LA FANTANA HAS BOUGHT ROKOR ECOSTYLE, SEE NEWS ON PAGE 5 NEWS
ENTREPRENEUR
FRENCH INVESTMENT
Austrian Airlines saw a 7 percent
Elena Suciu, managing partner of Har-
Though the ooh la la might have gone
growth in revenues from flying 11 per-
mony Design, an interior and exterior
out of the local economy, French firms
cent more passengers in the first eight
design company, talks to BR about her
are still deploying their savoir faire on
months, says local GM Jose-Luis Gilaber
career path and future plans
the Romanian market
See page 6
See page 9
See pages 13-16
BUSINESS REVIEW
www.business-review.ro
ROMANIA’S PREMIERE BUSINESS WEEKLY
OCTOBER 4 - 10, 2010 / VOLUME 14, NUMBER 36
FLYING IN THE FACE OF THE CRISIS see pages 10-11
COURTESY OF TAROM
The aviation industry has been going through turbulence of late, but Ruxandra Brutaru, general manager of Tarom, is aiming to steer the national airline towards bluer skies
THIS WEEK
BUSINESS REVIEW
EVENTS
What we are working on OTILIA HARAGA, Senior Journalist...
Bucharest.
October 7 é Business
Review organizes the second edition of the French Business Forum at InterContinental Bucharest.
is working on a piece on private companies in the healtchcare sector.
October 28 é Business
Review organizes the Energy – Focus on Power event at Ramada Plaza Hotel.
CORINA DUMITRESCU Journalist... is writing about local match-making and dating LAURENTIU OBAE
services. LAURENTIU OBAE
October 14
SIMONA BAZAVAN Journalist... is researching an analysis on the
é Business
Review organizes the TAX & LAW – New fiscal measures: effects and consequences event at Howard Johnson Hotel.
October 21 é Business
Review organizes the Turkish Business Forum at InterContinental
November 4
local wine indus-
é Business
try.
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P&G TAKES A GAMBLE ON ROMANIA
Week in NUMBERS 187,000 The number of sacks of waste collected by the over 150,000
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DANA CIURARU ANCA IONESCU
Romania! on September 25
The cost of the new Procter & Gamble haircare products plant opened in Urlati
might appear limited, President Traian Basescu welcomed the CEO
20,652,098
of Procter & Gamble, Bob McDonald, who was in the country to
BUSINESS REVIEW / October 4 - 10, 2010
COURTESY OF P&G
open the FMCG firm’s USD 100 million new plant in Urlati
The number of bonds in Rompetrol Rafinare that the state now owns
OANA MOLODOI Marketing Manager ADINA MILEA
Journalists
Sales & Events
CORINA DUMITRESCU Copy Editor DEBBIE STOWE Photographer LAURENTIU OBAE
Though he laughingly admitted his own need for haircare products
GEORGE MOISE Sales & Events Director
OTILIA HARAGA SIMONA BAZAVAN
USD 100 million
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NEWS
Strauss Romania invests EUR 4.5 Procter & Gamble cuts ribbon on haircare products plant in Urlati million in Doncafe campaign
Strauss Romania, owner of the Doncafe brand, is launching a new communication campaign this month, the result of an estimated EUR 4.5 million investment. The coffee manufacturer expects a turnover of around EUR 60 million this year, similar to its result in 2009, said Marius Melesteu, Strauss Romania’s general manager. The new campaign’s brand ambassador will be Maia Morgenstern, internationally known for her role in Mel Gibson’s blockbuster Passion of the Christ. The choice was made based on research conducted by
Government eliminates minimum tax, announces plan to stimulate business
AGERPRES
Prime Minister Emil Boc is hoping the new measures will stimulate the economy
Prime Minister Emil Boc announced last week a series of government measures “to stimulate the local business environment”. They includes eliminating the minimum tax from October 1, lowering the interest charged on the late payment of state receivables to 0.04 percent per day from 0.05 percent and changing the conditions 4
under which companies that invest and create jobs can receive state aid. The minimum tax will be replaced with a tax on profit. “For the third quarter, companies will pay the minimum tax on October 25, and from February 25 they will pay the tax on profit for the fourth quarter of 2010,” said finance minister Gheorghe Ialomitianu. Ialomitianu also announced that the fiscal authorities will suspend foreclosure procedures against companies that are owed money from the budget, or which can recoup VAT. Also, the state’s and companies’ debts to each other will be balanced automatically, not on request, as the current legislation stipulates. The measures were approved through an emergency ordinance adopted last Wednesday by the government. Simona Bazavan
Procter & Gamble has officially opened its new shampoo and conditioner plant in Urlati, Prahova county. The plant, which required an injection of over USD 100 million, is a greenfield investment which the company says is part of its sustainable development strategy in Romania. About 90 percent of the production from Urlati will be exported to regional markets such as Turkey, Russia, Ukraine and the Baltics. “It is part of a new generation of P&G plants which incorporate sustainability elements from design through operation and it serves as a model for other P&G plants around the world,” said Bob McDonald, chairman of the board, president and CEO of P&G, at the event. The unit in Urlati is the only one that P&G has opened in Eastern Europe this year. Another 10 factories worldwide are currently in various completion stages. P&G has further expansion plans for the Urlati unit. “We want to develop Urlati into a multi-category site. We hope that in time we will produce here more than shampoo and conditioner and, of course, this will require further investments,” said Luc Viaene, GM of P&G Urlati. The new plant has four production lines and currently produces the Pantene, Wash & Go and Head & Shoulders brands. Over 250 people work in the new plant but company representatives say that the recruiting process continues. The facility stretches over 6 ha, the company having leased 25 ha in total for
COURTESY OF PROCTER&GAMBLE
COURTESY OF STRAUSS ROMANIA
Actress Maia Morgenstern is the brand’s face
Strauss Romania in partnership with Gfk, which found Morgenstern was considered a reliable celebrity in terms of awareness, coffee association, persuasive ability and brand compatibility. This is the actress’s first association with a FMCG brand. The new television advert, which was made by Leo Burnett Romania, airs from October 1. It was filmed at Odeon Theater in Bucharest with Italian director Alessandra Pescetta at the helm and recreates a scene from Anton Chekhov’s The Seagull. Doncafe products have also undergone a repackaging campaign, for which an agency from London is responsible. Strauss Romania, the local branch of the eponymous Israeli group, has been on the Romanian market for 15 years, initially with the Elita coffee brand, which was rebadged in 2008 as Doncafe. Currently, the Romanian branch has 360 employees and holds a 36 percent share of the roasted coffee market and 26 percent of the local instant coffee market. Corina Dumitrescu
Hair to stay: Procter & Gamble has been active in Romania since 1992
the next 49 years. Local authorities have invested EUR 2.5 million in the infrastructure required for the site, said Mircea Cosma, chairman of the Prahova County Council. P&G estimates that it will generate EUR 1 million for the local budget by the end of 2010. P&G has been present on the Romanian market since 1992. Last year the company posted a turnover of approximately EUR 370 million. P&G runs three entities locally: Procter & Gamble Marketing Romania (coordinating the marketing activities for Romania and another seven countries in the area), Procter & Gamble Distribution SRL (coordinating distribution within Romania), and Detergenti SA (manufacturing detergents and fabric bleaching products in Timisoara and haircare products in Urlati). Simona Bazavan
Law firm Danila, Petre & Asociatii expands to fiscal consultancy Danila, Petre & Asociatii has launched a new branch focusing on fiscal consultancy, as well as asset and debt recovery, Danila, Petre & Asociatiii Consultanta Fiscala. The firm expects to double its turnover in 2011. It will also be taking over 25 percent of the shares at Active Recovery, an asset and debt recovery firm set up in 2009. The new law firm has as shareholders attorneys Luminita Danila, Cristian Petre, Nicoleta Grama, all part of the main law firm, plus economists Adriana Diaconescu and Mirela Cainaru. Danila, Petre & Asociatii is dealing with over 400 cases of insolvency, representing 52 percent of its total number of files.“The extension
to this field was a natural and normal step, which will help us meet our clients’ needs by diversifying the range of supplied products. The Romanian fiscal system is going through times of major changes. All of these have been a challenge, as well as provided motivation to keep up with present and future changes and to offer integrated services to our clients,” said senior partner Danila. Danila, Petre & Asociatii also announced last week that it was working on a transaction to be finished by the end of 2010 which is expected to equal last year’s record of EUR 5 million. The deal is an agricultural acquisition. Corina Dumitrescu BUSINESS REVIEW / October 4 - 10, 2010
NEWS PwC: Average private sector wage increase in 2010 4.3 percent The average wage increase in the private sector amounted to 4.3 percent in 2010, according to this year’s PayWell Romania salary and benefits survey. The year’s figure is 40 percent lower than the average increase of 7.2 percent reported by the companies participating in the survey in 2009. The data also indicates that almost 70 percent of the surveyed companies increased or plan to increase wages in 2010, while 30 percent either don’t intend to raise pay, or hadn’t taken a decision by the time the data were collected. “Companies have shown a remarkable similarity this year regarding salary and benefits policy, as wage increases in different sectors ranged between an average of 2.9 percent in retail and 5.9 percent in the IT sector. This highlights the fact that all Romanian companies, regardless of their sector of activity, remain cautious in the current economic environment and have kept a close watch on costs, especially personnel costs. Although this year certain economic sectors have emerged from recession and reported modest growth rates, for example companies that have a strong exports component, companies still remain pessimistic regarding the recovery perspectives of the internal market,” said Peter de Ruiter, partner, tax and legal services leader at PwC. For 2011, almost 40 percent of the participating firms in the PayWell Romania 2010 study have budgeted salary increases, with the average wage increase being 6.8 percent, 60 percent higher than this year’s figure. “We anticipate stronger pressures for wage increases in the near future, given the recent VAT hike from 19 percent to 24 percent, especially in the economic sectors that have a strong tradeunion presence. Still, PwC does not expect much higher salary increases in 2011, taking into consideration the current economic environment and the balance between supply and demand on the labor market,” added de Ruiter. As far as perks and bonuses are concerned, PayWell Romania 2010 concludes that 60 percent of Romanian firms give fixed bonuses to all employees. These are granted mostly in connection with winter, Easter and summer holidays. The only sector where fixed bonuses are less frequent is the IT sector. These bonuses are usually offered as set sums, ranging between RON 150 and RON 700. Otilia Haraga BUSINESS REVIEW / October 4 - 10, 2010
La Fantana acquires Rokor Ecostyle La Fantana has acquired Rokor Ecostyle, giving the company a market share of over 80 percent, which makes it leader on the water purification systems market. At the time when the transaction was signed, the business value of Rokor Ecostyle was EUR 4.35 million. Following the move, Rokor Ecostyle will run under the same brand as a dedicated division for the water purification segment of La Fan-
tana. “The professionalism of the management team of Rokor Ecostyle proven during the evaluation process, together with the quality of services and the products on offer were the main arguments in favor of closing this transaction,” said Cristian Amza, CEO of La Fantana group. La Fantana has 600 employees in Romania and Serbia. The company has two bottling units in Romania, in
Bucharest and Talmaciu, and one in Serbia, in Mitrovo Polje. In Romania it has 25,000 corporate clients and institutions. The firm has installed 55,000 water coolers in the country. Rokor Ecostyle, importer and exclusive distributor of Waterpia water purification systems in Romania, was founded in 2003. Before it was taken over by La Fantana, its major shareholder was Serban Andrei. Otilia Haraga
5
NEWS Accreo opens subsidiary in Romania, runs projects of EUR 50 mln to attract structural funds
6
velopment and the expansion of production capacities, as well as greenfield investments. “So far, the absorption rate of the funds granted for 2007-2010 is 1213 percent,” said Dinu. According to Dinu, Romania should approach the issue from a competitive perspective. “Member states that are able to attract more funds, more rapidly, will be at an advantage,” he said. So far, Romania has had a preference for small and medium enterprises, which may pose problems from the point of view of impact and the financial perspective. A competitive solution may be to focus on large brands,” said Dinu. There are a series of drawbacks stopping Romania from attracting EU funds more rapidly, said the company. First of all, it does not have a blueprint of the most vital projects it needs to implement in important sectors such as infrastructure, like Poland does, for instance. A large part of the funds that need to be attracted are in the infrastructure sector, and this takes time. If Romania does not speed up procedures, it may run out of time to secure the funds. Otilia Haraga
LAURENTIU OBAE
Polish company Accreo, which specializes in providing advice for attracting European funds, has opened a subsidiary in Romania. Launched in June, it is currently working on projects that total over EUR 50 million. At the moment there are five projects under way at Accreo, which concern the development of production facilities, acquiring new equipment and greenfield projects, especially in the industrial domain, and services. Accreo targets mostly large multinational companies to which it will offer integrated services. “We wish to develop Romania into a regional business hub, but we are only at the beginning now,” said Laurentiu Dinu, general manager of Accreo Romania. By the end of the year, Romania should attract European funds of around EUR 400 million, but this depends on identifying “opportunities on the market and knowing how the mechanisms work,” said Michal Gwizda, partner at Accreo Poland. Some of the fields where Romania has potential to evolve through the use of European funds are renewable energy – solar energy, wind energy and hydro energy, research & de-
Austrian Airlines reports EUR 207 million local revenue for the first 8 months
Jose-Luis Gilabert, Austrian Airlines GM for Romania & Moldova
After seeing its revenue slashed by 31 percent in 2009 compared to the EUR 416 posted in 2008, JoseLuis Gilabert, Austrian Airlines GM for Romania & Moldova, told BR that the carrier is on its way back to recovery after registering a 7 percent growth in revenues and an 11 percent increase in the number of
passengers in the first eight months of the year. “So far in 2010 the business is definitely recovering although certainly not to the level we registered in 2008. But we aim to return to that level,” Gilabert said. Consumer behavior has changed as companies’ travel polices have become more restrictive, forcing air carriers to reduce prices. This was also the strategy applied by the Austrian Airlines. “People are traveling more but for less money,” said the GM, adding that Romania remained a key market for Austrian Airlines. Referring to the merger with Lufthansa, Gilabert said that this would offer more flexible services and increase connectivity. “In Romania we have what we call a parallel market. Two GMs, Stefan Versemann for Lufthansa and myself of Austrian Airlines. Each GM has his own team,” he explained. Simona Bazavan
BUSINESS REVIEW / October 4 - 10, 2010
NEWS / TAX&LAW
The current Romanian Labor Code – is it really designed to help employees? TAX&LAW By Daniela Petre Senior Associate, Banu, Raclaru si Nasta SCA
It is stated that the current Labor Code is rather on the employee’s side. Why is that? When profits reduction or accounting losses of a company call for personnel rearrangements or adjustment of wage payments, the employer can only act within the limits of labor law, dominated by the current Labor Code. Regulations contained in the current Labor Code are designated to restrict as much as possible the employers’ abuses. In the case of dismissals for reasons not pertaining to the employee’s person, the incomplete regulations on the one hand and the judicial practice on the other hand made employers’ steps towards business restructuring difficult. Indeed, the fact that the Labor Code does not mention the reasons which are not pertaining to the employees’ person leading to dismissal, on the one hand leaves room for abuse from employers, and on the other hand makes such dismissal of an employee nearly impossible. In our opinion, mainly, what favors the employee in this case is the imposed excessive formalism when we deal with dismissals for reasons which are not pertaining to the employees’ person. Thus, the manner of drafting the management bodies’ decisions, the financial and economic justifications, and the BUSINESS REVIEW / October 4 - 10, 2010
dismissal notifications raises problems for employers. Moreover, providing available positions or requesting support from the National Employment Agency (NAE) are most of the time ignored or considered unnecessary for individual dismissals. The poor drafting of dismissal documentation results inevitably in the annulment of the decision of dismissal by the court of law and the reintegration of the dismissed employee. Often even the NAE’s position, who claims that in case of individual dismissals its intervention is unnecessary for the reinstatement of the dismissed employee, creates major confusion and leads to the punishment of the employer who acted in good faith. In the case of disciplinary dismissals, the employee is protected by an abusive dismissal. Thus, guaranteeing i) the employee’s right to defense and ii) the provision of preliminary disciplinary inquiry and iii) the provision of graduated sanctions system and the necessity of proportionality between offense and punishment, cannot be interpreted as favoring the employee or encouragement of violation of labor discipline. It simply respects the employee’s right to work and fair treatment. In cases when the employee is professionally unfit however, one can speak of an excessive protection of the employee, to the detriment of the
employer, when, due to a mistake or lack of personnel selection techniques, people who do not meet job requirements are hired. Here indeed the Labor Code needs to be amended. Procedures required by the Collective Labor Agreement at national level are difficult and, in our opinion, ambiguous. It is necessary to establish an easier procedure for professional unsuitability, as it is unacceptable to oblige a trader to maintain an employee who does not have the training or professional experience to perform in that position. Nevertheless, the employer’s fault in selecting the personnel should also not be neglected. All the present gaps and ambiguities of the Labor Code make it necessary to amend its provisions. Listing a series of solid reasons that lead to dismissals for reasons not pertaining to employees’ person are very appreciated, but we consider that proposals to leave such reasons to the discretion of the employer without any constraint to justify their options is abusive and therefore cannot be taken into consideration. Regarding the dismissal for professional unsuitability the legislator’s intervention is necessary, by establishing a fair procedure to allow employers to select their best employees and to dismiss all unfit ones. Such a procedure would not restrict the right to work but it would inflict responsibility on the labor market. Thus a longer trial period could be a solution.
WineRo toasts EUR 2.5 million investment in Romanian market It’s easy to make money from wine, say the French with irony, but only after you spend 50 years making good wine, because then comes profit. Ghenadie Bobeica, shareholder at WineRo, the firm behind the creation of a new Romanian wine, Alira, sees the recovery of the initial EUR 2.5 million investment (solely in the vineyard) taking place after then, in this case, too. “However, from a more optimistic perspective, profitability will arrive seven years from now,” adds Bobeica. The markets that the new brand will target, besides Romania, will be the same as EniRa, the Bulgarian label that WineRo distributes in Romania (as they are part of the same group, Bessa Valley). Some 80 percent of production will go on the local market and 20 percent abroad, to France, Luxemburg, Great Britain, Germany, Switzerland, the Czech Republic, China, South Korea, Taiwan and Japan. The new label will be launched in November, retailing at around RON 4042. This year’s limited production of 45,000 bottles will also be available through HoReCa. “After the launch, we will have a product in the super-premium segment, through its quality, but for a price typical of starter premium products,” says oenologist Marc Dworkin of the Merlot wine that he created. Bobeica wants to take the wine investment further, to tourism, uncharted territory in the Aliman area. “We want to transform the wine cellar, which will be finished by September 2011, into a tourist attraction. It will be located in Rasova, 12 km from the Bucharest-Constanta highway. Apart from this, we will also develop an accommodation project, as we want to turn the Cernavoda-Ion Corvin (e.n., both part of Constanta county) area into a landmark. There have been similar previous efforts, but ours will be the first one to be carried out fully,” adds Bobeica. WineRo was founded in 2006 by Dr. Karl-Heinz Hauptmann (co-founder of ECM in the Czech Republic and former manager of Merrill Lynch London) and has its headquarters in Bucharest. The foundations for the first Romanian vineyard, with a total area of 80 hectares, were laid in Aliman, in Constanta county. The total value of the project is EUR 4.7 million, of which EUR 2 million constitutes non-reimbursable financing, and EUR 2.7 million co-financing for the wine cellar’s construction. Corina Dumitrescu 7
WHO’S NEWS / CALENDAR
NEWS
WHO’S BOGDAN SPETEANU is the new general director of BCR Leasing. He is also currently a member of the board of directors of BCR Chisinau. Speteanu is taking over from Thomas Tolazzi whose term ends on October 1. Prior to joining the company, Speteanu worked as program director for Erste Group in Vienna. He is a graduate of the Executive MBA Asebuss at the RomanianAmerican Business School and one of the three Romanian graduates of the Erste Group Top Management Development Program NICOLAE VIOREL DINU returns to Musat & Asociatii as partner after five years as managing counsel at Salans-Moore & Associates. Dinu started his career at Musat & Asociatii in 1996, being involved in numerous privatisations and investment projects, as well as in civil and commercial litigation. He has an LLM degree from the George Washington University Law School and entered the New York State Bar in 2004 OCTAVIAN POPESCU has been promoted to partner after six years with Musat & Asociatii. He has in-depth expertise
in white-collar crime, fraud, economic espionage, financial and cybercrimes, by conducting complex cases in these areas. Further areas of expertise include insolvency & restructuring and labor litigation.
EVENTS, BUSINESS AND POLITICAL AGENDA OCTOBER 2 é The second Chapitre, the festive induction of new members of the Bail-
liage de Roumanie of the gastronomic brotherhood Chaine des Rotisseurs, will take place in the Athenee Palace Hilton Hotel in Bucharest. By invitation only.
OCTOBER 5 é 09:30 Mediafax and the National Bank of Romania organize the Roma-
nia Financial Forum. By invitation only. é 10:00 Coltuc law firm organizes a discussion with and about clients
dissatisfied with local banks at Golden Tulip Times. By invitation only. é 10:45 MIC.RO organizes a press conference to announce its financial
MAGDA GRADINARU joins More than Pub as PR coordinator. A former journalist, she has worked as an editor both in television and at a news agency for the past six years. Gradinaru has extensive experience in the social and cultural field. She graduated in philosophy and later on in communication and PR with a major in political communication. CALIN BUZEA, 33, is the new managing director of MRM Worldwide Romania, the digital marketing agency of McCann Erickson Romania. He previously worked for the agency between 2004 and 2006. Buzea has also worked for Mediafax Romania as business director. He graduated in finance and holds a master’s degree, also in finance.
results. By invitation only. é 11:00 Lufkin organizes a press conference at Athenee Palace Hilton to
discuss its investment project for Romania. By invitation only.
OCTOBER 6 é 18:30 Centrul Medical Unirea (CMU) opens a pediatrics hospital in the
Dorobanti area. By invitation only.
OCTOBER 14 é The 2010 edition of the National Conference on HR takes place at Rin
Grand Hotel. By invitation only.
OCTOBER 15 é TEDxBucharest2010 takes place in Bucharest. Attendance is by admis-
sion process only.
Car sales down 26.5 percent in first eight months
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
STOCKEXCHANGE
The budgetary targets is 5.9 percent of GDP
The Finance Ministry has given the green light for a RON 1 billion auction to sell treasury cer8
tificates with a one year expiration date. This is part of the ministry’s plan made public this month, according to which the Romanian institution will attract RON 4.6 billion from banks, through six issues of treasury certificates and state bonds. Since the beginning of the year the ministry has contracted some RON 25 billion on the local market. The Romanian authorities have set an initial budgetary target of 5.9 percent of the GDP for the end of the year, but the target was increased to 6.8 percent.
COURTESY OF DACIA
Finance Ministry approves RON 1 billion treasury certificates auction
Who will buy? Car sales have moved down a gear, slumping over a quarter this year
Local car sales fell 26.5 percent in the first eight months of the year compared to the same period of last year, from 103,592 to 76,131 units, according to data from the Association of Car Producers and Importers. In August 7,053 units were sold, 15.4 percent down on July, while the first eight months of the year
saw 68,341 cars sold, 26 percent fewer than in the same period of 2009. The best sold car make is Dacia, with 1,836 units, followed by Volkswagen with 737, Renault with 612 and Opel on 549. Dacia is also the best sold brand since the beginning of the year with 22,451 units, followed by Renault with 5,614, Ford on 5,584 and Volkswagen with 5,552. Car production declined in August by 97.8 percent to 823 units, but went up 25 percent in the first eight months of the year to 220,479 units. Exports went down in August by 93 percent to 2,116 units while between January and July they rose 30 percent to 196,639 cars. In August Dacia’s car plant in Mioveni was in technical revision. Car imports dropped in August by 6.5 percent to 5,968 units, while in the first eight months the figure declined by 28.6 percent to 52,003 cars. BUSINESS REVIEW / October 4 - 10, 2010
ENTREPRENEUR
In perfect Harmony with design After many years of working as an employee, Elena Suciu decided to set up her own business in 2008. She is aiming to increase her brand portfolio and to continue to be positioned as a premium-luxury player on the Romanian interior and exterior design market. COURTESY OF HARMONY DESIGN
Anca Ionescu Elena Suciu, managing partner of Harmony Design, took her first steps in the corporate world back in 2008, when she decided to set up her own business. She graduated from the Economics Faculty, where accounting was her passion. She had worked since she was a student as an accountant at Navrom, a marine company in Constanta. After four years there, she became financial director for some small importexport firms in Constanta and also for Crewing “Bright Balkan”. But in 2001 she changed career paths and became reporting manager for Diageo, a multinational company specialized in alcoholic spirits and the owner of the Johnnie Walker, Smirnoff and Baileys premium brands. “The next step up in my career was in 2004 when I got the ‘international assignment’ contract for Diageo. It allowed me to become coordinator of internal auditing at Diageo’s branch in Beirut, Lebanon, indefinitely,” remembers Suciu. But after one year in Lebanon she decided to come back to Romania because of the political uncertainty and armed conflict. After that she was appointed interim HR manager of Sollers Distribution, the exclusive distributor of Diageo in Romania. “In that position I had to impleBUSINESS REVIEW / October 4 - 10, 2010
ment a professional evaluation program in addition to a training and career planning program according to the Diageo business model,” says Suciu. After its implementation she decided to shift her attention to a very risky business area, accepting the position of logistics manager at Sollers Distribution. But 2008 was a tipping point for her career. “At that time some of my friends from Belgium, owners of Namgrass – a firm specialized in artificial grass – asked me to help them to participate in an exhibition in Romania, at Romexpo. Having no other option, I had to organize their participation in the trade fair,” remembers the entrepreneur. Soon afterwards she decided to obtain the exclusive rights for Romania to distribute the Namgrass brand. “That was the moment when I passed from manager status to entrepreneurship,” says the managing partner of Harmony Design. Speaking about her current business, Suciu says that her previous professional experience helped her to understand it in its whole complexity and to identify the opportu-
nity to build her own enterprise in 2008. “It was very useful for my business that I had had to lead a wide range of departments such as financial, human resources and logistics during my professional career,” notes Suciu. She says that the first product she launched on the local market was ornamental artificial grass. “It was easy for me to identify the needs of the interior arrangement local market, where there is still plenty of room for versatile products such as artificial grass and high quality outdoor furniture.” One year after launching the Namgrass brand in Romania she made another great leap forward: she set up Harmony Design in 2009. Today, the company has a portfolio that includes only luxury products – international brands for outdoor furniture and accessories issued by great design houses from Europe. She decided to set up Harmony Design for a simple reason: she was very attracted by the design concept. “My hobby of interior and exterior design was transformed into a real business. The latest trends indi-
cate exterior design as being on top; there are plenty of design ideas and communication mediums offer us new illustrations, while international exhibitions show us new trends in exterior design and up-to-the minute technologies,” says Suciu. “I am sure that our knowledge of exterior design gets richer with each trip abroad we make. There is still plenty of space on the Romanian market for many other exterior design products.” She adds that both furniture and accessories for outside that she has brought on the local market address the premium-luxury segment and represent the key to optimizing the small exterior space people have available. “Both from a visual and usability perspective, my products help customers in their initiative to plan and create a ‘contemporary-urban’ style for their space,” says Suciu. As for the most difficult time her business has faced, the entrepreneur says it was the fight to keep her company profitable. If she started another firm she wouldn’t change anything. “I would probably make the current crisis disappear,” she jokes. Suciu adds that to realize the needs of the targeted market, understand the behavior of your customers and educate the public are some of the biggest challenges her business is facing at the moment. According to Suciu her products differentiate her company from the crowd. “Our competition came from the diversification of the packages of services not from the product area. Plus, Harmony Design is the only company that exclusively markets furniture and accessories for outdoors,” says Suciu.As for the future, she intends to improve her portfolio of brands on the outdoor design market segment.
Harmony Design é Number of employees: 5 é The initial investment: EUR
100,000 é Total investment: EUR 500,000 é Turnover 2008: EUR 50,000 é Turnover 2009: EUR 87,000 é Turnover 2010: EUR 115,000 9
INTERVIEW
Tarom: winging its way to blue skies At the controls of state-owned airline Tarom for more than one and a half years now is young general manager RUXANDRA BRUTARU, who opens up to Business Review about the carrier’s strategy during the recession. Tarom has just launched its first ever promotional campaign COURTESY OF TAROM
in an attempt to project a modern image in the minds of passengers. Otilia Haraga Do you have a background in aviation? If not, what was your career path? I was appointed GM of Tarom on December 28, 2008. But I have been working for the airline since October 2007, when I started as deputy GM. I could talk endlessly about the reasons why I’m in this industry. Aviation is a drug and only those who love this domain passionately and respect its discipline can withstand a lifetime in an extremely competitive environment. I am the daughter of a pilot and this certainly made its mark on me from a very early age. I wanted to be both a flight attendant and a pilot, but my father guided me towards a profession on the ground. As a mother, I must admit that it is difficult to reconcile work and home as it is; I think it would have been much more complicated working at a height. What have been your biggest challenges so far as GM of Tarom? There are many difficulties. Unfortunately most have been due to prejudice. The fact that I am a young woman is definitely something people in our society find hard to accept. The real problems I have been confronted with were related to my lack of experience in the public sector, as even now I have not learned the necessary patience for this slow system. There are many frustrating moments when you see the competition and the mar10
High flyer: aviation runs in the family for Ruxandra Brutaru, general manager of Tarom
ket going in a specific direction at a fast rate and you find it impossible to act. There is no clear company culture, and although the employees are remunerated at a level that is acceptable on the Romanian market, there are few who love the airline and identify with it; for most it is just a workplace. This saddens me, because this is how the airline could be rehabilitated. What turnover do you estimate Tarom will have this year? When I became GM, Tarom was already in dire straits. Its market share had declined to 19.5 percent, and the occupancy rate in Q1, 2009, was just 45 percent. This was at a time when five aircraft had entered our fleet and the economic crisis was worsening. 2009 was a difficult year both for Tarom and the whole aviation industry. This is why Tarom mainly focused on increasing market share, number of passengers and occupancy. We estimate we will end 2010 with a growth in the above-mentioned indicators. We foresee average occupancy of 62 percent (in July-September it was on average 70 percent), approximately 2.1 million passengers and a market share of 23 percent. Unfortunately, not all news is good news. Though overall revenues will surpass revenues in 2009, the market is still in a difficult position, which is being felt generally as a result of the decline in purchasing power. In this
context, Tarom estimates a turnover of approximately USD 390 million. What caused the losses the company posted last year? The RON 238 million (approximately USD 81 million, calculated at the average USD value in 2009) of losses were due to the economic situation in the market. The beginning of the year was critical because the number of passengers plummeted. I took over the company in December 2008 and in the first three months of 2009 we saw a sharp decrease in the number of passengers. This also overlapped with a disappearance of passengers in business class; many corporations changed their strategy. While Tarom had a generous share of business passengers, in a very short time they chose to change or renegotiate contracts and transferred clients from business to economy class. Tariffs in economy class were renegotiated and also went down. Our main focus last year was to recover after this shock. In 2008, Tarom purchased and rented aircraft. We rented three planes, two of which came at the end of 2008 and one at the beginning of 2009. Another two Airbus A310 aircraft were put back into use. In 2003 when the airline had huge losses they had been taken out of circulation, and this helped to re-balance the company’s situation. Now they were re-intro-
duced for technical reasons at an inauspicious time. While in 2006 and 2007 there was unprecedented economic growth in Romania and the number of airline passengers surged by 20-30 percent – which is atypical in this industry, we grow 5 percent a year and consider ourselves lucky – we suddenly had a great deal of capacity and few passengers. Not only were they few, but they wanted to pay less and less. It was a shock at the level of the market in terms of the average revenues posted by airlines. Also, last year was the most painful for the modern aviation industry internationally. This year, we intend to regain balance in the expenditure sector – which I think we managed to do. Unfortunately, we have faced external risks – the price of oil just kept on growing and our bill is getting higher and higher – in the first seven months alone we paid in excess of USD 20 million more than last year. The oil bill represents a third of the total expenses. What are the other main expenses of an airline? They are split into personnel, fuel and operational expenses. This year we have focused on re-gaining a balance since we have seen the market is not willing to pay and it is not a good policy to sell expensive tickets when passengers do not have money. So we chose to cut expenses as much as possible: we cut the cost per passenger by 12 percent, which is a very good target. Unfortunately, passengers are still in a difficult financial situation and we have not managed to fulfill what we were aiming for. We hope we will close the year better than last year. We continue to be exposed to the price of oil and currency exchange rate. We cash in EUR because our tickets sell in EUR, but we pay the bills in USD. The oil, the insurance of the aircraft, the installments, everything is in USD so that’s the influence of the currency exchange rate. With the exception of the Middle East market (where tariffs are in USD), which still represents a small part of Tarom’s revenues, the rest of the money we cash is in EUR. Do you expect losses this year? It is hard to say since the currency exchange rate and the price of petrol have oscillated significantly. We hope BUSINESS REVIEW / October 4 - 10, 2010
INTERVIEW the losses this year are lower than last year. We are putting pressure on increasing revenues. We are trying to see how we ended the summer; so far we only have the report for the first seven months. I think we will have a better image at the end of October. We have cut all expenses as much we could. Next year we will try to budget these risks better and buy products that will help us have more control so that we will not be so volatile. We have renegotiated very many contracts and opened public auctions for products in the technical area. With some technical contracts, we’ve had 40 percent decreases. For example we will organize a new public auction for the maintenance of engines where we hope we will also get a discount. We have renegotiated the pool contract – it is a contract for spare parts at international level – where we obtained an important difference of more than 20 percent. We have renegotiated with catering suppliers and modified the catering concept. So we’ve tried to get the best prices in each area, which is very complicated as there are a great number of contracts. We have focused on the priorities. There are also sectors where we
BUSINESS REVIEW / October 4 - 10, 2010
cannot do anything. For instance, a major part of our bill is represented by air space. These flight taxes are very high and they are established at the level of the European Commission, so I cannot intervene and negotiate. I was looking at some IATA reports for last year, which proved that, although losses at the level of the entire industry were huge, in total the bill of airlines for air space, take-off and landing services, etc, increased by 16 percent. Airlines are at the end of the chain, but our negotiation margin with our suppliers is rather slim, because in nearly all cases there is a monopoly. There are few destinations in which you can afford to choose between airport A and B. We are struggling to obtain access to the airport in most cases, not to mention arguing with the EC for discounts. It is an industry which has reached maturity and certain processes need to be re-invented in order to cut more expenses. Have you considered opening a low-cost division with more affordable fares? We did analyze this. But we are a very small company in comparison with international ones. As small as
we are, we are competing against giants which have hundreds of planes. We only have 26 aircraft and we are competing shoulder to shoulder with British Airways, Air France, Lufthansa… If these players find it very hard to open a low-cost division – by all accounts, more than 95 percent of them have failed, with huge losses – it is even harder for a small state-owned firm which is more rigid than a private company to do so. How are revenues split across the markets where Tarom has activities? Our activity is split in several areas. First is the European market, which represents the bulk of our revenues from external markets. It is followed by the Middle East and the regional emerging market. Revenues from the domestic market represent approximately 20- 25 percent, while the rest come from the external market. Nearly 58-60 percent of our passengers travel for business purposes, while the rest travel for leisure and VFR (visiting friends and relatives). How much of its fleet does Tarom own, and how much is rented? The Tarom fleet is divided among ATR, Airbus and Boeing planes.
Tarom owns all the equipment, with the exception of three Boeing 738-800 New Generations, which are rented from specialized companies, banks and airlines. There is a specialized market for such things. One of them comes from Babcock&Brown. The other two are rented from an airline, Air Berlin, but the initial owner was a bank, the Royal Bank of Scotland. How much does the company pay to rent an aircraft? The rent depends on the year of production, as with cars. The aircraft we rented were brand new; they had just been released from the plant. What I can tell you is that the average value of an aircraft that is two-three years old should be somewhere between USD 320,000- 340,000 a month. How many employees work for Tarom now? We have 2,329 employees. There are in excess of 600 people working in the flight operations sector, around 700 working in the technical sector, more than 200 in ground operations. The remaining staff works in the marketing, financial and other auxiliary sectors.
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FRENCH INVESTMENT REVIEW
French firms keep sang-froid despite no vie en rose French companies active in Romania are not exactly experiencing an economic belle époque with the recession slashing profits and terminating or postponing many investment plans. However investors say that they are here to stay, as LAURENTIU OBAE
business opportunities haven’t run dry. So far, French investments in
Towering ambition: French firms are still pinning their hopes on the local market despite the crisis
Romania are estimated to have reached approximately EUR 7 billion. Almost EUR 600 million was spent last year alone, making France the fifth largest investor in the country. Simona Bazavan About 100 new French firms have decided to take a chance in Romania and started a business locally in the past two years, according to Daniela Apolozan, executive director of the Chambre Francaise de Commerce, d'Industrie et d'Agriculture en Roumanie (CCIFER). However the economic crisis has taken its toll; 2010 saw a 30 percent decrease in the number of French companies prospecting the local economy, says Apolozan. Big players such as BRD-Groupe Societe Generale, Orange, Carrefour and Lafarge, to name but a few, already have deep roots in Romania. Newcomers such as Bongrain and Axa have pledged future expansion and others are expected to join them. “Not only do French companies have no intention of leaving Romania, but there are 50 more considering investing here,” said Bruno Roche, president of CCIFER. Guy Poupet, chairman and CEO, of BRD-Groupe Societe Generale, feels the same way. “Romania still is a country with a high potential for foreign investors. The businesses of the big international groups that came here – be BUSINESS REVIEW / October 4 - 10, 2010
it in the banking sector, the automotive industry or in retail – have seen a high development rhythm. In fact, there hasn’t been any exit from Romania. Even though the country is going through a difficult time, in the long run I think that Romania still has all its advantages for foreign investors,” he added. ICAP statistics show that there were 3,155 “active” French companies registered in Romania at the end of August 2010, more than 10 percent with direct French shareholding. In December 2009, these firms accounted for a EUR 13.4 billion turnover compared to EUR 11.8 billion in December 2008, and 111,161 employees. Out of the total number of French businesses active locally, 119 reported a final 2009 turnover above EUR 10 million. According to ICAP, in December 2009, out of the firms which declared financial data, 1,063 (44.70 percent) recorded a profit and 1,315 (55.30 percent) a loss.
NOBLESSE OBLIGE… WHEN IT COMES TO MONEY Back in 1999, Societe Generale bought BRD, which was at that time state-owned, since when it has invested nearly EUR 800 million. “In 1999, net profit was EUR 21.2 million, whereas by 2009 it had risen more than 10 fold, to EUR 269.6 million,” said Poupet. The bank’s number of employees has doubled from 4,500 to 9,000 over the same period. In 2010, the lender plans to concentrate on risk management. ”In this context, the main objective in 2010 is to maintain our profitability in the conditions of a very low demand for banking
services. On the commercial side, it is important to continue launching new products and services with a strong innovative dimension, and to adapt existing products to market changes,” added the CEO. In the first semester, BRD registered a RON 367 million (EUR 88.6 million) net profit, down 13.7 percent on the same period of last year. The lender's provisions surged by about 54 percent, reaching RON 628 million (EUR 151 million). At the end of June BRD had 2.5 million customers and managed assets worth EUR 11.1 billion, 2 percent down on H1 2009. "The bank's activity is affected by the lingering economic crisis which translates into a low demand for banking products and therefore into high risk costs. BRD’s efficiency was sustained by internal cost control measures which have led a to a very good cost/income ratio,” said Poupet at that time. At the end of 2009, Groupama Asigurari was the third biggest player on the local insurance market in terms of market share. After three years of mergers and acquisitions estimated at EUR 500 million, the Groupama brand was officially launched last September. The company is the result of a merger between BT Asigurari and Asiban and the takeover of OTP Garancia. The premium income of the Romanian subsidiary of Groupama and OTP Garancia Asigurari was down 9 percent, falling to EUR 96 million in the first half of the year. “Property and casualty insurance fell by 7.6 percent over the period, largely due to the decline in the motor segment related to the continued drop in
vehicle sales and strong competition in pricing between market players. The difficult economic climate meant there were fewer personal loans (the primary life and health insurance market in Romania), which negatively impacted life and health insurance premium income (down by 22.1 percent),” reads the company’s report for the first semester. Worldwide, the company has 16 million customers and over 38.500 employees. The group has extended its operations mainly to emerging and fast growing markets, such as Hungary, Romania, Bulgaria, Turkey and Slovakia. After the buyout of the minority interests of its Hungarian, Czech and Polish subsidiaries held by the EBRD in December 2009, French insurance giant AXA bought local Omniasig from Vienna Insurance, turning it into AXA Life Insurance. The Romanian market, with its low life insurance penetration rate compared to the rest of the European Union, offers AXA significant growth potential, the company believes. The French insurer has recently invested approximately EUR 3.7 in its local subsidiary through a capital increase. In 2009, Omniasig reported a EUR 3.4 million loss. The total revenues of mobile phone operator Orange Romania, whose main shareholder is France Telecom, sank 7.4 percent in Q2, 2010, from the second quarter of last year, to EUR 247 million. Compared to the first quarter of this year, when Orange Romania posted EUR 237 million, company revenues were 4.2 percent higher in the second quarter of 2010. “In Europe, the quarterly trend in Romania gradually improved (-7.4 percent in the second quarter, after -10.1 percent in the first quarter of 2010,” said a France Telecom press release. “According to our estimations, the market value of our company increased as a result of the evolution of the ARPU and of the database of clients with subscriptions. Even though the prepay base has decreased as a result of the deterioration of economic conditions, we estimate that on this segment, the value remained stable,” said Thierry Millet, CEO of Orange Romania. On June 30, 2010, Orange Romania had 10,471,000 customers, which represents a 1 percent growth compared to the same period last year. On the segment of mobile data, Orange obtained a 29 percent growth in revenues in the second quarter of the year compared to Q1, 13
FRENCH INVESTMENT REVIEW 2010. The mobile operator posted EUR 1.055 billion in revenues last year, down 19.5 percent from the previous year, in spite of further expanding its customer base, according to data from France Telecom.
INDUSTRY SISTANCE
IS THE PIECE DE RE-
In the ten years since Renault came to Romania it has invested EUR 1.5 billion, according to its data, and employs 18,000 Romanians. Since opening the Renault Technologie Roumanie (RTR) technical center in Titu, the French carmaker has in Romania everything from design and test centers, to the production of components, cars and sales centers for all three brands of the Renault Nissan alliance. Renault invested EUR 166 million in the Titu center with some 25 percent of the total investment, about EUR 44 million, being provided by the European Bank for Reconstruction and Development (EBRD). The center covers 350 hectares and is formed of 100 testing spaces, for vehicles and components. By the end of the year, the center will have a team of 300 employees. The first tests on tracks are scheduled for October this year.
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This September, Renault Romania also opened a new spare car parts center in Oarja, 20 km from Pitesti. According to representatives of the carmaker, the investment in equipment for the center is EUR 3.5 million, with the remaining sum the property investment made with partners. The center has a total surface of 65,000 sqm and supplies parts for the Renault, Nissan, and Dacia brands on both the local and international market. “The new center will improve the after-sale services of Renault group, ensuring the availability and delivery of original car parts in the shortest times,” said Jacques Daniel, after-sale manager with Renault Group. The carmaker recently announced that Dacia’s worldwide sales had risen by 12.1 percent in the first eight months of 2010, to 221,092 units, giving it a 0.6 percent share of the market. By August 2010, Reanault had sold almost 30,000 Dusters, the SUV it launched this April. Orders have been placed worldwide for a further 64,000 Dusters. This June, Lafarge Ciment announced a EUR 1 million investment in a new ash storage, loading and transport system at Electrocentrale Isalnita, a subsidiary of SC Complexul Energetic Craiova. The system was installed on the
already existing ash silo which has been completely rehabilitated. “We plan to grow the segment of our operations that generates products with a low carbon footprint, as climate change and CO2 levels are a constant concern for a responsible company such as Lafarge. A high technological integration of alternative fuels and materials is a priority for all our cement factories,” said Sorin Bogdan, industrial manager of Lafarge Ciment Romania. This latest investment is tipped to reduce the amount of ash dumped by CET Isalnita and allow Lafarge to produce more environmentally-friendly cements. According to Lafarge representatives, the outlay is part of the company’s EUR 90 million investment plan for 2006-2011. In the next two years the cement producer is planning other such projects so that the investment target is reached. Glass producer Saint-Gobain announced this May plans to invest another EUR 6 million in an industrial production line for laminated safety glass at its existing facility in Calarasi. While preparatory work has already begun on the site, the main construction will begin in the second half of this year and the unit will be commissioned around the middle of 2011.
“Our Romanian production platform was meant from the very beginning to have a regional approach, supplying markets throughout the Balkans and beyond. From our perspective, the growth potential of Romania and the surrounding markets remains intact despite the current economic difficulties. It therefore makes business sense to add new capabilities and to continually expand our locally-manufactured product range. This is part of the long-term commitment we made to Romania and regional markets,” said Ovidiu Pascutiu, general manager of Saint-Gobain Glass Romania. The new investment is the third in a series, coming soon after an initial over EUR 100 million investment in a float glass plant, commissioned in 2007, and a EUR 30 million coating line, which was opened for business in 2008, making Saint-Gobain Glass one of the biggest greenfield investors in Romania. All three production lines are located within the company’s industrial site in Calarasi. The upcoming laminated safety glass production line, like the coating line, will be unique in the region, and have an annual output of about 2 million sqm. continued on page 16
BUSINESS REVIEW / October 4 - 10, 2010
FRENCH INVESTMENT REVIEW
Road to more investments is paved with good infrastructure Many major French companies have already started a business in Romania and in future SMEs from healthcare, IT&C, energy, the environment and agriculture are expected to join them. But future investments depend a lot on the authorities’ capacity to modernize and further develop the country’s infrastructure, Bruno Roche, president of Chambre Francaise de Commerce, d'Industrie et d'Agriculture en Roumanie (CCIFER), told BR.
COURTESY OF CCIFER
Simona Bazavan Is Romania still an attractive destination for French investors or is it beginning to lose ground in favor of other countries in the region? In the first semester of 2010, France was among the top foreign investors and commercial partners to Romania. In the past two years the CCIFER has been consulted by about 100 French companies interested in doing business in Romania. Because of the advantage of its strategic geographical position, which allows it to act as a link between Eastern and Western countries, Romania remains an attractive destination for French investors. However, if the country doesn’t do more to develop its infrastructure, it could lose out to neighboring countries. In the past two years, despite the economic crisis, no important French company has left Romania. Since January 2009, about 400 new firms with French shareholding have been created. How much did French-owned companies invest locally last year and how does this compare to previous year? What are the estimations for 2010? Official statistics show that France ranks fifth among the top foreign investors to Romania with approximately BUSINESS REVIEW / October 4 - 10, 2010
EUR 3.9 billion invested so far and EUR 591 million in 2009. According to data from the French Embassy to Bucharest, which includes updates of investments as well as the origin of the companies rather that of the capital, France is the third biggest investor in the country with EUR 7 billion invested so far. Between 1999 and 2009 French FDI increased nine fold. Currently there are 6,000 companies with French shareholding registered by the National Trade Register Office (ONRC). What do you estimate to be the value of French exports to Romania and Romanian exports to France in 2010? France is currently Romania’s third main commercial partner with exports to Romania amounting to EUR 1.43 billion and imports reaching EUR 1.23 billion in the first six months of 2010 What were the most important French investments in 2009 and what local industries have the potential to attract French investments in the future? In 2009 French companies which are already present in Romania (Renault-Dacia, Orange, Lafarge, Michelin, Alcatel, Bouygues, Danone, Alstom, Veolia, Accor, Carrefour, Cora, BRD-Société Générale, BNP-Paribas, Colas, GDF Suez) reconfirmed their interset in developing their business here. At the same time, new industrial groups and small and medium companies have shown interest in developing investment projects and industrial partnerships with a strong potential to develop economic relations. In recent months the latest newcomers have been Bongrain, which acquired the majority stake of Delaco, and AXA through the takeover of Omniasig. Major French groups are present in all the important local industries: automotive, telecommunications, aeronautics, constructions, banking, services and IT. continued on page 16 15
FRENCH INVESTMENT REVIEW continued from page 14
RETAILERS SLOW DOWN EXPANSION PLANS BUT KEEP BON APPETIT This August French retailer Carrefour opened its 23rd local hypermarket in Drobeta Turnu Severin, Mehedinti County. The new outlet is 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. Carrefour established its first supermarket in Bucharest in April. The firm’s sales in Romania in Q1 of 2010 amounted to EUR 269 million, a 3.5 percent rise on a likefor-like basis due to the expansion of sales space. Carrefour employs over 495,000 people in Romania, and runs 23 hypermarkets and 26 supermarkets. Cora has adopted a similar strategy to Carrefour, choosing to invest in smaller stores. The retailer has announced plans to open two 4,500-sqm hypermarkets in Baia Mare and Constanta in the last quarter of the year following an investment of EUR 5 million per
continued from page 15 What are the main incentives for French investors in Romania, and what has changed in this respect in recent years? The country’s main advantages remain its EU membership, cultural and geographical proximity and a well qualified and competitive workforce. These advantages have evolved and especially diversified over the years. EU membership has allowed Romania to win credibility on the long term. If a few years ago investors were attracted by the emergence of the local consumer market in the future investments will be driven by more value-adding arguments: the professional qualifications of the local workforce, economic dynamics, maturing of the local market, and growth and development potential of certain fields like technology, energy, the environment and services. From your contact with French companies, what are the main setbacks of the local business environment and what should the Romanian 16
store. So far there are four Cora hypermarkets locally, owned by Romania Hypermarche, the local subsidiary of the Louis Delhaize group. Earlier this summer Bongrain Europe completed its acquisition of a 52 percent stake in Delaco, one of Romania's leading players on the cheese market. The closing of the transaction took place on July 27, following clearance from the Romanian Competition Council. The selling shareholders will continue to be actively involved in the company’s further development and also retain the management of the company, with Tudor Comaniciu acting as CEO. “Delaco and Bongrain will combine their respective resources and expertise to offer a large portfolio of high-quality cheese products to Romanian consumers,” said Comaniciu. Bongrain was started in France in the mid-50s and had a 2009 turnover of EUR 3.3 billion with 17,076 employees worldwide. Delaco was set up in 1996, and since 2000 has focused on the cheese products segment and become one of Romania's leading market players.
authorities do to help foreign investors? For French companies – and others – to invest in Romania it is vital the country solves the issue of its road and railway infrastructure. Romania must develop its infrastructure otherwise it will be avoided. It is absolutely necessary to build highways and to entirely modernize the railway system. This is vital for transport between Eastern and Western Europe. Developing public private partnerships would be extremely useful for further developing large scale projects. To what extent do you expect an increase in French investment projects in Romania? Can you give any names or mention industries where they might be coming from? French companies that are currently interested in the local market come from the medical, energy and environmental fields as well as IT&C, agriculture and services. Major French firms are already here and on the short term we are expecting small and medium companies from the above mentioned fields. BUSINESS REVIEW / October 4 - 10, 2010
PROPERTY Somaco reports 37 percent Panasonic increase in BCA sales in 2010
AGERPRES
Somaco is owned by investment fund Oresa Ventures
Somaco Grup Prefabricate has announced a 37 percent increase in its BCA sales in the first nine months of the year, compared to the same period of last year when it sold 144,400 cubic meters. The growth was registered at a time when production numbers on the BCA market dropped. “We managed to post this growth in BCA sales because of the territorial expansion of sales in Transylvania, ex-
panding the offer […] and winning a major contract in August where we delivered 16,764 cubic meters of BCA to the National Housing Association,” said Gabriel Colobatiu, general manager of Somaco Group Prefabricate. This year, Somaco expects a 10 percent increase in the volume of BCA sales. The firm owns in Adjud the largest BCA plant in Moldova, with a production capacity of 300,000 cubic meters. Between September 2008 and May 2010 it invested over EUR 1 million in modernizing, upgrading and expanding production at its Adjud factory. The company has a medium-term investment budget of EUR 8-10 million and plans to expand the production capacity of the plant once the BCA market shows signs of recovery. Somaco is owned by investment fund Oresa Ventures, through its subsidiary Sonriso Investments.
CEE real estate market enters yield convergence and rising property values phase, Erste report claims A report from Erste Group has found that the CEE property market is entering a new phase of yield convergence and rising property values, with takeovers still attractive options as financially sound companies remain interesting targets while others are being taken over for liquidation. This benefits mainly real estate investors rather than developers as vacancy rates are still high. “Analysis of CEE real estate markets shows that we will very likely enter a period of continuously rising property values. The development will clearly be led by yield compression. Given the pretty high vacancy rates across the region and the completion of a number of development projects, a substantial property value increase due to rising rent levels is still unrealistic for the next foursix quarters ahead,” said Gunther Artner, co-head of CEE equity research.
opens store in Unirea Shopping Center
The new store is the first in a series
The first in a series Panasonic stores has been opened in Unirea Shopping Center, following an investment of EUR 100,000. Panasonic officials expect the store to generate sales of approximately EUR 1 million. “We hope that the new series of stores will consolidate relations be-
tween the Panasonic brand and the general public. This is why we chose to implement a concept that involves a higher interaction between consumers and our products,” said Alexandru Mina, advertising & public relations manager at Panasonic Romania. By the end of the year, Panasonic will open another 10 stores, in Bucharest and other big cities, which will have a unitary and exclusive design inspired by Japanese culture. The turnover posted by Panasonic in Romania in the fiscal year 2009 was EUR 55 million. The firm’s business in Romania increased by 5 percent in the first half of this year, according to country manager Stefan Ichim. Its representative on the local market is the Romanian subsidiary of Panasonic Marketing Europe. Otilia Haraga
One segment where the economic recovery is having a positive impact is the office market, where take-up was 38 percent y-o-y in the first half of this year, due to higher demand in both Western and Central and Eastern Europe. The vacancy rate remained at its pre-quarter level of 10.2 percent. However, the divergence in vacancy rates across Europe remains high, ranging from as low as 6.8 percent in Paris to levels above 15 percent in cities like Amsterdam, Dublin, Budapest and Moscow. The office segment saw a further stabilization in rent levels, with some major cities even recording acceleration in rental growth on a quarterly basis. London’s West End (+13.3 percent), Paris (+7.1 percent) and the City of London (+5.3 percent) saw the strongest increase in office rents. Demand for office space in CEE rose 36 percent y-o-y.
Cemacon puts EUR 28 million into ceramic bricks line Brick manufacturer Cemacon has invested EUR 28 million in setting up a new ceramic bricks line. The investment is 97 percent finished and is set to position Cemcon second in Romania by the size of its production facilities. The line, which has a capacity of 1,000 tons per day, is in the company’s new plant in Recea, where construction works startBUSINESS REVIEW / October 4 - 10, 2010
ed in 2007. With the new investment, the firm hopes to expand its coverage area at least four fold from the current zone which includes Salaj, Satu Mare and Maramures counties. Last year, Cemacon posted a turnover of RON 29 million, and by 2011 it plans to reach RON 55-60 million. The firm’s main shareholder is SSIF Broker Cluj. 17
BR EVENTS
Austrian investors call for stability 2009 can be described as nothing short of a horror story for many local industries which have seen their business shrink as markets collapsed. But it’s not all bad news and there is still confidence, said businesspeople present at the second Austrian Business Forum organized by Business Review last week. 1
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ALL PHOTOS: LAURENTIU OBAE
■ 1. Joerg Wiederhold, partner, PricewaterhouseCoopers ■ 2. Rudolf Lukavsky, commercial counsellor with Austrian Embassy to Bucharest ■ 3. Jose Luis Gilabert, country manager for Romania and Moldova at Austrian Airlines ■ 4. Kurt Weber, managing director of Horvath & Partners Romania ■ 5. Prof. Dr. Joerg K. Menzer, managing partner of Noerr Romania ■ 6. Bogdan Daniel Voichita, regional sales manager at IKB Leasing, giving an outlook of the local leasing market in 2010 ■ 7. Panelists tackled the key issues affecting the economic climate today ■ 8.The event afforded ample networking opportunities ■ 9. Around 70 members of the business community attended the forum 18
The pipeline of foreign investments to Romania hasn’t dried up but there is a lot of room for improvement. When it comes to the local authorities, all fingers point at the global economic crisis as the culprit for the current situation, but there remain many economic setbacks with a local flavor. In a single voice, businesspeople attending the event slammed the government’s inability to secure a stable fiscal environment. If tax rates in themselves are not a necessarily a drawback, overnight changes and delays in VAT refunds, among other difficulties, make it hard to run a business here. Future investments also depend on expanding and modernizing the local infrastructure and attracting a higher level of EU funds. On paper, Romania has some of the lowest labor costs in Eastern Europe. Company representatives agreed however that real costs are higher and that there is a pressing need to invest more in innovation and productivity. A large number of Austrian companies are active in Romania in most local industries. The country ranks top of the foreign investors to Romania with over EUR 10 billion invested so far. EUR 500 million was spent last year and the same amount is set to be reached in 2010 too. The event, which attracted about 70 company officials, was organized in partnership with IKB Leasing, Noerr, Austrian Airlines, Horvath&Parners, PricewaterhouseCoopers and Marsh and with the support of Ramada Plaza. For more information about future BR events, please visit www.business-review.ro/events/. BUSINESS REVIEW / October 4 - 10, 2010
BR EVENTS
Efficient dispute resolution mechanisms needed, ICC conference concludes The first ICC conference on international arbitration organized in Romania saw the presentation of various dispute resolution mechanisms aimed to ensure both the continuous execution of works and an efficient resolution of the dispute. Throughout the conference, various case studies were discussed, as well as the stages that disputes in Romania should go through before reaching the Arbitration Tribunal. 1
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ALL PHOTOS: LAURENTIU OBAE
■ 1. The ICC YAF panel: Dan Cristea, associate, Tuca Zbarcea & Asociatii; Radu-Bogdan Bobei, chief editor, Romanian Arbitration Review; Cornel Popa of Tuca Zbarcea & Asociatii; Matei Purice, associate, Tuca Zbarcea & Asociatii; Alina Leoveanu, deputy counsel, ICC International Court of Arbitration, Paris ■ 2. Panelists from the first ICC conference in Romania: Andreia Oana Dumitrescu, partner, Dragne & Asociatii; Ioana Hrisafi, partner, Tuca Zbarcea & Asociatii; Emmanuel Jolivet, general counsel of the ICC International Court of Arbitration, and deputy director, ICC Dispute Resolution Services, Paris; Alina Leoveanu, deputy counsel, ICC International Court of Arbitration, Paris ■ 3. Cornel Popa of Tuca Zbarcea & Asociatii; Emmanuel Jolivet; Philip Dunham, partner, Dechert LLP, Paris; Robert Rosu, partner, Tuca Zbarcea & Asociatii ■ 4. Around 100 people attended the event on September 28
Corina Dumitrescu Alina Leoveanu, deputy counsel at the ICC International Court of Arbitration, underlined the importance of every aspect of dispute resolution services, from the place and language of arbitration to the filing of the Answer to the Request for Arbitration. Emmanuel Jolivet, general counsel of the body, outlined the specifics of the Rules of the ICC Commission for Conflict Resolution, including the three types of commission that authors of construction contracts may address. The subject was raised as Romania has often requested the aid of the International Court of Arbitration, esBUSINESS REVIEW / October 4 - 10, 2010
pecially on construction issues. Ioana Hrisafi, partner at TZA, detailed the rules governing arbitration, explaining the eight steps of the ICC proceedings, from the request for arbitration and establishing the Arbitration Tribunal to closure of the proceedings and settling the award. One of the key topics was the Terms of Reference specific to the ICC arbitration and their main functions. Other speakers at the conference included Viorel Mihai Ciobanu, president of the Court of International Commercial Arbitration attached to the Chamber of Commerce and Industry in Romania; Ioana Hrisafi, partner at Tuca
Zbarcea & Asociatii; Andreia Oana Dumitrescu, partner at Dragne & Asociatii; Jane Davies-Evans, counsel at Freshfields Bruckhaus Deringer; Roman A. Mallman, principal associate at Freshfields Bruckhaus Deringer Paris; Philip Dunham, partner at Dechert LLP Paris; Boris Kasolowsky, partner at Freshfields Bruckhaus Deringer Frankfurt; Ion Dragne, managing partner at Dragne & Asociatii; Robert Rosu, partner at Tuca Zbarcea & Asociatii; and Cornel Popa, partner at Tuca Zbarcea & Asociatii. Popa gave a Romanian perspective on the arbitrability of disputes involving public authorities, arising from concession agreements, public
procurement contracts and contracts concluded by state-owned firms. The first Efficiency of Complex Dispute Resolution Clauses in the Current Economic Climate conference in Romania was held by the International Court of Arbitration in Paris and law firm Tuca Zbarcea & Asociatii, together with Freshfields Bruckhaus Deringer and Dragne & Asociatii on September 28. The previous day saw the seminar Competence – Competence Principle – Recurring Issues take place, a forum for young arbitrators to exchange views on international arbitration and enrich their network in the region. Business Review supported both events as media partner. 19
RESTAURANT REVIEW
Beef with a Difference OSHO, 19 PRIMAVERII, TEL 021 568 3031 magine my consternation when I was awoken from a well earned Sunday morning sleep by Bucharest’s most infamous bon viveur, JP Vigroux, who demanded that I attend his court at Osho for Sunday lunch. He said it was outstanding, and as I am tempted to defer to the culinary opinion of Frenchies, I gave it a shot, and just wait and see what I discovered! They modestly call themselves a steak house, but it is much, much more than that. If you enter it from the front end of the building, you will find yourself in a shop which sells all of the chophouse’s prod-
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ucts, ‘over the counter’ at retail prices. This includes not only their extensive range of meat products, but an array of up to 20 Italian cheeses and salamis. Add to that a rich list of French and Italian fine wines, and you have a ‘Deli where you can dine’. OK, this may sound strange, but believe me it is not! So the House has set itself up as a unique concept, but they will live or die on the quality of their product. Let us see how they perform. The boss is Emma, the prettiest girl in Romania. She can always be found behind the bar, and if this litLAURENTIU OBAE
Deli with a difference: Osho also sells its wares over the counter
LAURENTIU OBAE
No beef with the quality: Osho only puts the finest meat on its menu 20
tle lush is not able to walk you around the restaurant, her father, Bora, will do it for her! The concept of the House is close to my heart. For 20 years I have been fighting a losing battle with the abattoirs and restaurateurs to hang their beef at 4 degrees C for 20 or more days. Thank God the House does precisely that! Beef in this country is so, so very bad that crappy second rate Argentinean beef has dominated the restaurant trade here for the last seven years. But paradoxically, Romanian beef can be excellent, only if it is treated with respect by hanging it, and allowing the fibers to relax, and in doing so the flavor intensifies. The pride and joy of Osho is their ageing the beef in two ways, namely for 28 days in a dry, chilled controlled environment, or as an alternative, for 21 days. Both meat dishes are sold at different prices depending on their ages. Osho is an American concept, so size portions are American, and that means they are huge. The genetic breeds of beef on offer are also the favorite bovines in the USA. And, they are also the most beautiful and glorious to behold: red, gold and cream quadropeds which taste as great as they look. We are talking about Scottish Aberdeen Angus, and French Limousin and Charolais
breeds. This is beef heaven! Vegetarians should stay away, which is no problem as veggies are invariably all cat loving, irritable, unfulfilled, neurotic females who would not be able to reverse car into a parking space in Primaverii. The only thing I did not like about Osho is the American angle. We are in Europe and I rail against anything that tries to undermine thousands of years of European culture by substituting it with shallow American patois. So, that means I don’t like ‘rib eye steak’ called by its American name of ‘New Jersey Steak’. I could go through the whole menu quoting you names such as Club Steak, or New York Steak… and on and on. To put it another way, there is more culture in a plastic tub of yoghurt that there is in the whole of America. But having said that I must add that in three visits to Osho I have eaten my way through half the menu. That means the meat, not the paper. It is all MAGNIFICENT. I cannot fault it for either quality or for its prices. They even have a business lunch for a ludicrously low bargain price of RON 18. What are you waiting for? Michael Barclay mab.media@dnt.ro BUSINESS REVIEW / October 4 - 10, 2010
CITY
Over 150,000 volunteers help clean up Romania, advocacy next On September 25, Let’s Do It, Romania! aimed to make the country a cleaner place. Preliminary results show that this goal was achieved, however, it was but the first step of an environmental process that has only just started. After mobilizing the entire country to lay waste to the mess left behind by the thoughtless, the biggest challenge now seems to be: will Romanians manage to keep their country clean? Corina Dumitrescu Let’s Do It, Romania! gathered over 150,000 participants in its cleanthe-whole-country-in-just-one-day campaign. The volunteers collected over 187,000 sacks of waste, preliminary results show. The next step of the project will consist of a sustained advocacy campaign, says Anamaria Hancu, coordinator of the project’s communication team. Estonia, on the other hand, the country which inspired the world through the first initiative of this kind, managed to bring together 50,000 volunteers, 4 percent of a population of 1.3 million, on May 3, 2008. In population terms, Romania’s final percentage may not be as high, but is close enough to show that people have grown out of the
passiveness inherited from communist years and now care enough about the future of their country to make a difference. On a national level, Brasov currently ranks highest in the classification of the most volunteers that counties in Romania managed to amass, with 15,000 individuals involved, closely followed by Cluj (13,000) and Bucharest (over 11,000). Just outside the top three, Arges signed up around 10,380 people for cleaning activities, while Maramures can boast a rounder number, 10,000. Various public figures showed their support throughout the campaign and on D-Day, including musicians Smiley, Zoli of Sistem, Adi Despot from Vita de Vie, Holograf and world boxing cham-
pion, Leonard Doroftei. The next steps of Let’s Do It, Romania! will consist of advocacy, from studying the legislation on waste collection to identifying the issues that make it difficult to apply. As a second objective, says Hancu, better communication will be established with both the public and private environment in Romania to set up selective waste collection containers, mandatory private and public sanitation services, infrastructure for selective waste transport, transfer and sorting stations, centers for waste collection, recycling and capitalization, compliant pits for waste disposal, as well as compost stations for organic waste. The authorities will begin to apply sanctions for dropping litter and fly tipping.
Young Romanians do their bit to help
Zoli of Sistem fills one of over 187,000 sacks
Bags of effort: volunteers pose with their sacks
Grégoire Vigroux: “Romanian Marketing Directors just love the idea of advertising through cars!”
The “Print & Sign Fair”, which took place in Bucharest recently, ended on September 25th. Carmedia - a young start-up company with inflow of foreign capital, created in April 2010 – was there. Carmedia’s booth attracted a large number of Marketing Directors during the fair, as the company was just introducing an innovative and surprising! - advertising medium in Romania. What is it exactly? The answer and more details have been provided by Grégoire Vigroux, one of the co-founders of the company.
BUSINESS REVIEW / October 4 - 10, 2010
How are you recruiting the drivers for carvertising? We have been recruiting 1200 private drivers in Bucharest over the past few months. The drivers have been subscribing through our website www.carmedia-group.com. In order to be selected for a carvertising campaign, they have to match the following criteria: Driving more than 30 kilometers per day is compulsory – in order to ensure maximum visibility in the traffic jam; The cars have to be parked outside day and night – to allow people in the street to see them; The cars must be recent ones, in very good shape – knowing that we are rather interested in small nice cars than big ones as it offers nicer support for graphical design.
The drivers who are matching the above criteria will have a chance to be selected, as long as they also show strong commitment and high seriousness. After all, the drivers have an important responsibility: as “mobile advertisers“, they are representing our clients’ image. The drivers are getting paid between 300 and 400 RON per month.
How the idea of launching carvertising in Romania came to your mind? Carvertising was born in 2000 in the USA. Today, the medium is successfully working in many countries, especially in Western Europe and in the USA, where advertising through private cars is considered, according to recent studies, as both innovative and impacting by more than 3/4 of the population. Why do you think carvertising will work in Romania? Before starting this business, a specialized agency made a market study for us. The 400 most important marketing key-decision makers were asked about carvertising. The feed-back they gave was very encouraging, as 49% of them declared they are interested in this medium. Basically, from this study and from the recent feed-backs that we got, we have realized that Romanian Marketing Directors just love the idea of advertising through cars! At the Romexpo fair, some Marketing Directors told us they believe in our medium because
of its originality (no other company is doing it in this country); its efficiency (because they recognize carvertising may have high memorization rate); and its flexibility (because the medium allows them to strictly optimize and control their advertising expenses).
Is it the right moment to start this business in Romania whereas crisis leads to cutting advertising budgets? Let’s face it: today, TV commercials, outdoor advertising and print campaigns are both expansive and too conformist. On the contrary, Carvertising is cheap and innovative. Our two strongest assets are cost-optimization and innovation, as our clients can control their budgets from A to Z in investing in something new. They decide on the number of cars which should be used for the campaign – as well as how long the campaign should last. A carvertising campaign may start with a budget of only 1000 EUR. For this amount, you can have 5 cars driving in Bucharest for an entire month, and you can even target the specific areas that you want to reach! The era of crisis is the best time for innovation, especially in the advertising industry. And carvertising is the ultimate solution for Romanian Marketing Directors who want to differentiate from their competitors without ruining themselves! More details about carvertising services: www.carmedia-group.com
ADVERTORIAL
What services is Carmedia offering? Carmedia is offering three types of advertising services through cars. The first one is carvertising and the idea is the following: we are using private cars (covered with ultra-designed stickers) as a new advertising tool, in order to promote our clients’ brand, image, products or services. Besides carvertising, Carmedia is also offering company car covering (we are branding the
car fleets of our clients) and advertising on taxis (we are sticking ads on taxi vehicles and we are using their light cassettes as well to reach brand visibility in Bucharest 24 hours / day). Although we are the first company to offer carvertising services in Romania, company car covering and advertising on taxis already existed before. However, we are bringing an added-value to it, by using high-quality stickers (removable or long-lasting ones, all imported from Germany) and graphical design services which are taylor-made to match the medium. For advertising on taxis, we are also able to provide fleets of hundreds of taxis in Bucharest for our clients.
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CITY / FILM REVIEW
British documentaries come to National FILMREVIEW: Tuesday, After Christmas his mistress, one of whom he has to split with before Christmas. The film depicts Peasant Museum the drama of modern man; Paul
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Monday night is British documentary night
Starting October 4, on every Monday evening at 19.00, the National Museum of the Romanian Peasant (Muzeul
Taranului Roman, on Monetariei St. no. 3) will stage a British documentary in a season that will last until December 20. Twelve British productions will be showcased at Studio Horia Bernea, as part of the British Council’s program “New work, new audiences”, which aims to give more visibility to British cultural events. The films included in the series have been nominated or awarded at international festivals, including the British Documentary Film Festival Grierson. Corina Dumitrescu
Animated film feast at fifth Anim’est
One of the top animation festivals in Eastern Europe, Anim’est, now on its fifth run, will take place between October 8 and 17 in Bucharest and between 22 and 24 October in Cluj. Thirteen short animated films from Romania and another 13 from the Balkan region will compete for this year’s awards. The short film gala will take place at several cinemas across Bucharest, including Patria, Union and Scala. Titles
on show include: The Illusionist, Mozaic 1, 2, 3, 4 and 5, The Tale of Despereaux, Metropia, Boogie the Slickster, Up, Despicable Me, Kung Fu Panda, Fantastic Mr. Fox, How to Train Your Dragon, Alvin and the Chipmunks, Niko & The Way to The Stars, and many more. Live music, competitions and scary films are also part of the festival program. Corina Dumitrescu
Faithless: a cheating husband has to choose between two women in Radu Munteanu’s film
Radu Muntean’s so-called infidelity drama premiered in Romania on September 17, one of the most keenly awaited movies of the year in its home country. It has been very well received by film critics worldwide, with glowing reviews in publications including Variety, LA Times and Liberation and a nomination in the Un Certain Regard section of the Cannes film festival, among many other wins at local and international film festivals. To Romanians, although the movie will rank among the best productions of recent years, the gloomy realism with which it presents contemporary Romanian society may not come as a surprise. So at first glance, it may seem that Tuesday, After Christmas is just another example of the dark and almost suffocating drama that Romanian cinematographers showcase past and present Romanian reality with, impressing the more optimistic Western eye. This, for example, was the case with The Death of Mr Lazarescu, 2006 winner of the Cannes Un certain regard section, a story of the dysfunctional medical system in Romania, and 4 Months, 3 Weeks, 2 days, Palme d’Or winner at Cannes, a tragic depiction of communism and how it regarded women. On a less tragic note, however, Tuesday, After Christmas tells the story of the adulterous Paul Hanganu (played by Mimi Branescu), a man romantically involved with two women, his wife and
Hanganu is a credit broker in his late thirties, who has managed to attain a comfortable upper middle class existence, providing for his wife and nineyear-old daughter. But this socially acceptable happiness shatters as soon as he falls in love with another woman. In spite of his betrayal of the woman who has dedicated her life to him and their daughter, Hanganu sheds a more human light on the usually negative character of the adulterer. Although he is a man trapped by his own destiny, to whom things happen (as he explains to his shocked wife, he did not choose to fall in love with someone else, it happened to him), Hanganu eventually makes the decision to stay with only one of the women, although he could have continued his double life without too much ado, like so many others in his shoes. All in all, Tuesday, After Christmas is definitely a must see, as it brings a completely new perspective on how we are used to regarding certain aspects of life. The actors give excellent performances and one of the most moving scenes in the movie is a showdown between Adriana Hanganu, the wronged wife, and her husband. This scene is among many in the film that won Mirela Oprisor the Best Actress prize at the Sarajevo Film Festival. Corina Dumitrescu Director: Radu Muntean Starring: Mirela Oprisor, Mimi Branescu, Maria Popistasu On at: : Movieplex Cinema Plaza, The Light Cinema, Hollywood Multiplex, Studio, Cinema City Sun Plaza, Cinema City Cotroceni
Ovidiu Rom competition attracts over 100 applications The competition launched this summer by Ovidiu Rom and the Education Ministry for local communities looking for financing to get underprivileged children into pre-school has attracted over 100 applications, the charity says. From the applicants, 14 have won USD 150,000 of financing to help them get every poor child in pre-school. The organizers had initially planned to offer sponsorship to only five communities, but increased the number of beneficiaries and the financing after receiving an overwhelming number of applications. 22
Around 1,000 children will benefit from the project. Ovidiu Rom has allocated approximately EUR 150 for every child between four and six whose family lives below the poverty line. The 14 local communities selected for the project are: Brasov county: Sacele and Tarlungeni, Buzau county: Ramnicu Sarat, Covasna county: Araci, Haghig, and Intorsura Buzaului, Dambovita county: Gura Sutii, Harghita county: Balan, Maramures county: Coroieni, Mures county: Band, Salaj county: Jibou, and Sibiu county: Altana, Brateiu, Rosia. BUSINESS REVIEW / October 4 - 10, 2010