PROFESSIONALS EARNING COPYRIGHT ROYALTIES WILL NOW HAVE TO PAY SOCIAL CONTRIBUTIONS; SEE NEWS ON PAGE 6 ENTREPRENEUR
FOCUS
INTERVIEW
Ilie Gheorghe, president and CEO of
Even though the local SUV market has
Athena Tavoulari, regional manager at
bakery Spicul, says the company is
dropped since the beginning of the
Stanton Chase International, says the
looking to increase its market share and
year, more modestly priced models
local market hasn’t yet assimilated the
launch new plants
such as the Duster are a speck of light
concept of an executive search agency
See page 8
See page 9
See page 11
BUSINESS REVIEW
www.business-review.ro
ROMANIA’S PREMIERE BUSINESS WEEKLY
AUGUST 30 - SEPTEMBER 5, 2010 / VOLUME 14, NUMBER 31
D-DAY FOR ROMPETROL COURTESY OF THE ROMPETROL GROUP
Dmitry Grigoriev, the CFO of Rompetrol Group, says the company wants to take the legal option of converting a part of Petromidia refinery’s debt into shares to be owned by the Romanian government. The announcement was made earlier in the year, but only lately has the state stepped up its collection efforts, after it was forced to cut salaries in the public sector and raise VAT see page 5
WEEK IN PICTURES FLANO CLINGS ON BUT ROMANIANS ARE AMONG EUROPE'S MOST WORRIED
BUSINESS REVIEW EVENTS First ICC events to be hosted in Romania The ICC International Court of Arbitration in Paris will host, for the first time in Romania, two events focused on discussing the available dispute resolution alternatives to litigation. Various ICC guests, lawyers from Tuca Zbarcea & Asociatii, Freshfields Bruckhaus Deringer and Dragne & Asociatii, along with the president of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry of Romania, will be among the speakers. The city of Bucharest will host two days of events organized for the first time in Romania by the ICC International Court of Arbitration in Paris. The focus will be on facilitating the exchange of ideas and experiences between arbitration practitioners and any other party interested in finding out more about the diverse dispute resolution mechanisms available in the commercial world today. On 27 September, the ICC Young Arbitrators Forum together with Tuca Zbarcea & Asociatii will organize the seminar Competence – Competence Principle – Recurring Issues – the first ICC YAF event ever organized in Romania. The seminar will provide a forum for young practitioners to discuss current international arbitration issues and to enrich their networks in the region.
BUSINESS REVIEW / August 30 - September 5, 2010
Speakers at the inaugural YAF seminar in Romania are: Alina Leoveanu, Deputy Counsel, ICC International Court of Arbitration, Paris; Radu-Bogdan Bobei, Chief Editor, Romanian Arbitration Review; Matei Purice, Associate, Tuca Zbarcea & Asociatii; Dan Cristea, Associate, Tuca Zbarcea & Asociatii. The event is free of charge but the number of participants is limited. On 28 September, the ICC International Court of Arbitration and Tuca Zbarcea & Asociatii, along with Freshfields Bruckhaus Deringer and Dragne & Asociatii, will organize the first international ICC conference in Romania – Efficiency of Complex Dispute Resolution in the Current Economic Climate. The event will boast a list of distinguished speakers who will bring their internal knowledge of the ICC International Court of Arbitration in Paris with the experience of practitioners involved in both local and international arbitration disputes. The conference aims at offering a practical approach to presenting the different dispute resolution alternatives in the current economic climate. The various debates that will take place during the conference will analyze concrete case scenarios, illustrating the different mechanisms for dispute resolution and the potential challenges involved.
The focus will be on topics such as: Initiating arbitration under the ICC Rules; The role of dispute boards and the ICC system for dispute boards; Current dispute resolutions in construction projects; Conservatory measures in arbitration cases; Recognition and enforcement of the arbitration sentences in Romania. Speakers at the inaugural ICC Conference in Romania are: Emmanuel Jolivet, General Counsel of the ICC International Court of Arbitration in Paris and Deputy Director of the ICC Dispute Resolution Services; Alina Leoveanu, Deputy Counsel of the ICC International Court of Arbitration; Philip Dunham, Partner, Dechert LLP, Paris; Viorel Mihai Ciobanu, President of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry in Romania; Cornel Popa, Partner, Tuca Zbarcea & Asociatii; Robert Rosu, Partner, Tuca Zbarcea & Asociatii; Ioana Hrisafi, Partner, Tuca Zbarcea & Asociatii; Boris Kasolowsky, Partner, Freshfields Bruckhaus Deringer; Roman A. Mallmann, Principal Associate, Freshfields Bruckhaus Deringer; Jane Davies-Evans, Counsel, Freshfields Bruckhaus Deringer; Ion Dragne, Managing Partner, Dragne & Asociatii; Andreia Oana Dumitrescu, Partner, Dragne & Asociatii.
STOCKEXCHANGE
IT&C and white goods retail was once the success story of the local business scene and a growing economic sector. Nowadays, many such stores are struggling. Flanco has just managed to gets its reorganization plan approved by its creditors after eight months. The company says it reached break-even point in June, and is now looking forward to better days.
Romanians are more pessimistic than other Europeans about the current economic situation, unemployment and their own job, a Eurobarometer survey has found. But the situation is reversed when it comes to budget deficit and public debt. Almost half of Romanians are unconcerned that the state is shelling out too much, compared to other Europeans who are worried about public spending. Only 56 percent of Romanians think the budget deficit and public debt need to be lowered. By comparison, 74 percent of Europeans believe that measures should be taken in this respect. The most anxious are Swedes (85 percent), followed by Hungarians (84 percent) and Germans (83 percent).
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 30 - SEPTEMBER 5, 2010 / VOLUME 14, NUMBER 31
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
4
Creditors give go-ahead to Flanco reorganization plan
LAURENTIU OBAE
NEARLY A QUARTER OF ROMANIANS ARE IN DEBT, NATIONAL BANK é Approximately 4.5 million Romanians have outstanding loans, a number that surpasses the total number of employees. Those most likely to default on their repayments are the 500,000 people who have three loans, two from a bank and one from another financial institution. At the end of July, the debts of these people stood at RON 13.8 billion. “The average debtor had around 1.75 loans outstanding in June, 2010. The rapid and significant fall into debt of the public requires attentive monitoring taking into consideration the fact that households do not have experience in administering important stocks of bank debts over an entire cycle of business, and especially during its decline, and current evolutions are worrying,” warned a National Bank report on financial stability.
Brasov’s Poiana chocolate factory closes its gates
Kraft Foods sold its Cadbury operations in Romania to investment fund Oryxa Capital
The Poiana chocolate factory in Brasov, the first investment by Kraft Foods in Romania, has closed its gates after the last two production lines were transferred to a plant owned by RAP Group, a former supplier of equipment to Kraft. RAR Group has started production for Kraft in a new location in Ghimbav, Brasov County. Kraft announced at the end of 2008 that it would close its production unit in Poiana and lay off 440 employees over the next year because the location of the chocolate factory in Brasov did not offer conditions for expansion. In 2009, Kraft decided to
keep part of its local production in Romania, which it outsourced to RAP Group, owned by businessman Radu Popeia. Most of the production lines of the Poiana plant were transferred at the end of last year to a production unit owned by Kraft Foods in Bulgaria. At the moment, most products that are sold by the company locally are imported. This year, Kraft Foods also sold its Cadbury operations in Romania to investment fund Oryxa Capital, but did not specify the value of the transaction. Simona Bazavan
Casa de Insolventa Transilvania, the judicial administrator of Flanco, has announced the re-organization plan for the retailer has been approved by all the four groups of creditors. The reorganization plan was approved after eight months. Flanco reached break- even in June, 2010, after 21 months of losses, between September 2008 and June 2010. The retailer aims to reach a market share of 10 percent and a turnover of EUR 110 million in 2011. Before the insolvency was declared, Flamingo International, the firm’s mother company which was listed on the Stock Exchange, controlled retailers Flanco International, which ran Flanco stores, and Flamingo Computers, in charge of the Flamingo Computers shop network. The distribution was controlled by Flamingo International which centralized all the group’s acquisitions and distributed the stock to the retailers. The total value of the debts was approximately EUR 60 million, at the level of the entire group. Bank creditors were owed EUR 34 million. ING was the firm’s biggest creditor, to which there were unpaid outstanding debts of EUR 17.2 million.
BUSINESS REVIEW / August 30 - September 5, 2010
NEWS
Cash-strapped Rompetrol wants state as shareholder The September 30 deadline in the dispute between Kazakh oil company, KazMunaiGas (KMG), which controls the Petromidia refinery in Romania, and the Finance Ministry has sparked further debate over Petromidia’s historic debt. The state wants to see the outstanding EUR 500 million on the table in cash, to complete the EUR 71 million of the total EUR 571 million historic debt that KMG paid on August 9. However, Dmitry Grigoriev, financial director of the Rompetrol Group, said, “The group’s cashflow isn’t positive. Rompetrol is subsidized by the mother company, the deadline to repay the debt is coming and closing the refinery is an option. The total debt to KMG reaches USD 900 million.” Rompetrol’s majority shareholder must repay bonds held by the Romanian state by the end of September or convert the debt into shares that will be owned by the govern-
BUSINESS REVIEW / August 30 - September 5, 2010
Romanian authorities aim to obtain the EUR 500 million historic debt from KMG by September 30
ment, according to an exceptional legal document. Petromidia refinery’s historic debt of EUR 571 million represents the company’s claims until September 30, 2003, accumulated by the refinery before the Rompetrol takeover (including VAT, excise, contributions to the
special Public Roads Fund, delay increases, interest, penalties and penalties for delay). Grigoriev said, “We consider it an option to have [the state] as a partner in the refinery and we think that situation might create benefits for both parties.” According to
Rompetrol officials, if the bonds are transformed into shares KMG will remain the majority shareholder, while the state’s stake will reach some 40 percent. Grigoryev added that the company would have saved USD 50 million if the refinery had been closed in the first six months of this year, and noted that if an agreement with the Finance Ministry were not reached there was always the option of shutting it down. Rompetrol Rafinare plans to shut down the Petromidia refinery for 45 days of repairs and maintenance from September 20, according to Grigoryev. The company, which manages the refinery, posted a net loss of USD 119 million in the first half of the year compared with a USD 69 million loss in the same period of 2009, and will not return to profit until 2013, company officials have announced. Dana Ciuraru
5
NEWS / CALENDAR/WHO’S NEWS eMag plans to open two new showrooms this year
State slaps extra tax on copyright royalties
IT&C online retailer eMag has announced that it has plans to open two new showrooms this year, according to Mediafax newswire. “The first of these new showrooms, which will be opened at the beginning of September, will be located in the center of Constanta, and will have a surface of 300 sqm, while the investment will be around EUR 50,000-60,000,” said Radu Apostolescu, marketing manager of eMag.
BCR inks loan contracts worth EUR 420 mln in First Home program COURTESY OF GOV.RO
Banca Comerciala Romana (BCR) has signed over 10,000 loan contracts as part of the national First Home program, with granted sums exceeding EUR 420 million. Within the first stage of the First Home program, designed to help young firsttime buyers get onto the property ladder, the average value of a loan contract granted by BCR amounted to about EUR 41,200, while 1,550 loan contracts were signed for the maximum permitted value of EUR 57,000.
Labor minister Mihai Seitan says online payment of contributions will be facilitated
Professionals who earn copyright royalties will now have to pay social contributions, some of which will be payable monthly, amounting to 16.5 percent of their net copyright income, under changes made to the Fiscal Code at the start of August. The same
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 1
é 16:00 – Little London School organizes an event for the opening of the
new school year and the inauguration of a new headquarters. By invitation only.
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 Business Review organizes the second edition of the Austrian Business
Forum at InterContinental Bucharest. For more information visit www.business-review.ro/events/.
SEPTEMBER 28
é Business Review organizes the second edition of the Austrian Business
Forum at Ramada Plaza Bucharest. For more information visit www.business-review.ro/events/. é ICC and Tuca Zbarcea & Asociatii organize the Efficiency of Complex Dispute Resolution Clauses in the Current Economic Climate event at InterContinental Bucharest. For more information visit www.businessreview.ro/events/. 6
ruling applies to those defined as PFAs (Persoana Fizica Autorizata, or the self-employed). About 500,000 Romanians are paid through copyright fees, according to Mediafax. Under the new regulations, these people were initially ex-
WHO’S VALENTIN IONESCU, 38, has been appointed general director of the Bucharest Stock Exchange (BSE) following a decision by the institution’s council. He is taking over from Anca Dumitru who has stepped down from the position but will continue to be part of the BSE’s executive management. Ionescu’s career has been linked to the BSE for the past 15 years. He has also worked for the stock exchanges in Prague and Vienna and for Euroinvest Bank AG Vienna and Wood & Company Financial Services a.s. Prague. Ionescu is a graduate of the Academy of Economic Studies in Bucharest and holds an MBA from CNAM Paris. ALINA DRAGAN has been appointed executive VP for HR at UniCredit Tiriac Bank and member of the bank’s directorate, following the approval of the National Bank of Romania. She has professional experience of eight years
pected to queue monthly at CNPAS (the National House of Pensions and Other Insurance Rights) and ANOFM (the National Agency for Employment) offices across Romania, by the 25th of the given month, and once a year, on January 25, at CNAS (the Romanian National Health Insurance House), in conformity with their locations of permanent or temporary residence. However, on Thursday, the labor minister, Mihai Seitan, said that the Ministry of Communications would facilitate the online payment of contributions for professionals via the e-Romania portal. Documents can be sent via post and the money can be deposited in the accounts of the local employment and pensions agencies. Seitan added that this needs to be done by September 25 and will not have to be repeated on a monthly basis, unless corrections interfere. Penalties will be charged only after the system becomes functional. In Romania, various professionals are paid through copyright royalties, including artists, architects, journalists, accountants and engineers. Corina Dumitrescu
NEWS in the field of HR and has held the HR executive director position at the bank for the past year. Dragan is a graduate of the Psychology Faculty in Bucharest and a member of the Romanian Psychology Association and of the association of HR practitioners in Romania. RADU COSARCA is the new manager in charge of external relations at Enel Romania. A former journalist, he has worked for several Romanian television stations, including National TV, TVR and Antena 1. Cosarca is also a former member National Audiovisual Council of Romania (CNA). He will take over the position in September.
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
BUSINESS REVIEW / August 30 - September 5, 2010
NEWS
UPC posts revenues of EUR 31 mln in Q2, registers slight growth The company had 737,100 analog cable subscribers, 254,000 digital cable customers and 187,400 DTH subscribers, according to the UPC Holding report. The company’s subscriber base in Romania continued to decrease in the second quarter across its various RGUs, due to fierce competition. “Our total subscriber additions were hampered by Romania, which
lost 54,000 RGUs in Q2 2010, as compared to a loss of 1,000 in the prior year’s quarter. If we were to exclude our net RGU loss in Romania, we would have reported RGU additions of 122,000, representing a nearly four-fold improvement from the comparable amount in Q2, 2009,” read the report. Otilia Haraga
STOCKEXCHANGE
UPC Romania posted revenues of EUR 30.8 million in the second quarter of this year, a 1.32 percent growth on the same period of last year. In the first half of the year, UPC posted revenues of EUR 62.3 million, 2.3 percent up on 2009. On June 30, 2010, UPC Romania’s total number of revenue generating units (RGUs) was 1,589,400.
UPC registered a slight growth in revenues last year
Raiffeisen, ING and BRD win bid for Property Fund listing
LAURENTIU OBAE
The Property Fund is getting closer to BSE listing
A consortium formed of Raiffeisen Capital & Investment, ING Bank NV Amsterdam Bucharest branch and BRD – Groupe Societe Generale has been declared by Property Fund officials the winners of the bid organized for the selection of the fund’s listing on the Bucharest Stock Exchange. The Property Fund is a closed investment fund created to compensate former owners whose properties were confiscated during the communist regime. It holds participations in 88 companies, the most lucrative being those in the energy sector. The main shareholder is the Finance Ministry which controls 56.98 percent of the shares. Dana Ciuraru BUSINESS REVIEW / August 30 - September 5, 2010
7
ENTREPRENEUR
Royal nod puts bakery among the upper crust With a tradition going back more than 160 years, bakery Spicul has a new face: it became the exclusive supplier to the Romanian Royal House earlier this year and also improved its brand portfolio. ILIE GHEORGHE, president and CEO of the company, has more big ideas in store: he intends to increase the company’s market share from 2 percent this year to 10 percent in the next two or three years. Anca Ionescu Ilie Gheorghe started his association with Spicul 19 years ago. He joined the bakery in 1991 as commercial manager and two years later rose to general manager. But he is also the artisan of the business, and has been the company’s majority stockholder since 1991. At the moment the manufacturer is entirely in the hands of private investors. “I sold the land in the Orhideelor area four years ago to the real estate developer Hercesa and one year later we started to build the new location 8
on the industrial platform in the Chitila area,” remembers Gheorghe. Spicul sees itself as more than just a bakery. Its origins lie 160 years ago, when watermills designed to process the wheat were certified for the first time. Since its early years of operations, the firm has distinguished itself through the quality of its products, and has been included on the list of the suppliers to the Royal House. Although Gheorghe has a technical and economic background – he graduated from the Construction University in Bucharest and the Academy of Economic Studies (ASE) – he decided to take a different professional path. “The idea to develop this business came from my professional experience and from many visits to milling companies and bread manufacturers in countries such as Austria, Italy, France, Germany, Japan and the Netherlands,” says the CEO . He adds that his eagerness to harness his experience of more than 40 years in the food industry was one of the main reasons he got involved in Spicul. “We wanted to produce traditional, healthy and useful bread and bread-
stuffs,” explains the entrepreneur. In his opinion, the most difficult moment his company has faced was the investment itself, because of the specific local economic conditions – from the approval to build a plant to the moment when it became operational. “I can say that anyone who invests in Romania is treated like an enemy,” says Gheorghe. If he started another business he wouldn’t change anything. But when it comes to the challenges his business has faced he says there are plenty. The strategy of his business, Gheorghe says, is built around the customer. “Our philosophy is to support the customer, to prevent decay, to help the customer maintain his or her health and not to act in a curative manner as the majority of Romanians do at the moment,” he explains. His main goal – except the financial one – is to offer very healthy food at the right price. As for competition on the market, Gheorghe says that supply is five times higher than demand, with 90 percent of the total products coming from the black market. He adds that the company has a 1-2 percent market share at the moment but
he intends to increase it to 8-10 percent in the next two or three years. The bakery made fresh moves this summer when it launched new products such as Clatituta Zgloby and the range of products Slabesti Mancand on the market. Granzela and Toastiny (sliced and packed bread), Zgloby (pastry products), City, Hatz Rostogol and Hatz cu Coltz (biscuits) are part of the firm’s brand portfolio. On top of that, Spicul has become the exclusive supplier of bread and milling products to the Romanian Royal House. “This status is an honor for Spicul and it is confirmation of the high quality of our products,” says Gheorghe. He says that his company differentiates itself from the crowd through its up-to-the-minute technology, which allows it to produce high quality products. The EUR 30 million of new investments made in order to modernize the technology at the plant is one of the largest investments in the local bread production and milling industry. Money was used to build a construction plant in the Chitila area and to buy new production lines from Japan, Austria and the Netherlands. The company posted a EUR 5.5 million turnover in 2008 and had 219 employees at the end of 2008. As for the future, Gheorghe has one thing in his mind for Spicul: further development despite the current economic crisis. “We are working now on a primary processing project and we are trying to launch the starch and gluten plant as well as the wheat and maize mills by the end of this year,” concludes Gheorghe.
Spicul é 2009 estimated turnover: EUR
3.5 million é 2010 estimated turnover: EUR 5
million é Number of employees: 350 é Initial investment: EUR 30 mil-
lion é Total investment: EUR 35 mil-
lion BUSINESS REVIEW / August 30 - September 5, 2010
FOCUS
Duster cleans up on stalling SUV market
Dana Ciuraru
BUSINESS REVIEW / August 30 - September 5, 2010
SMALL
SUV sales have decreased at half of last year’s results for the first seven months, to 3,500 units
cars in the first seven months of this year. But the crisis, unpredictable fiscal changes such as the VAT hike and the increasing demand for second-hand SUVs which can be less expensive seem to have alarmed the dealers that market top of the line SUVs, to the benefit of cheaper models.
DUSTER, A SPECK OF LIGHT ON A FALLING SEGMENT Mazda officials told BR that the firm had sold 98 CX-7 models until July, a 78 percent hike compared with the same period of last year, when it moved just 55. According to Dragos Grapinoiu, marketing manager at Mazda, this year’s sales made up 18 percent of the total, compared with the imports market where SUV sales accounted just for barely 9 percent. “Since Mazda launched the diesel version at the end of last year customers have moved towards the 2.2 Euro 5 version at high equipment levels,” says Grapinoiu. According to company information,
the CX-7 price varies between EUR 29,400 and EUR 35,000. Grapinoiu tells BR that the old car replacement program has also boosted Mazda’s sales. But the most spectacular hike was recorded by Dacia’s Duster model, which costs around EUR 14,000. Dacia’s SUV, the first such model produced by the Mioveni factory, saw production reach about 36,000 units, representing some EUR 550 million, since it was launched in March. Dacia officials have announced that the carmaker will increase production of the Duster from the current 20 units per hour to 25 in Octo-
IS THE NEW BIG
Driven by the low demand, carmakers have readjusted their offer by announcing that they will bring smaller SUV models onto the market. As such, BMW Group Romania, importer of the BMW and Mini brands on the local market, will launch in the second half of next month the new Mini Countryman, the first SUV in the English manufacturer’s range. Prices start at EUR 21,142 for the basic version. Meanwhile, Renault-Nissan Romania has announced that it will launch the new Juke in the second half of this year. Juke is the smallest SUV in the Nissan range, positioned in the lower class as Qashqai. Local market prices have not yet been disclosed, but on the Spanish market they start at EUR 16,000. Despite the importer’s hurry to bring these new models onto the market, the Mioveni factory has stolen the thunder and keeps scoring top points for sales and revenue.
SUVs sales dropped heavily this year Brand
2008
2009
YTD
July 2010
Jeep
376
173
57
10
Land Rover
824
378
133
19
Mitsubishi
3310
1374
405
72
SOURCE: APIA
“Because of poor market conditions, we have orders from the company’s management not to disclose any information about the number of SUVs sold this year,” an official from a car importer told Business Review. A peek at the July data released by the Producers and Importers Car Association (APIA) suggests that these are worrying times for SUV importers. According to the statistics, the major SUV importers with operations on the local market will probably have difficulties in matching last year’s results, already dramatically falling. Moreover, market specialists say that comparable sales on the SUV segment have decelerated from 6,400 units in 2009 to just 3,500
ber and then 35 at the beginning of next year. The Duster will thus take the carmaker’s production in Mioveni to 330,000 vehicles this year, a record for the plant, with Fabrice Cambolive, the commercial manager of the brand, expecting a “1.8 percent share of the overall European market,” up from the 1.7 percent share held by the Romanian brand in June. The Duster has made a significant contribution to the production increase, with Dacia receiving orders for 35,000 SUVs, mostly from Western Europe. Only 15,000 units have been delivered so far, 1,500 of them in Romania. And the big plans do not stop here. Recently, Renault has announced that it will begin production of the Duster in Russia under the Renault symbol.
LAURENTIU OBAE
SUV sales on the local market are far from being at full throttle as they were a few years ago. Market specialists say sales dropped by half in the first seven months of this year compared with the same period of last year. However, those SUVs priced more modestly haven’t lost their allure. More, the Duster model has made waves on the local market, but even more so abroad where it makes up some 90 percent of the Mioveni factory’s production.
9
LINKS
Recession pips Apple’s popular iPhone 4 to the post After the long awaited launch of the iPhone 4 in the USA, Romanian techno-geeks were looking forward to the prospect of having the handset available in local stores as well. That time has come. Several online stores already boast the new iPhone among their wares, but the phone is not yet winning rave reviews. Pundits say that this may be due to the financial crisis coupled with the fact that this is a gadget not easily affordable to the average Joe. However, the last generation iPhone has been much improved compared to its predecessor – Business Review surveys some of its new functionalities. Otilia Haraga
10
4 in their offer. But the phone has not been brought via Apcom, which is Apple’s original distributor in Romania, or by Orange Romania, which announced weeks ago that it has exclusivity on this handset. Contacted by Business Review, Orange Romania representatives did not specify when the iPhone 4 would be available in Orange stores, revealing only that this will happen “soon.’ “Orange is the only authorized iPhone distributor in Romania. Customers who buy iPhone 4 handsets from Orange will benefit from warranty and service under the conditions stipulated by the law,” says Petre Dobrescu, product division manager. When the phone hits Orange stores, it will be on sale from the operator’s shop network, its online store and the stores of some of the Orange partners, who are authorized to sell the iPhone 4. Marius Ghenea, owner of FitDistribution, the company which runs pcfun.ro and PCGarage.ro, says: “We put it on sale on PCfun.ro and PCGarage.ro immediately after it was available in Europe, because at this time, especially for an important online store in Romania, if you don’t come up with a product on the local market at the same time as it is made available elsewhere in Europe, there will be two problems: first, customers will be able to buy it online from another European country, which means a loss of sales for us and local online
commerce. Second, information travels very quickly on the internet and customers do not understand why the product is available in Great Britain or Germany but not in Romania,” he explains. However, how does a gadget like the iPhone 4 sell during a crisis period in Romania? Ghenea says he cannot put forward a figure, but sales have been sluggish. He adds: “At the iPhone 4’s current market prices, only the most affluent customers can afford it, so, especially during this period of cutbacks in consumption and reductions in buyers’ budget for such products, the response has not been too great.” The price of the iPhone 4 varies on iPhone 3GS Resolution: 640 x 960 pixels Camera: 5 megapixels Frontal camera: 0.3 megapixels HD Video recording 720p Other specifications: chip Apple A4 Multi-tasking Folders for applications Talk time Up to 7 hours in 3G mode Up to 14 hours in 2G mode Internet surfing Up to 6 hours in 3G mode Up to 10 hours in Wi-Fi mode Stand-by time Up to 300 hours
iPhone 4 Resolution: 320 x 480 pixels Camera: 3 megapixels VGA Video recording Multi-tasking Folders for applications Up to 5 hours in 3G mode Up to 12 hours in 2G mode Up to 5 hours in 3G mode Up to 9 hours in Wi-Fi mode Up to 300 hours X
Apple’s iPhone 4 became available in 17 more countries on July 30, but Romania was not one of them. Customers could buy the talked about new model in Australia, Austria, Belgium, Canada, Denmark, Finland, Hong Kong, Ireland, Italy, Luxembourg, the Netherlands, Norway, New Zealand, Singapore, Spain, Sweden and Switzerland. However, in Romania, several online stores, such as pcfun.ro, PCGarage.ro, eMag.ro and marketonline.ro, have already included the iPhone
But for its high price which is prohibitive for many, iPhone 4 is coveted by many a gadget lover
Pcfun.ro from RON 4,397.13 to RON 4,949.56 for the two available versions – 16GB and 32 GB. “I cannot give you a figure, but most customers went for the entry model, 16 GB,” says Ghenea. On the eMag.ro website, the iPhone 4 is sold in the 16 GB version for RON 4,989 (VAT included) and in the 32 GB version for RON 5,739 (VAT included). “Half of the iPhones are bought by residential clients while the other half are purchased by companies. Most users of iPhone handsets – 60 percent of consumers – are men. 18-35-year-olds are especially attracted by this handset,” says Dobrescu. Ghenea splits the buyers of this device into three categories. “The iPhone 4, as well as the other iPhone models and the entire range of gadgets from Apple (iPod, iPad), is a line that attracts mainly Apple fans, and secondly other consumers who are passionate about gadgets. There is also a third category of customers – snobbish buyers,” he says. It seems that at this point in time Romania not very many people can afford to be either Apple fans or snobbish. The Romanian Apple buyer is “very affluent, gadget oriented, and very likely a client who has used other Apple products in the past and continues to use the same brand,” says Ghenea. Although the launch of the product in the United States did not go without problems, as consumers complained about some signal and reception issues, Ghenea says up to this point there have been no such issues from Romanian buyers. “We do not have any complaints. I think in Romania the GSM signal is somewhat better than in the United States, at least in certain areas that are too crowded or, on the contrary, very remote in the USA,” he says.
BUSINESS REVIEW / August 30 - September 5, 2010
INTERVIEW
Hunting for optimism in gloomy economic times
Simona Bazavan It is estimated that the global executive search market fell by about 30 percent last year. What was the situation in Romania? Indeed, globally the market has decreased by about 30 percent, but in Romania it went down by as much as 70 percent. At the beginning of 2009 the market experienced the psychological effect of the crisis, especially in Romania which was a country that had registered constant growth until that time. Afterwards the market simply froze. Many clients have dropped anything that had to do with executive search and executive recruitment and not because they didn’t need such services. The positions that remained vacant weren’t filled, with companies choosing to divide the responsibilities of the vacant position between other members of the organization, in order to cut costs. Given this context it was only natural that the executive search market would fall in 2009. BUSINESS REVIEW / August 30 - September 5, 2010
ond reason, for about 12.5 percent, would be dissatisfaction with the current employer along with improved remuneration, also 12.5 percent. Usually, these people are looking to do something more challenging, more motivating and on a larger scale. In my view, the money doesn’t usually come first in an executive’s decision to change his or her workplace. Moreover the salaries of C-level executives haven’t been affected by the crisis and some companies have even chosen to motivate their executives through aggressive bonuses.
LAURENTIU OBAE
Globally regarded as the matchmakers of the labor market, the concept of an executive search agency has yet to be fully assimilated locally, ATHENA TAVOULARI, regional manager of Stanton Chase International and managing director of its Bucharest office, told Business Review. Against this backdrop, local headhunters witnessed their business plunge by up to 70 percent last year.
Companies from industries such as financial services, banks and leasing companies have actually frozen the recruitment process and made no placements whatsoever. Other industries were affected as well. Is the Romanian executive search market different from other countries in the region and in Western Europe? Regionally, and I’m speaking mainly about Romania, Bulgaria and Serbia, and in some cases even in Greece we have seen that due to the crisis the market has become more price-sensitive, whereas this was not the case before the crisis. Speaking locally, the executive search market is not yet as educated about and accustomed to the concept as Western European countries are. Romania is a market that does not yet fully realize the difference between a recruitment agency and an executive search one. However, this does not apply to big multinational companies present in the country or to the very big organizations that we usually work with. This is why there is a big difference in fees, because there is also a big difference in the value added that a client is getting through an executive search agency compared to a middle management recruitment agency. In
this sense and as the market has become very sensitive to fees it has become more than ever our challenge to educate the market. In recent months many companies have decided to bring in foreign executives. Can this be related to the current economic context? This has always happened in Romania and is a clear trend of an emerging market but it will surely change in the coming years. From our experience, a common reason given by clients for choosing an expat it that the kind of knowhow they were looking for could not be found locally. I don’t think this is directly related to the crisis because the difference between the remuneration package of an expat and that of local CEO is at least two or three times higher. On the contrary, I would say that the crisis has created more opportunities for local C-level executives. What are the main reasons behind an executive’s decision to change employer? A survey carried out earlier this year by Stanton Chase among 200 local C-level executives showed that 47.6 percent of the respondents would change their employer for career development reasons. The sec-
What industries have resumed recruiting for executive positions? The most notable signs of recovery have come from the financial services sector, mainly banks, although it has not yet fully recovered. So far we have been assigned more than ten projects in this field. We have been assigned positions that have included members of the executive committees, marketing, legal, IT and operations positions, so Clevel or director level positions. Other industries are technology, both IT and telecom, and the consumer products industry. Our name in the Romanian market is very much connected to FMCG, we work a lot with these companies and we expect the growth to continue in 2010. What results did Stanton Chase register in 2009 and what are your predictions for 2010? At Stanton Chase we saw a decline of almost 50 percent in 2009 as companies active in industries that we are very strong in, such as financial services, consumer products and technology as well as pharmaceutical and healthcare, were greatly affected by the economic downturn. In the first six months of 2010 we achieved the revenues of the whole of 2009 making it an increase of more than 90 percent. We continued to be close to our key clients as well as doing a lot of business development activities which resulted in some very important new projects, some of which are at an international level. We also managed to register a placement rate for the first six months of almost 94 percent when the global average is 80 percent. So we remain optimist and confident in Romania’s potential to become a stronger regional center. 11
PROPERTY Holcim puts EUR 14 mln Arad-Timisoara highway to be finished next year Carrefour adds 23rd After setting a deadline for the tion of the Arad-Nadlac motorway into electricity production completion of the Cernavoda-Con- and the highway linking western local hypermarket in highway last week, transport Timisoara to central Sibiu will start installation in Alesd plant stanta minister Radu Berceanu announced next year, according to Mediafax Drobeta Turnu Severin Construction company Holcim will invest EUR 14 million in a project aimed at increasing the energy efficiency of its cement plan in Alesd, Bihor County, Mediafax has reported. The plant will generate approximately 25 percent of the electrical energy required by the unit. “The decision to invest in Romania in latest generation green technologies make the Alesd plant the first in Eastern Europe to go to the next level of implementing alternative energy solutions,” said Markus Wirth, general manager of Holcim. The total value of Holcim’s investments in Romania since 1997 up until now is EUR 650 million. This year the company is spending EUR 20 million to upgrade its plants in Campulung and Alesd and its grinding station in Turda.
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on Saturday that the Arad-Timisoara highway should be finished at approximately the same time, in 2011. The minister said the construc-
newswire. Berceanu added that a EUR 180 million contract to build the DevaOrastie highway will be signed soon.
Horbanch increases social capital for local operator by EUR 3 million Construction and gardening retailer Hornbach has increased the social capital of the company operating its stores locally, Hornbach Centrala, by EUR 3 million (RON 12.6 million). The new social capi-
tal now stands at EUR 15.2 million (RON 64.2 million). The German group also controls Hornbach Imobiliare in Romania. It has three stores in the country: two in Bucharest and one in Brasov.
SCT Bucuresti, Alpine Bau and Via Proiect Bucuresti win contract for capital street repair works The Bucharest city hall has awarded to SCT Bucuresti, Alpine Bau in Austria and Via Proiect Bucuresti a RON 37 million (EUR 8.8 million) contract to upgrade the road system and the tram line on the Aerogarii Boulevard in
Bucharest. SCT Bucuresti is owned by Austrian Do-Fi South-East Holding with 50 percent, CCCF Bucharest with 19.6 percent, Sorin Apostol with 12.2 percent, AVAS 4.5 percent, and other shareholders.
French retailer Carrefour is opening its 23rd local hypermarket in Drobeta Turnu Severin, Mehedinti County. The new outlet will be located in the Severin Shopping Center and is the first hypermarket the retailer has opened this year, after opening six Carrefour Market supermarkets in 2010 so far. The new hypermarket has a sales surface of 7,100 sqm, 25 cash registers, 1,000 free parking spaces, and around 50,000 items on sale. It will employ 250 people. Severin Shopping Center is located close to the city center. Besides the Carrefour hypermarket it includes a DIY Bricostore outlet, and local and international brands such as Deichmann, New Yorker, Orsay and Takko. Carrefour’s sales in Romania in Q1 of 2010 amounted to EUR 269 million, a 3.5 percent rise on a like-for-like basis due to the expansion of sales space. Carrefour employs over 495,000 people in Romania, and runs 22 hypermarkets and 26 supermarkets.
BUSINESS REVIEW / August 30 - September 5, 2010
CITY
Let’s Do It, Romania! starts countdown to country clean-up Clean the whole country – in a single day! is the slogan with which Let’s Do It, Romania! wants to encourage as many people as possible to contribute to improving the environment. Inspired by the project that successfully turned Estonia into COURTESY OF LETS DO IT ROMANIA
a waste-free country in 2008, thousands of Romanians have spent thousands of hours accomplishing September 25, a day set to turn Romania in a waste-free country
one of Romania’s biggest community projects so far, that of restoring the natural beauty of landscapes that have been blighted by garbage for too long. Corina Dumitrescu Things have evolved since our last review on Let’s Do It, Romania! this March. September 25, 2010, is a date that set to make history, as Romania’s own national cleaning day. But behind this one-day project has been a collective year-long effort from an estimated 15,000 volunteers (and counting), to which is added the support of local environmental (and not only) NGOs, the authorities, media, as well as Romanian businesspeople and inspiring public figures. The idea behind the project came from the Let’s Do It 2008 campaign in Estonia, which, on May 3, 2008, managed to bring together 50,000 volunteers, 4 percent of a population of 1.3 million, with BUSINESS REVIEW / August 30 - September 5, 2010
locals being joined by people from all over the world in the initiative. Described by international media as one of the most ambitious volunteer actions in modern times, the project was also a very efficient country branding campaign for Estonia, all for the cost of EUR 500,000 and with the priceless result of getting an entire country clean in just one day. More information about the campaign in Estonia is available on YouTube, through a search for Country Clean-Up Project Let’s Do It 2008. In Romania, the foundations for the project were laid in 2009, when Liana Buzea of Asociatia Ecoasist, an environmental NGO, contacted the Let’s Do It team from Estonia. Momentum then spread from Bucharest across the country, says Anamaria Hancu, coordinator of the communication team. She attributes the need for the project to the fact that “in Romania, there are many NGOs or authorities that have organized individual or collective cleaning activities, which only resolved the problem of waste blighting natural spaces temporarily. What’s more, Romania also has a problem with its waste management system, which needs to be improved.” So Romania became part of the Let’s Do It, World! communi-
ty and joined the other countries organizing clean-up campaigns this January, in Talinn, at a conference organized by the Estonian team. Let’s Do It, Romania! has so far comprised three main stages, organizing, mapping and cleaning. Across the country, the organizing team consists of around 200 volunteers, with the mapping team reaching about 2,500 registered individuals. The mapping phase of the campaign involved identifying and describing the so-called waste piles, as well as sending their coordinates via GPS to help create a digital map of the areas. The cleaning part, the campaign’s most important component, is currently being finalized, gathering volunteers. Pilot clean-ups have already been staged, with three pilot counties now waste-free (Cluj, Arges and Timis), 5,100 volunteers involved and 300 tons of garbage collected. So far, Hancu estimates a total of 15,000 participants in all of the project’s stages and a total investment of between EUR 55,000 and EUR 60,000, as a result of both sponsors’ and volunteers’ contributions. And how will a project of such proportions fare on its big day, September 25? “In the morning, volunteers, previously notified via e-mail, will come for the cleaning at the
meeting points corresponding to the counties that they are in (usually, at town or city halls). Participants will be trained, will afterwards receive sacks and gloves and then set off on the route of their choice (if they have previously registered online on www.letsdoitromania.ro and have already chosen piles), along with the team that they have formed. If they are not yet part of a team, they come to the information point that morning, find all the necessary information and are allocated to a team,” Hancu explains. The project is currently in full development and would not have managed to achieve such a level of involvement, had it not been for the support it proved able to attract from local state authorities, the media, NGOs and public figures. The main partner in the project is the Ministry of Environment, which provided consulting support on waste management issues. The Ministry of Regional Development and Tourism facilitates relations with local authorities from touristic locations and helps by involving their partners, says Hancu. “Of great help will be the involvement of the Ministry of Education and Research, especially from September 15. We really need the participation of children on September 25,” adds Hancu. There is no need to underline, however, that at the heart of the initiative lies the involvement of volunteers from around the country, dedicating their time to a goal considered too challenging by many before them. As for what the future holds, after September 25, the next stage of the project will consist of lobbying, with the authorities applying sanctions for waste disposal in unmarked areas, the legal framework will be completed and the gradual improvement of the waste management system will begin. A television spot inviting volunteers to participate in the project will be aired on Monday, August 30. The spot is also available for viewing on YouTube, on Let’s Do It, Romania!’s official channel. More information about the project, how to join or simply offer your support, is available on the local site, www.letsdoitromania.ro, as well as the global one, www.letsdoitworld.org. 13
CITY
Chamber music strikes up this autumn, at SoNoRo and Mogosoaia Castle
Chamber music frolic at this year’s SoNoRo
This year’s international chamber music festival SoNoRo will take place between October 31 and November 14 in Bucharest, Cluj and Iasi. Over 30 international artists will hold 14 concerts in 13 different locations. This year’s event has the title Un
ballo in maschera (A Masked Ball), as masks, carnivals and balls are its main sources of inspiration. The musical center stage will be taken by the works of Frederic Chopin and Robert Schumann, as 2010 marks the 200th anniversary since the birth of the two composers. On the same theme, Mogosoaia Castle will host an anniversary chamber music concert on September 5, which will also feature compositions by Chopin and Schumann. The concert will start at 5 pm and entrance is free of charge. Mogosoaia Castle is a historical building, dating back to 1702, and is situated around 15 km outside Bucharest in Mogosoaia, Ilfov County. Corina Dumitrescu
Battle of Songs officially opens registration for aspiring composers The fourth Battle of Songs has begun and will allow registrations until October 10. The project is an opportunity for aspiring music writers to establish themselves and to win prizes amounting to a total value of EUR 2,500. This year’s jury will feature big names from the Romanian radio scene, musical and program directors from the most important local radio stations, as well as acclaimed online promoters of Romanian music. A pre-
vious winner of the competition is George Hora, in 2008, now a wellknown Romanian musician, and one of this year’s radio hits. Xonia featuring Deepcentral – My Beautiful One, was launched at the Battle of Songs 2009.For each composition entered in the contest, a fee of EUR 14.9 is payable. Up to ten songs may be submitted. For more information, see the competition’s official site, www.battleofsongs.com. Corina Dumitrescu
Bucharest City Hall launches new leisure space, Little Riviera After the success of the Via Sport project, in which around 10,000 people participated, Bucharest City Hall has decided to launch a new leisure space in Bucharest. Developed under the slogan “Far from the city, in the center of Bucharest”, the project will become a tradition only by public demand, de-
pending on the success of this year’s edition. Little Riviera (Mica Riviera) offers visitors terraces on the bank of the River Dambovita, on which they can enjoy drinks and watch various shows. Little Riviera is located on Splaiul Indepedentei, in the vicinity of Piata Unirii. Corina Dumitrescu
Little London School opens in Greenfield Complex Little London School has opened in a new location, in Bucharest, in the Greenfield Complex, near Baneasa Airport, after a total investment of EUR 300,000. The official opening of the new eight-grade school is on September 1. The new school aims to integrate teaching methods from both the Romanian 14
and the British school systems. “We aim for our students to gain a real understanding of the school disciplines and their interconnections, as well as the ability to apply practically and use in real life what they learn in school,” says Dana Papadima, the new school’s principal. Corina Dumitrescu
Cesaria Evora returns to Romania for fifth time, after undergoing heart surgery
No stopping for the Barefoot Diva
After canceling a concert in Bucharest this May due to health issues, Barefoot Diva Cesario Evora will return to the capital on October 18, after performing in Brasov on October 15.
The 68-year-old morna singer from Cape Verde will arrive in Romania a few days prior to the concert and is rumored to be dedicating some time to discovering the country’s mountain regions. In May this year, Evora underwent heart surgery from which she has recovered successfully. The two shows that the diva will hold in Romania are part of the tour promoting her most recent album, Nha Sentimento. The concert in Bucharest will be held at Sala Palatului, and the one in Brasov at Sala Sporturilor. Ticket prices range between RON 70 and 210 and can be purchased from www.eventim.ro or directly from the concert venues. Corina Dumitrescu
Johann Strauss Ensemble to tour Romania
Marathon of classical beats this December
Chamber music lovers have reason to rejoice, as the marathon of this music genre continues in winter. Austrian orchestra the Johann Strauss Ensemble will hold a Best of Vienna tour in Romania, between December 8 and 20, with Christmas as the main theme of the concerts. The tour will start in Bucharest at Sala Palatului on December 8, marking
the orchestra’s sixth concert here, and will continue in Arad, (December 10), Timisoara (December 11), Oradea (December 12), Cluj (December 13), Sibiu (December 14), Targu Mures (December 16), Iasi (December 19) and Brasov (December 20), Mediafax reports. Formed in 1985, Johann Strauss Ensemble’s repertoire includes compositions by the Strauss family, as well as by Mozart, Haydn, Beethoven and Schubert, among others. Tickets are available in Bucharest from Sala Palatului, the Diverta chain, Muzica store, Eminescu library and o nline on www.biletoo.ro, www.myticket.ro, www.bilete.ro, www.blt.ro si www.ticketpoint.ro, with prices ranging between RON 50 and 250. Corina Dumitrescu
Mar Nero hits Romanian cinemas on September 17 An Italian-French-Romanian coproduction directed by Federico Bondi, Mar Nero, will debut in cinemas in Bucharest and Cluj on September 17. The film tells the story of the relationship between a young woman from Romania who has come to Italy to find work and the older woman she takes care of. Although, at first, the two are reluctantly forced to share the same roof, as time passes they become friends and the younger Romanian, Angela (played by Dorotheea Petre, laureate of the Un Certain Regard category at the Cannes film festival in 2006), manages to inspire the bitter Gemma (Ilaria Occhini) to live the rest of her life to the fullest. An unexpected event
prompts the odd couple to abandon the peaceful life that they were leading in Florence and set off on a trip. The movie co-stars Maia Morgenstern, famous internationally for playing Mary in Mel Gibson’s The Passion of the Christ, and Vlad Ivanov, who starred as the infamous doctor in Cristian Mungiu’s Cannes Golden Palm winner, 4 Months, 3 Weeks and 2 Days. The movie will premiere in Bucharest at Cinema Studio. Its blog, http://marnero.wordpress.com/, aims to inspire people to continue the story of the film and write beautiful life stories of Romanians working in Italy. Corina Dumitrescu BUSINESS REVIEW / August 30 - September 5, 2010