bikewalk.ro) in April. The concept is simple: cyclists gather in Tineretului Park (where they can borrow bikes if they don’t own them), usually on Saturdays at 18.00, and take a ride around downtown Bucharest, while traffic is stopped. So far, the movement has managed to gather hundreds of cyclists, and this is just the beginning. Civika recently joined forces with Bikewalk, as it shares the same civic spirit, offering its full support to the project, helping with its communication, promotion and further development. Dumitrescu believes the event could become a regular thing. “The police would no longer be resistant because of our high numbers. The first lane of traffic could be dedicated to us on large boulevards. In the most recent edition, no car ever hooted its horn at us, even though we sometimes blocked intersections, and people were standing outside smiling at us, encouraging us.” The main aim is to normalize cycling and make it safer, as well as to demonstrate that if at least ten percent of drivers chose to ride a bicycle every now and then, traffic would be a lot more fluid and people would be healthier and even less stressed. On the same energetic note, Via Sport is a project organized by Bucharest City Hall to which Dumitrescu has also contributed. “Stop traffic! Start playing!” is the project’s motto and it has succeeded in banning traffic on one of the busiest BUSINESS REVIEW / August 23 - 29, 2010
areas in Bucharest, Kiseleff Boulevard, and turning it into an oversized playground, for children and adults alike. Tennis, badminton and football areas and bicycle lanes were created for those spending their weekends in the city over four summer weekends, the last of which was the August 20-22 weekend. Lecturi Urbane, Bikewalk and Via Sport, like other projects of their ilk, are shoestring affairs: most of the communication and promotional activities were done online, via blogs, Twitter and Facebook profiles. These projects share the audacity of the Pay It Forward concept. Offering books to strangers is an amazing feeling, agree Ciubotaru and Dumitrescu. Encouraging people to protect the environment and take exercise by joining the Bikewalk outings and returning to people the responsibility and joy of public spaces are probably common sense for Westerners, but for Romanians they are a rediscovered right. All of these are altruistic gestures made by the people for the people, showing that it does not take a revolution to change mentalities. In all these cases, change might not occur over night or without effort, but the results are invaluable. “An activist is a person responsible enough to take an attitude,” concludes Dumitrescu, adding that social responsibility should not only be manifested as companies’ somewhat commercial CSR, but “PSR” (Personal Social Responsibility), as well, since we all benefit from the communities that we are a part of and it is our duty to pay, at least a little, back to them and thus, to us too. 11
PROPERTY
Mercadia Holland buys miniMax Discount Mercadia Holland BV has taken over the full shareholding of miniMax Discount, the operator of the discount retail network. Mercadia owns the Mic.ro chain of proximity stores, which is controlled by businessman Dinu Patriciu. The value of the transaction was not disclosed but market estimates place it at a few million euros. “The acquisition of miniMax is part of the group’s development strategy for the local market and aims to create synergies between the two companies on the logistics and acquisitions side, which will allow us to optimize offers for the clients of both segments – discounter and proximity,” said Dan Ionescu, CEO of Mercadia Holland BV. miniMax Discount is a Romanian company established in 2003 as a discounter opening in medium-size towns across Romania. It currently owns 31 stores in towns with over 10,000 inhabitants all over the country: Arad, Avrig, Braila, Buzau, Calan, Calarasi, Campulung Muscel, Cernavoda, Cisnadie, Hunedoara, Mangalia, Oltenita, Oravita, Pascani,
miniMax outlets are present in smaller towns across Romania, which gives Mic.ro good access to customer’s interested in discount retail
Pucioasa, Ramnicu Sarat, Rasnov, Sinaia, Slatina (two) Stefanesti, Targoviste, Titu, Tulcea, Turnu Magurele, Urziceni, Vaslui, Victoria and Vulcan. The network’s full development stage is envisioned at 100 stores. The miniMax retail outlets have a sale surface of 750 sqm, with six cash registers and 80 parking places. The entire activity of the stores is coordinated and managed by
the miniMax Discount logistic center, which occupies 15,000 sqm outside of Bucharest. The previous owners of miniMax Discount were Austrian group Real4You, together with Rainer Exel, who runs the company, and Andreas Kampf, who is active on the sales segment. Mercadia Holland BV owns the majority share packages in Mic.ro
Retail, Bet Café Arena and iLearn. Mic.ro started operations in Romania this year by launching a chain of proximity stores, which currently includes 76 outlets and is planned to reach 300 by the end of the year. Bet Café Arena, launched this year as well, is a sports betting and coffee shop with 70 outlets across Romania. ILearn offers consultancy services in the human resources services industry.The acquisition comes at a time when retail sales are going down. According to research by analytical advisory firm Candole, Romanian retail sales are expected to fall by 4.6 percent this year, pushing sales figures back to their 2007 level. The drop follows another one of 10 percent in 2009. The decline comes against the background of a contracting economy. The biggest fall was registered in June of last year when sales slid by 16.4 percent. Food and furnishing spending have seen drastic cuts, the report shows, while sales of fuel have dropped dramatically as transportation needs have reduced in a shrinking economy. ■
Fewer properties to be built by National Railways Company CFR plans to rent station space to big retailers National Housing Association
The number of houses built by the National Housing Association (ANL) is expected to fall this year from 7,000 units, as was planned by the Development Ministry at the beginning of 2010, to just 1,400. The cutback comes as the state budget funding for building this type of housing, which is intended to be used by young people, is going down. 12
LAURENTIU OBAE
Budget cuts have hit the youth housing building program
“The Regional Development and Tourism Ministry has not suspended the youth housing building program or the thermal housing improvement program. As the ministry’s budget was cut by 10 percent, the budgets allotted to these programs have been reduced as well,” said ministry officials. The year’s budget for thermal upgrading did not allow for any new works, just for the works to be finished on the 29,000 homes contracted in 2009. In order to expand financing to build more ANL housing, the ministry has given young tenants the option to buy ANL houses, with the resulting money to be used for further construction. The thermal upgrading program is to receive additional financing from credits granted by the Savings Bank (CEC) with state warranty and interest subsidized by the development ministry. ■
CFR hopes its stations will look better, as big retailers take up space to rent there
The National Railways Company CFR plans to rent space in 15 stations to large retailers. An area representing 30 percent of the total station surface could be taken up by fast food outlets, restaurants, pharmacies, bookstores and bank branches, said the company’s general manager Emil Sabo, quoted by Mediafax. “We have drafted a best commer-
cial practices guide based on a German model and we have identified procedures for renting and managing the space in stations,” Sabo said. The bidding process will not be used for the 15 stations at once because some of them are still involved in ongoing rental contracts, so only three or four stations at a time will be involved in the auction. ■ BUSINESS REVIEW / August 23 - 29, 2010
CITY
TEDx events bring ideas worth sharing this autumn Stepping into the shoes of the worldwide success of TED, TEDx conferences have become a worldwide phenomenon and, since last October, avid local fans have brought the concept to Romania too. Behind their enthusiasm is a passionate and catching belief that COURTESY OF ALEX SPINEANU
ideas have the power to change us and the world we live in – all in the spirit of “ideas worth sharing”. Bogdan Naumovici giving his share of “ideas worth sharing” at TEDxBucharest 2009
Simona Bazavan The first TED event was organized back in 1984 in the US, where it started out as a conference that brought together people from three distinct fields: technology, entertainment and design. Thus TED. Over the years, TED has become a nonprofit dedicated to the mission of building a “clearinghouse” that offers free knowledge and inspiration from the world's most inspired thinkers and doers, and an environment where the curious can engage with ideas and each other. Today, TED has turned into a global network of conferences curated by the American private nonprofit Sapling Foundation. And because the concept has become so popular, the TEDx program (x stands for independently organized event) was initiated, giving local community members the chance to organize their own “TED-like” events under a license. There is a TEDxParis, a TEDxSaigon and, since last October, a TEDxBucharest.“When the program was launched, we were among the first teams to apply for a license. (…) In 2009 the TEDxBucharest BUSINESS REVIEW / August 23 - 29, 2010
team was the youngest team in the world to organize a TEDx event,” Oana Toiu, member of the organizing team, told Business Review. The organizers’age may have seemed an impediment in the license application process but TEDxBucharest 2009 in itself turned out to be a success, described by participants as “nothing short of spectacular”. After the experience of the 2009 edition, which was limited to 120 participants, for this year’s event the team obtained the next level license that has no restrictions, except the general TED guidelines. TEDxBucharest 2010 will take place on 15 October, organized by a group of 11 young professionals, with an age average of 23. “We are in a large majority the same as in the first edition in 2009. As the event has evolved, both in concept and size, so did the organizing team. This year we are operating on a volunteer basis under the umbrella of the youth NGO Generation Y, founded by the conference curator, Carmen Oprea,” Toiu added. Speakers at TEDxBucharest 2009 included Alexandra Nichita “the young Picasso”; Alex Gavan,
the youngest Romanian alpinist to conquer an 8000m peak; Mircea Tudor, the first ever inventor to win a Geneva award by an unanimous jury decision; Dumitru Popescu, from ARCA; Mircea Toma; Bogdan Naumovici and Sandra Pralong. The scale and complexity of this year’s edition will be different, organizers say. It will include more participants, more international speakers, a wider variety of topics approached by the speeches and additional events dedicated to the local TED community as well as a higher online interaction with this dedicated community. Attendance is by application form and standard registration costs USD 100. “In an event such as this, where the space, the atmosphere and participants’ engagement are just as important as the speakers, we need great people in the room, not only on stage. We are looking for the thinkers and doers of our time, be they activists, diplomats, business people, inventors, entrepreneurs, journalists, artist or just amazing people,” Toiu concluded. Outside the capital, this autumn will also bring TEDxBanat. The event will be organized by Alexan-
dru Bleau, Cristina Putan and Oltea Zambori, who for the past year have been involved in related online events such as the Startup Days and Tweetmeet Conferences in Timisoara and Cluj. “TED is an extraordinary event from which you leave motivated and carrying new ideas and new knowledge. We have wanted for some time now to bring such an event to the Timisoara and Banat community, and the opportunity to organize it under the TED license was a pleasant surprise for us. It is also worth mentioning that we are all three TED.com fans,” Bleau told Business Review. The main discussion topic of the event, which will take place on November 19, will be “projecting the future” and some of the speakers who have already confirmed their presence are Cristian Manafu, Stefan Szakal, Amalia Matei and Cladiu Teohari. After TEDxBucharest2009 others stepped in, elsewhere in Romania. Earlier this year there were similar events in Cluj and Iasi. The curator of TEDx Cluj and the person who acquired the license is Cristian Dascalu, freelance business development consultant. The motivation behind the decision to bring such an event to Cluj was an easy one, Lorand Minyo, liaisoning strategist, responsible for the communication for the event, told Business Review. ”We all were huge fans of TED and we had to share our passion with the great people of Cluj – most of whom had already heard of TED and were eager to participate in a TEDx event, not to mention our promise to bring something unique to Cluj,” he said. He added that the team will organize a new TEDx Cluj event within two months. “Official details on this are not public at the moment, but they will be from September 1,” he said. In Iasi the event was organized by the Youth Academy. “We are a young organization actively involved in non-formal education. We believe in and support the diversification of learning methods through interactive workshops and projects meant to develop youngsters’ interpersonal abilities (…),” CarmenLaura Nita of the Youth Academy told Business Review. The main topic of TEDxIasi was “what makes people happy”. 13
CITY
Top French ballerina Sylvie Guillem to star in Push show at National Theater The show Push at Romania’s National Theater will comprise four choreographical moments, bearing the signature of Russel Maliphant, who will also join acclaimed French ballerina Sylvie Guillem on the stage. Since its debut, the show has received four major awards, including the Laurence Olivier distinction for Best New Dance Production, as well a Time Out award for Guillem’s performance in Solo, the first part of Push, in which the
ballerina plays a great flamenco artist. Push is staged yearly in London and since 2006 has been performed as part of international tours in Germany, Greece, Switzerland, USA, Italy, France and Spain. The show, a premiere in Romania, will take place on October 22 at the National Theater in Bucharest and is part of the JTI Meetings, now on their eleventh run. Corina Dumitrescu
If I Want to Whistle, I Whistle chosen as Romania’s Oscar nominee Director Florin Serban’s picture If I Want to Whistle, I Whistle (Eu cand vreau sa fluier, fluier) has been selected as Romania’s nomination for the Best Foreign Language Film Award at the 2011 Oscars. The official finalists for the Oscar nominations will be announced on January 27, 2011. The movie has already won a Silver Bear Award, the Jury Grand Prix, and the Alfred Bauer distinction at the Berlin International Film Festival 2010. With a total budget of EUR 900,000, If I Want to Whistle, I Whis-
tle is the first Romanian picture to enter the Berlin competition in 17 years. The movie will premiere in the United States on January 5 in New York, according to variety.com. The film tells the story of a teenage prisoner in a juvenile detention center, who is only five days away from his release. However, his prospects of freedom are disrupted by the appearance of his mother and his falling in love with a Sociology student, an intern at the detention center. Corina Dumitrescu
Guns n’ Roses concert in Romania to go ahead, assures D&D East Entertainment After the media buzz created on August 16 around Axl Rose’s apparent post on his Twitter account announcing the cancellation of all upcoming Guns n’ Roses concerts, D&D East Entertainment have issued an official statement that the concert will be going ahead as planned. Quoting the band’s management, D&D East Entertainment officials said that there was an attack on Axl Rose’s Twitter account and that the posted information according to which the Guns n’ Roses tour has been canceled was
completely false. “We wish to assure every fan that there is no problem, and the concert in Bucharest will take place on September 21,” said Denise Sandulescu, D&D East Entertainment general manager. The gig announced for the Romexpo venue in Bucharest is the band’s first show to be held in Romania and part of its Chinese Democracy tour. Guns n’ Roses formed in 1985 in California and have since sold an estimate of 100 million albums worldwide. Corina Dumitrescu
The World According To Ion B, Dokufest award winner The World According to Ion B, a documentary telling the story of homeless Romanian collage artist Ion Barladeanu, won Best Balkan Documentary Award at Dokufest International Festival in Kosovo, on August 7. The documentary, directed by Romanian Alexander Nanau and produced by HBO Romania and Alexander Nanau Production, fol14
lows the life of Ion Barladeanu, initially an anonymous homeless man on the road to international acclaim. Recently, Marc Lober, head of the HBO Central Europe program division, ranked The World According to Ion B as the best documentary produced by the television channel in the region within the last year. Corina Dumitrescu
Learn to dance at fourth Street Dance Camp
Streetdancing gains ground among the young
The fourth edition of Street Dance Camp Romania will take place between September 5 and 11 in Reghin, the first
international camp dedicated to dancers and choreographers, as well as to those who simply love dance and international cultures. The camp will gather amateur and professional dancers alike and will comprise a week of daytime dance and nighttime parties. Beginners can take separate classes from more advanced dancers. The lessons will be given by ten choreographers from Romania, Fabrice from France and Eszteca from Holland. An all-inclusive pass to the camp costs RON 700. For more information on the event schedule, getting to the location and general details, see www.dancecamp.streetdance.ro. Corina Dumitrescu
Tattoo experts gather in Bucharest at end of August
No pain, no gain for a an everlasting piece of art on one’s body
An international convention on tattoo art, body piercing and body painting will take place in Bucharest between August 27 and 29 at Sala Palatului. The event will gather local and international artists, and is an opportunity for anyone interested to get themselves tattooed by one of the established artists set to participate.
The event will host concerts by Act Tribute to Motorhead, 9.7 Richter, Parazitii and Rares Blues Totu Experience. Tickets for the event, ranging in price from RON 23 per day to RON 57 for all three days, are available in the Diverta store network and online at www.myticket.ro. ■
Richard Marx, Right Here Waiting for a concert in Bucharest Pop-rock performer Richard Marx, whose hit singles include Hazard and Right Here Waiting, will be performing in Bucharest on November 1 at Sala Palatului, as part of his European tour. The Grammy-award winner began his 20-year musical career with the release of his debut album in 1987, from which Don't Mean Nothing, Should’ve Known Better, Endless Summer Nights and Hold on to the Nights became hits. He started singing at the age of five and met Lionel Ritchie at 17, later going on
to supply his backing vocals. Marx is also a reputed musical composer, having written songs for Sarah Brightman, Barbra Streisand, Natalie Cole, N’Sync, Michael Bolton, Ronan Keating and Ringo Starr. He won a Grammy Award for Song of the Year in 2004 for Dance with My Father, a song he composed with Luther Vandross. Tickets range from RON 90 to RON 250 and can be purchased from the Diverta chain and www.myticket.ro. Corina Dumitrescu BUSINESS REVIEW / August 23 - 29, 2010