Business Review No.46, December 13 - 19

3Q: PwC partner Peter de Ruiter sat down with BR to outline the good, the bad and the ugly of the Romanian tax system, how it compares with others in the region and what it all means for his Big Four company and others in the field »page 11

ROMANIA’S PREMIERE BUSINESS WEEKLY

FOCUS THOUGH THE CRISIS HAS PUT BUDGETS UNDER PRESSURE, COMPANIES, NGOS AND INDIVIDUALS HAVE NOT ABANDONED PHILANTHROPY. BR SURVEYS THE LATEST CSR MOVES »PAGE 10-15

DECEMBER 13-19, 2010 / VOLUME 14, NUMBER 46

BEAUTY FIRMS FIGHT UGLY MARKET

NEWS

Publicis focuses on digital and PR After the acquisition of three of its local affiliates, Publicis Groupe is looking to develop its digital and PR sides » page 5 NEWS

Google brings Street View to Romania Google has launched its Street View service in Romania, making it available in eight cities for now » page 5 TALENT

The art of business Dan Bunea is making a business out of his passion for painting » page 8 PLUS

Photo: Dreamstime

Though the financial outlook is not pretty for cosmetics companies at the moment, local players are putting on a brave face and pressing ahead with measures to iron out the economic wrinkles »page 16

TMF director Jochum Haakama says there are good reasons to invest in Romania now » page 9 Wind farms have gotten a lot of investor attention, both corporate and entrepreneur » page 17 Eastern Europe’s only ice hotel is set to open at Balea Lac by Xmas » page 21

www.business-review.ro Business Review | December 13 - 19, 2010

NEWS 3

NEWS in brief COMPANIES

WEEK in numbers

McDonald’s opens first local McCafe in Bucharest McDonalds Romania has opened its first local McCafe in Bucharest following a EUR 200,000 investment. It is located in the McDonald’s in Unirea shopping center.

The outlet will serve 17 types of coffee, costing between RON 5 and RON 11, and has 44 seats.

The first McDonald’s opened in Romania in 1995. The company currently has 63 branches in 21 cities across the country, and a daily flow of 140,000 clients.

2.3m the value of shares that SIF Muntenia has bought in the Property Fund

430k

Groupon enters local market US company Groupon, which sells collective offers, has entered the Romanian market.

There are already 18 such websites in Romania, which means the firm will face stiff competition, but it did not wish to make its entrance here through a takeover, according to media reports.

Groupon will initially have 17 employees in Romania and aims to reach 500,000 users within four months of its launch on the local market.

While in other countries each user brings the company EUR 1 per month, in Romania it expects the figure to be 20-30 percent lower, according to media reports.

The majority of Groupon users are women. The firm declined a USD 6 billion acquisition offer from Google.

IT&C online retailer eMAG has been certified as an Apple Authorized Reseller, which is expected to boost its sales of Apple products.

“The new status of eMag in relation to Apple and our common plans lead us to believe that our sales will increase threefold next year compared to 2010 as far as the entire Apple range is concerned,” said Radu Apostolescu, eMag marketing manager.

The firm was certified following an audit, which examined its quality of services, consultancy and expertise in Apple products, marketing and customer relations policies, technical support and the ability to record and publish online the opinions and recommendations of users.

2 Photo: Laurentiu Obae

eMAG plans to triple sales of Apple products next year

the bonus pot for the management committee of Cocor, the company which owns the Cocor shopping center

the number of hypermarkets that Carrefour will open next year in Romania, one in Botosani and one in Bucharest, in the Colosseum project

IMAGE of the week

proximately eight sarmale will be sold for between RON 11.5 and 12.5.

Bucharest aglow with Christmas decorations Bucharest’s traditional festive lights were switched on last week.

Besides the decorations, the start of the holiday season was also marked with the opening of two Christmas fairs, one in the historical center and another in Cismigiu Park. Both will run until January 3. Bucharest’s mayor, Sorin Oprescu, says this year’s decorations cost a third of the 2008 budget. City hall representatives say they opted for a different kind of ornament this year, with fewer light bulbs to prevent any overloading of the electricity system, especially the electrical pylons which are old and have not yet been replaced.

Developer Copper Beach goes bankrupt

production, operations, logistics, IT, marketing, sales and HR for the Romanian market.

open more than 15 hospitals, clinics and pharmacies and boost its investments for the next two years to EUR 45 million.

Kienbaum Executive Consultants opens office in Romania

MedLife negotiates three new acquisitions

Sarmale production unit opens in Harghita County

German executive search firm Kienbaum Executive Consultants International has opened an office in Bucharest.

The firm has appointed Loreda Dragomir as country manager, according to Recruiter.co.uk.

Dragomir joins Kienbaum from executive search firm Stanton Chase International, before which she was country manager in Romania for Grafton Recruitment.

In the new office Kienbaum will focus on hiring top management and C-level executives for roles in finance, controlling,

MedLife is currently in talks over three acquisitions outside Bucharest, one of which may be concluded before the end of the year.

“In December, we intend to make an acquisition worth millions of euros which will take our turnover above EUR 40 million and also widen the gap between MedLife and its two competitors who are vying for second place on the market: CMU and Medicover,” said Mihail Marcu, president of the MedLife administration board.

Next year the operator intends to

A private investor has opened the first sarmale production unit in Romania, following an investment of EUR 130,000.

The plant is located in Gheorgheni, Harghita County, according to Mediafax.

Sarmale is a traditional Romanian dish made of minced meat wrapped in cabbage leaves.

The investor, Bajko Laszlo, started from the idea that people today are very busy and no longer have time to cook.

He bought an old stable, transformed it completely, equipped it and has hired four people so far. A container with ap-

Copper Beach Capital has gone into bankruptcy after the reorganization plan it proposed was rejected.

The firm is the developer of the 156apartment Blue Tower project in Colentina.

It went into insolvency in the fall of 2009, after running up debts of over EUR 27 million. Its largest creditor is Alpha Bank, which provided financing for the project.

Alpha Bank has a EUR 14 million exposure on the Blue Tower project. Another significant creditor is construction company Total Confort, which is owed EUR 1.5 million.

EUROPEAN UNION & EU FUNDING Romania to launch EUR 5.5 bln EU-funded infrastructure projects The Romanian authorities will launch EU-funded projects worth EUR 5.57 billion by the end of next year, announced the transport minister, Anca Boagiu.

This will include the construction of

www.business-review.ro Business Review | December 13 - 19, 2010

4 NEWS

NEWS in brief 289 km of highway and modernizing 166 km of railway.

The highway sections to be auctioned by the end of 2011 are Nadlac-Arad (38.8 km, EUR 234 million), Orastie-Sibiu (82 km, EUR 693 million), Deva-Orastie (32.8 km, EUR 355 million), Timisoara-Lugoj (35.6 km, EUR 217 million), all to be completed in 2013, and Lugoj-Deva (99.5 km, EUR 1.02 billion) to be completed in 2015.

The ministry also has plans to upgrade 943 km of national roads for EUR 848.45 million, using a loan from the European Investment Bank.

Projects for next year include modernizing166.3 km of rail, for a total EUR 1.88 billion, and 21 train stations for EUR 227 million.

EBRD lends EUR 300 million to National Bank of Greece subsidiaries in Romania, Bulgaria and Serbia The EBRD has approved three credit lines worth a total of EUR 350 million for the subsidiaries of the National Bank of Greece in Bulgaria, Romania and Serbia, for on-lending to businesses in their respective countries.

United Bulgarian Bank will receive EUR 150 million, Banca Romaneasca EUR 100 million, and Vojvodjanska bank will get EUR 100 million of new funding from the lender.

The EBRD financing will provide the three banks with medium-term senior funding to support their funding base, diversify and extend the maturity of their liabilities and enhance their lending to the economy.

Cernavoda nuclear units 3 and 4 project get OK from EU EnergoNuclear, responsible for the construction of nuclear units 3 and 4 in Cernavoda, has received a favorable response from the European Commission regarding the project.

Romania, through state-owned nuclear energy company Nuclearelectrica, controls 51 percent in EnergoNuclear. Italy’s Enel, German RWE and Belgian-French group GDF Suez each own 9.15 percent, while ArcelorMittal Romania and Spanish Iberdrola control 6.2 percent of its shares apiece.

Czech utility CEZ, which owns another 9.15 percent stake in the joint venture, said recently that it plans to withdraw from EnergoNuclear’s shareholder structure. Cernavoda currently operates two reactors of 700 MW each and provides around 18 percent of Romania’s electricity production.

The third and fourth reactors, with similar capabilities, are set to become operational in 2017.

LEGAL Bostina & Asociatii selected as legal consultant for OMV Petrom stock exchange sale Law firm Bostina & Asociatii has been selected by the Ministry of Economy to provide legal counseling regarding the sale – on the capital market – of a 9.84 percent stake in OMV Petrom.

The project team will be led by Olimp Barbulescu, who has built up experience in the capital market over several years at the National Securities Commission and afterwards at Bostina & Asociatii.

This would be the largest privatization by the Romanian state made on the stock exchange. The government decided in August to start sale procedures for a 9.84 percent stake in OMV Petrom.

The state owns 20.6 percent in the firm. Austrian group OMV holds the majority 51 percent, while the Property Fund controls another 20.1 percent.

Danila, Petre & Asociatii invests EUR 260,000 in new office After expanding to fiscal consultancy as well as asset and debt recovery, and having also opened a subsidiary in Bulgaria, law firm Danila, Petre & Asociatii (DPA) has moved to a new office, three times the

size of the previous one. The new location is in a 960-sqm building, of which the law firm owns half. The total investment in the decorating and equipping of the new location is EUR 260,000.

The office hosts all the DPA group’s activities: its civil law division, DPA Fiscal Consultancy, the Active Recovery firm – in which DPA partners hold 25 percent of the shares – as well as Audit Consult. Officials have also said that the firm is planning to extend its client portfolio, territorial coverage and team of lawyers.

TRAVEL Baneasa airport to host business flights Baneasa airport is set to be given over mainly to business travel, said the transport minister Anca Boagiu.

With a EUR 1 million investment, the airport will be reorganized: and most flights taking off from Baneasa will have a reduced capacity of around eight to ten seats. The airport will have dedicated terminals for general aviation and VIPs. Other infrastructure works will accompany the transformation of the airport, such as access infrastructure, which will include an underground subway station and parking places. Low-cost flights are expected to be shifted to Otopeni airport.

www.business-review.ro Business Review | December 13 - 19, 2010

NEWS 5

MEDIA

Publicis Romania to focus on digital and PR after acquisitions

P

Regional CEO Tomasz Pawlikowski rational markets.

The Romanian media and advertising market is expected to begin to show signs of recovery by the second half of 2011 and should reach its pre-crisis level in 2012-2013, added Pawlikowski. In 2004-2005, the local market held a lot of potential and was one of the most important in the region, said the CEO, adding that the crisis had occurred just as the market was gaining momentum. With a minority stake in Leo Burnett Group Romania too, Publicis is currently one of the most profitable communication groups in the country and one of the largest in the world.

The technical details of the deal were not disclosed by company officials. Pawlikowski and Teddy Dumitrescu, CEO of the local branch of Publicis Groupe, Grupul Publicis Communications Services Bucharest, said that they hoped turnover and profit would reach the same level as in 2009 and 2008. In 2009, the turnover was an estimated EUR 17 million and profit EUR 330,000, according to media reports. The local team of specialists, including the management, will not undergo any major changes. The international group now has a veto over such changes, as it holds over 51 percent of Grupul Publicis Communications Services Bucharest, with the rest owned by Dumitrescu.

Grupul Publicis Communications Services Bucharest offers advertising, branding, strategy, creative, production, sales promotions, event marketing and digital services. Founded in 1994, the agency has been a partner of Publicis Worldwide since 1995. It employs over 75 communications professionals, and serves international and local clients including Orange, Renault, Nissan, L’Oreal, LG Electronics, Ursus Breweries, Microsoft, Procter & Gamble, soft drinks firm Granini, OMV Petrom, Carrefour, HP, Citibank, sanofi aventis, Nestle ice cream, dairy company Albalact and Whirlpool. ∫ Corina Dumitrescu

INTERNET

POWER

Google brings Street View to Romania

Enel Green Power starts work on 34 MW wind farm

G

oogle has launched Google Maps Street View in Romania. The service will be available in eight cities, the main ski resorts of Prahova Valley and the Black Sea Coast.

Users can now navigate through panoramic photos of streets in Bucharest, Arad, Oradea, Brasov, Timisoara, Cluj, Sibiu and Constanta. In total, Street View covers 6,000 kilometers in Romania. The function premiered in the USA in 2007 and is currently available in several countries in North America, Australia, Europe and Asia. Romania is the 27th country where this service has been implemented.

Street View was conceived as a tool to help both individuals and companies in their activities. Industries such as tourism and real estate are expected to be among the main users. “This service does not represent a business model. We are not cashing in with Street View, we are just trying to attract more users,” said Dan Bulucea, country manager of Google Romania.

The pictures included in Street View were shot in 2008 and 2009 and Bulucea said they should be updated every year or two, but the expansion of the coverage area will also depend on how Ro-

manians receive this service.

Even though Google is embroiled in international legal problems over its Street View service, the country manager insisted that precautions had been taken so that people’s faces and vehicles’ license plates would be blurred, while anyone could ask for a certain building to be taken off the map.

Google recently announced that it had opened an office in Romania, a long awaited move from the IT giant. Currently the Google Romania team is made up of two people, including country manager Dan Bulucea, but the company plans to hire more staff next year, especially for marketing and sales positions.

The Bucharest office headed by Dan Bulucea will be responsible for developing Google's presence and strategy in Romania, establishing business relationships with Romanian partners, educating local companies about the benefits of going online, direct advertising sales. ∫ Otilia Haraga

Related Articles on the web Read an interview with Dan Bulucea on www.business-review.ro

Enel Green Power has started work on its first wind park in Romania, Agighiol, near the town of Tulcea.

The wind farm – which will include 17 wind turbines with a capacity of 2 MW each – brings the total installed capacity to 34 MW. With an annual production of about 100 million KW, the plant will be able to meet the electricity needs of more than 35,000 households.

“This is the beginning of Enel Green Power’s electricity production in Romania,” said CEO Francesco Starace.

“We have a substantial list of projects under construction and will significantly increase our presence in the country over the next two years.”

The installed wind capacity in Romania will reach 600 MW by the end of this year from 14 MW at the end of 2009, and a total of 3,600 MW by 2015.

Market specialists are currently talking about EUR 1.5 million of investment for 1 MW installed of wind energy. ∫ Dana Verdes

Courtesy of PwC

Courtesy of Publicis

ublicis Groupe’s recent acquisition of three of its long-term affiliates, Publicis Romania, Focus Advertising and Publicis Events, will see the firm focus locally on the development of the emerging digital area, as well as on PR, since the latter holds notable potential for growth in Romania, said Tomasz Pawlikowski, CEO of Publicis CEE, Russia and Greece. But the move will not bring major changes to the agencies’ strategy or current configuration, he added.

“With an estimated total value of EUR 12-15 million, the digital market is not worth investing in, if an agency does not produce over EUR 2 million,” said the CEO. Publicis Groupe also aims to announce the acquisition of media agency ZenithOptimedia in the next month or two. The agency might split in two in Romania, into Zenith and Optimedia, following other examples in the group, so the two new entities can work with competing clients.

The regional CEO said that negotiations between the parties had been taking place for almost two years and the decision had come now because of the current economical climate. Pawlikowski told Business Review he considers Romania to be one of the most interesting markets in the area, since it is more responsive to creative messages, perhaps mostly due to its Latin origins, unlike Russia or the Czech Republic which are more

3Q Peter de Ruiter

partner, tax and legal services leader, PwC Romania What do you think the fiscal climate in Romania means to investors? Is it one of the aspects which persuade them to do business in the country?

In general terms the fiscal climate is not so bad. It is clearly not perfect (but there is obviously no perfect tax system in the world). Let us try to be positive. In the context of the economic recession many governments throughout the world have had to adjust their tax systems to respond to the challenges of the new economic environment. Investors are less interested in tax rates than in having a business (and a fiscal) environment where changes are announced in advance. that lets them define a mediumand long-term business strategy.

What does the fiscal (in)stability in Romania mean to audit and tax firms?

One could say with a certain cynicism that we benefit from frequent tax changes and the fact that Romanian tax legislation is often the subject of diverse interpretations as it means a higher work volume to keep all our clients informed, prepared and aligned with all the changes. It must include fair, robust and transparent tax collection based on a comprehensive legal framework.

The execution of the collection and the tax legislation must furthermore be in the hands of a good government and administration living up to the principles of good governance. And the system needs to be overseen and judged by an independent high-quality court system with thorough knowledge of the tax rules.

How does Romania’s fiscal system compare with other countries in the region?

If you compare the tax rates in Romania with several other countries in Central and Eastern Europe you will see that Romania still has a competitive and attractive fiscal environment, with two exceptions: its VAT rate, which is almost the highest in the region, outside Hungary, and the social contributions which are also at a very high level compared with other EU countries. However, the attractiveness of the fiscal environment is related not just to the tax rates, but also to the ease of payment and complying with tax legislation. corina.dumitrescu@business-review.ro

www.business-review.ro Business Review | December 13 - 19, 2010

6 NEWS TAX & LAW

PARTNER CONTENT

Labor Law The evolution of work relationships between employers and employees according to the amendments proposed to the Labor Code

AmCham calls for reform of labor and fiscal systems

Courtesy of AmCham

AmCham representatives met with members of the media to voice their concerns

R

to be applied for disciplinary infringements shall be modified as well in the sense that the suspension of the labor agreement for a period of up to 10 working days shall not be applied any longer.

Thus, the valid sanctions to remain are the written warning, demotion for a period of maximum 60 days, reducing the salary and/or the management pay for a period of one to three months by 5%-10% and terminating the labor agreement on grounds of disciplinary infringement.

The amendments proposed by the said project envisage not only in-depth aspects of the employer-employee relationship, but also some procedural aspects in labor conflict situations.

Therefore, it is expected that the plaintiff will bear the burden of proof also in the event of labor conflicts (which is the general rule in procedural matters) and not the employer who is currently bound to submit the evidence to its defense by the first hearing term. Consequently, changing the obligation of submitting the evidence shall result in restraining the abusive or clearly not grounded legal actions of employees, at least.

We have referred ourselves with the above only to certain significant aspects of the normative act project, whereas the final project may suffer other amendments.

Besides the positive aspects of updating the Labor Code and the will declared upon proceeding with the legislative action in question, the true test to be passed is that of the extent to which these changes shall be truly efficient and welcomed.

Vlad Tomosoiu Partner Lucu Tsignopoulou & Associates

omania must consider reforming its labor and fiscal systems to prevent local businesses relocating abroad, said Sorin Mindrutescu, president of the American Chamber of Commerce in Romania (AmCham Romania), speaking at an end-of-year meeting with the media.

AmCham’s recommendations for fiscal reform include the modernization of tax legislation and administration. “We have never asked for lower taxes. Improving tax collection and fighting tax evasion should be the priorities,” said Mindrutescu. The chamber also welcomed the current revision of the labor code and legislation governing unions, employers’ associations, labor conflict resolution and collective bargaining. It called for “a genuine consultation process, free of electoral pressures, around this essential legislation.”

“The employer and employee should be able to negotiate the work contract be-

tween themselves without the unions interfering,” added Radu Enache, president of the chamber’s work commission and CEO of HP Romania.

Other topics included the ongoing negotiations for the next EU Financial Perspective 2014-2020 and the need for Romania to have an official position in this regard.

“This is, in our view, since the pre-accession period, Romania’s opportunity to actively engage in supporting a balanced competitiveness matrix at EU level, and AmCham members are willing to support the relevant authorities in substantiating a national position in line with Romania’s objectives for development,” said Mindrutescu.

At stake for Romania is not only the position of net beneficiary in relation to the EU budget but also contributing to the setting of the priorities for EU budget allocations. ∫ Simona Bazavan

TAXES

Tobacco and fuel excises go up starting next year

Cough up: smokers will have to pay more to keep up their habit as of next year Romania's excises on fuels and tobacco will be increased as of January 1, 2011, according to a draft emergency ordinance amending the Fiscal Code.

Specialists say that this measure will lead to new price increases for these types of products.

According to the draft ordinance, the excise on unleaded petrol will be raised

Photo: Laurentiu Obae

The project to amend the Labor Code proposes legislative changes for which at least some of the actors involved in the labor market, namely the employers, have waited a long time.

However, one must mention that although the need to make certain changes to the present regulation was raised more than once by the employers, the said changes are not meant to undermine or prejudice the employees` rights, but to correct a series of errors noticed since the adoption of the actual form of the Labor Code until the present time.

Therefore, the purpose of the said changes, if they are eventually adopted, is not that of permanently bending the balance in favor of the employer but that of nearly balancing a relationship which currently is obviously in favor of the employee and which leads to abuses from the employees and to an often laborious and less stimulating environment for the employers.

Among the possible changes are those regarding the validity and the regime of the labor contracts for limited period.

Although the rule regarding the conclusion of labor agreements for unlimited period shall be maintained, the conclusion of temporary contracts for a period of maximum three years (increased from two years currently) shall be allowed, and such contracts may be prolonged after the expiration of period thereof, as well.

Moreover, the restrictions providing that the same parties cannot conclude more than three contracts for a limited period and that upon terminating the third contract or upon its expiration a contract for unlimited period must be concluded, are eliminated.

Another possible change relates to compensating the additional work which might be done within a more generous period, respectively 60 days from the completion of such, as opposed to 30 days provided by the current regulation.

Another new element is the employer’s option to grant paid days off during periods of low activity in order to compensate for any extra hours worked throughout the year.

As regards the envisaged changes for the vacation, where it is split, the mandatory period of continuous vacation decreases from 15 to 10 working days.

Also, if the employee has benefited from a vacation longer than he or she was entitled to, the employer shall either retain from his/her salary the vacation fee related to the number of exceeding days or shall adequately reduce the vacation for the following year.

The section regarding the sanctions

LEGISLATION

to EUR 467 per 1,000 liters, from EUR 452.

The excise on diesel will be increased by EUR 11, to EUR 358 per 1000 liters.

The same document states that the excise on tobacco will be raised to EUR 76.6 per 1,000 cigarettes, from EUR 74 in 2010. Excise duties on alcoholic beverages and coffee will remain the same.

Dana Verdes

www.business-review.ro Business Review | December 13 - 19, 2010

8 TALENT

The art of business The creativity of the artist and the pragmatism of the businessperson are often thought to be mutually exclusive, but Dan Bunea draws on both in his line of work. With sales on both on the domestic and international market, he is looking to develop his activity prudently.

For Dan Bunea, painting is both a passion and a business. Although he works in the software development industry, Bunea’s enjoyment of painting as a hobby made him think seriously of setting up a firm in order to sell his works in a more “professional manner”. It was chance that made him start to paint back in 2007: he wanted more artworks in his house and suddenly found himself unable to buy new ones from a painter he had known. “This was the moment when I thought it would be a good idea to start painting my own pieces and selling them, as I knew I had talent,” remembers Bunea.

And it seems it was the right choice.

Although he never saw his passion as a real business, he managed to build a system to sell his works. The artist has sold about 60 abstract paintings since 2008 and posted EUR 12,000 in annual sales so far. The average price of a work is about EUR 400, with the total investment in paint and other materials being around EUR 5,000. “In this situation I am seriously thinking of establishing my own company for two simple reasons: first I could use the time spent finding new sales opportunities to work on my paintings, resolve logistical issues, buy the raw materials and post the new paintings on eBay and my own website. Sec-

WHO’S NEWS Mihai Dudoiu has been promoted to partner by Tuca Zbarcea & Asociatii.

He specializes in finance and project finance. With more than 11 years of experience, Dudoiu has previously worked as a corporate and finance lawyer in the local offices of two leading international law firms.

Ionut Serban has been promoted to partner by Tuca Zbarcea & Asociatii. His expertise focuses on litigation and domestic arbitration and he has been

Established: 2008 Average annual sales: EUR 12,000 Average price per painting: EUR 400 Number of paintings sold so far: 60 Number of paintings sold a year: 30 Total investment in raw materials: EUR 5,000 EUR 20 (for a 20x20 cm piece) to EUR 400-500 (for a 90x90 cm one) or even more than EUR 1,000 for larger ones.

“These pieces cost less than what exists on the Western market, where a mediumsized painting goes for about EUR 8001,000,” explains Bunea.

Speaking about the challenges he faces as a freelancer painter, the artist says there are plenty. “As an artist, I want every painting I create to represent me, to be unique and to entertain the viewer. But in business, this kind of approach is harmful, because sometimes you can work on paintings for weeks or even months. This means increased costs for The corporate creative: Dan Bunea makes a business of his artistic skills raw materials and plenty of time that can’t be paid off by the sale price,” says Bunea. “Sometimes, making a business ondly, I intend my company to sell both permanently provide information about of paintings influences my artistic apmy paintings and those of other artists,” your paintings and offerings. My experiproach because I need to focus on desays Bunea. ence with the online environment helped mand and market conditions, which He adds that when he decided to sell me a lot because I was also able to doesn’t allow me to have complete freehis paintings he started by carrying out create my presentation website,” says dom as an artist.” detailed market research. “As a proBunea.

Connoisseurs, art enthusiasts and ingrammer I had some experience in makAt the moment he is selling his paintdividuals interested in making an ining something of high quality at the right ings both in Romania and abroad, with investment in their personal image are price, but without having a market to ternational customers being predomiamong Bunea’s customers. “Abstract commercialize it, it is quite impossible to nant in the volume of sales. Since 2008 painting benefits from the minimalist succeed,” says the artist. He realized the entrepreneur has been part of an art trends in architecture. That’s why the dethere were three ways to sell his pieces: scene from Canada, Energy Art Movemand for such pieces is high, especially through art galleries, specialized agents ment, established by a Hungarian in the US, France, China, Brazil and Arpainter. Bunea has had three international and online. Because art galleries are gentina,” says the artist. As for the future, exhibitions through it so far, in North more suited to the alumni of art faculties America: “Green energy project” (2009, he intends to dedicate 100 percent of his and members of the Romanian ProfesOntario, Canada), “We are connected” time to painting. sional Artists Association, they were not “At present I am focusing more on the (2010, Chicago) and “Energized the main sales channel for Bunea. “ThereFrench market, and in addition I am tryRadiance” (2010, Memphis). On top of fore I decided to focus on online sales – ing to collaborate with an auction house that, he has exhibited his paintings in through eBay – because this environin Argentina. My future approach to this Timisoara – his current home city – in art ment has potential; the competition is business is a prudent increase in turnover,” galleries, coffee houses and business very strong in terms of the number, qualconcludes Bunea. centers. ity and price of artworks. But to become The price of a specific painting devisible online you need advertising and pends on its dimensions, varying from to put in tremendous work to be able to editorial@business-review.ro Courtesy of: Dan Bunea

∫ ANCA IONESCU

COMPANY PROFILE Dan Bunea

Business Review welcomes information for Who’s News from readers.

Submissions may be edited for length and clarity. Get in touch at simona.bazavan@business-review.ro with the firm since its establishment. He has six years of experience as a pleading lawyer.

Christina Vladescu has been promoted to partner by Tuca Zbarcea & Asociatii.

She specializes in litigation and domestic arbitration, and has over six years of experience as a district judge and eleven years as a pleading lawyer.

Catalin Oroviceanu has joined Badea Clifford Chance as senior associate. His practice encompasses a wide range of M&A transactions and restructuring projects, as well

as administrative and commercial litigation cases. He graduated from the Bucharest University Faculty of Law in 2001 and obtained a master’s degree from University College London in 2006.

Serena Volciuc-Ionescu has joined the banking group of Badea Clifford Chance. She specializes in crossborder finance transactions and has particular expertise in syndicated finance and debt restructuring. In 2005, she obtained an LLB and a BSc. She graduated from the University of London in

2009 with a LLM in banking and finance.

Marius Budu 54, joins the Boboc & Asociatii law firm as head of its criminal law department.

He graduated from the Bucharest Law Faculty in 1983 and has over 20 years of experience, having served as prosecutor and military judge.

Iosif Szavuj is the new general manager of DigiSign, a member of iNES Group.

He also serves as general director of the group. Szavuj is a graduate of the Polytechnic University in Bucharest.

www.business-review.ro Business Review | December 13 - 19, 2010

INTERVIEW 9

Back to fundamentals In spite of the slow economic progress and limp post-crisis recovery there are good reasons to invest in Romania now, Jochum Haakma, TMF director of group business development and chairman of the Netherlands Council for the Promotion of Trade, told Business Review. ∫ SIMONA BAZAVAN For some years now, the Netherlands has been Romania’s biggest source of foreign investments. Why is this?

What should the Romanian authorities do to attract more investments?

Ensuring stability in the long run and upgrading infrastructure go without saying.

I don’t know how active Romania is in attracting foreign investments. As a diplomat travelling around the world – and I’ve spent eight years in the Far East and nine in China alone – I never saw many signs that Romanian governments or ambassadors were really putting an emphasis on selling Romania as an investment destination. And this is another thing. Public diplomacy is extremely important. It is not only about being good, but also about being seen to be good.

What local industries have the potential to attract Dutch investments in the future?

Romania is trying to present itself as an important regional hub, making use of the Constanta port, but in order to that, developing local infrastructure and attracting more EU funds are vital.

I never saw many signs that Romanian governments or ambassadors were really putting an emphasis on selling Romania as an investment destination.

Since when has your company been active in Romania and how has the business evolved over the years?

TMF has been present on the Romanian market since November 1999. It started as a greenfield operation and has posted growth over the past 11 years, both organic and through acquisitions. We are specialized in providing compliance related services and we have close ties with foreign investors active in Romania.

TMF Romania offers administrative solutions and we assist clients at all stages of business development, start-up, growth and divestment. We currently have 100 employees and more than 300

clients, international and multinational companies.

What is TMF’s strategy for Romania? To what extent has your current business strategy been affected by the economic recession?

TMF Romania is part of a global network, comprising 87 offices in 67 countries, and TMF Group plans to double the size of its network in the next few years. As such, TMF Romania’s strategy is part of the global strategy and is built around a common business philosophy, aimed at focusing on customized services. This also means that the economic recession has not forced us to reconsider our strategy. At the end of the day, the economic recession was a call to reposition the business on the basis of economic fundamentals. Once firms were already positioned here – as TMF was – the recession had little impact at strategic level.

To what extent has the current economic turmoil affected the local market for such services?

The economic recession has definitely affected the size of the local market, to the extent that some companies have had to restructure or curtail their operations.

The macroeconomic conditions and uncertain legal and tax environment have acted as a hurdle, not allowing the market to expand due to the significant decrease in foreign investments. Thus, the overall market has shrunk. However, the market niche in which we are active has not experienced the same decrease.

What is your company’s strategy in Romania for the next year?

We expect 2011 to be an interesting year in terms of the accounting and management outsourcing market, as more players are expected to appear in the investment arena, while more companies are likely to concentrate on strategic deci-

Photo: Laurentiu Obae

Romania is in no way an exception or a curious case. Dutch companies have been roaming around the world for many years and a large amount of the Dutch GDP derives from outside the Netherlands. But coming back to Romania, yes, indeed, there have always very close diplomatic and economic bilateral relations between our two countries. After EU accession, supported by the Netherlands, many Dutch companies came here, attracted mainly by the location, the low labor costs and the skilled workforce. There were many good reasons to come here and there still are. Dutch companies’ interest in Romania has not been fading away, let’s put it like that.

This is one of the features that makes Romania stand out among other economies, and it is a pity. The whole region is growing and developing and there is the momentum to really invest in logistics.

For Dutch investors I think there is a good opportunity to invest in supply chain management and logistics, which is a field where we have lots of expertise, and also in infrastructure itself. Port management, oil and oil-related business, the automotive sector, ship building, electronics and key agriculture are other fields where there are many Dutch investors already active. And there is still room for growth in the local financial and insurance markets.

sions, outsourcing some of their administrative activities. Businesses everywhere are focusing more and more on what they do best (their core competency), and wherever possible, outsourcing the rest. Our strategy is to consolidate and extend our market position by permanently adapting to our clients’ needs.

For the entire interview please visit business-review.ro/interviews

CV Jochum Haakma 2007 Director business group development of the TMF Group BV in Amsterdam.

1997 – 2006 Consul General in resp.

Hong Kong/Macao and Shanghai.

1989 Director of the Indonesian Netherlands Association in Jakarta

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Philanthropy cash gap wit The economic crisis has meant budget cuts for almost everyone on the market, from big players to small businesses. CSR budgets were no exception, but this has not stopped NGOs and companies supporting good causes. Business Review investigates how environmental, health, education, social and cultural issues have been tackled through this year’s campaigns and what more can be done in the future. ∫ CORINA DUMITRESCU “In recent years, especially in 2009 and 2010, there has been a significant increase in the number of environmental and health causes supported,” says Florentina Loloiu, program director at Gala Societatii Civile (the Civil Society Gala), a project that promotes and awards the non-profit sector in Romania. However, social issues – such as social assistance and inclusion – have not been ignored, she continues. “On the contrary, this is a domain in which NGOs have constantly implemented either immediate-response projects, identifying certain needs at a given moment, or ongoing activity.” Educational projects have also been on the rise, adds Loloiu. Regardless of the field, projects that involve volunteering are the most successful, “since these projects use minimal financial resources and are, at the same time, the most transparent.”

Loloiu says, “The 192 projects submitted for this year’s Civil Society’s Gala, which were mostly implemented throughout 2009, have attracted funds of EUR 13 million.” All of the money has come from the private sector, the public sector and the EU. Self-supporting NGOs are also in the picture. According to the State of the Non-governmental Sector study carried out by Gala Societatii Civile with the support of Ursus Breweries, sponsorships and donations in the private sector are financing sources for 18 percent of the 174 surveyed NGOs.

Social initiatives? Yes, we can!

Regarded as one of the most creative countries in its region, especially due to its Latin origins, Romania’s social initiatives have begun to flourish with out-ofthe-box ideas. Lecturi Urbane (Urban Reading), which encourages people to read more, began life as a modest initiative in Bucharest, through which a small group of people took to the subway daily to read, to encourage other passengers to follow suit. It is now a project of national proportions, taking place in over twenty locations across Romania, with young locals doing something that counts for their communities. The project, ini-

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py plugs the ith creativity tiated in 2009 by Dan Dumitrescu, founder of Civika, a platform promoting social change, Andrei Rosca, creator of Bookblog, and Adrian Ciubotaru, blogger, activist and writer, is a typical example of achieving a lot with a little financial support, since the project mostly relies on volunteers and donations.

Street Delivery is another notable social initiative, aiming to return the city to its rightful owners, the people, through a three-day marathon of music, street theater, dance, open-air movie projections, water fights, sight-seeing, charitable

STOCKEXCHANGE

events and NGO presentations, storytelling, cooking and socializing, among many other activities. Held for the fifth time in summer 2010, Street Delivery is a lobby initiative aimed at the Bucharest City Hall, calling for the widening of sidewalks across Bucharest, the creation of a pedestrian underground passage to cross Magheru Boulevard and the construction of multi-storey car parks. The event’s wide array of artistic activities takes place annually on Arthur Verona Street, which is closed to drivers, allowing access only to pedestrians and cyclists.

Annually, Street Delivery attracts between 20,000 and 30,000 visitors.

Children, among the most vulnerable members of today’s society, are not neglected by local NGOs. The Christmas Trees Festival, the Save the Children event now on its tenth year, has managed to raise EUR 2 million for the benefit of over 10,000 children over the last decade.

To counter school abandonment, which a 2009 report found has risen in Romania in recent years, Save the Children has launched the national program Centers for Orientation and Resources for Inclusive Education – Complex Educational Services. Co-financed with European Funds, it aims to help disadvantaged children learn more about the need to go to school. One program from the NGO this year is Crestem impreuna (We Grow Together), for children whose parents have sought work abroad. Children from floodhit areas have also had help from the organization. In the first two trimesters of 2010, companies invested over EUR 350,000 in Save the Children NGO’s social programs.

In the same domain, UNICEF Romania did not solely focus on the needs of local children. At the start of the year, Haiti earthquake victims were also targeted, as were flood victims in Romania.

The organization raised USD 750,000 for its Haiti campaign, while the USD 937,000 collected for the local initiative was used to fund the distribution of hygiene products in the affected areas, psycho-social and counseling for families, school and house repairs and the purchase of school supplies. Drawing on the same percentage principle, UNICEF launched an affinity card in association with Unicredit Bank, where one percent of each transaction is donated by the bank to UNICEF. The social integration of people with disabilities is a priority for Asociatia Prietenia. In 2010, the association, funded entirely with private resources, collected RON 73,000 through the 2 percent of income tax that can be allocated to an NGO program. However, the organization needs a lot more to assist people with disabilities, says Daniela Laptoiu, project manager at the association.

Elsewhere, young people and children with seeing and hearing difficulties are

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12 FOCUS “The 192 projects submitted at this year’s edition of the Civil Society’s Gala, projects whose activities were mostly implemented throughout 2009, have attracted funds of EUR 13 million”, Florentina Loloiu, program director at Gala Societatii Civile (The Civil Society’s Gala)

Courtesy of Save the Children

Light Into Europe NGOs main concern.

This year, through the Guide Dogs for the Blind program, the first trained guide dog in Romania now assists a visually impaired person and will hopefully be the first of many. Large-print books are also published by the NGO for the benefit of the partially sighted. Those with hearing disabilities now have their own manuals with the help of the organization. The creative development of all these children is encouraged through the workshops that Light into Europe organizes.

Corporate players have also got involved. Vodafone Romania has invested EUR 10 million in its 12 years of activity on the Romanian market. In 2010, over 30 social programs were started on matters concerning health, education, the prevention of family abandonment, as well as schemes for the young and elderly.

This year, the Vodafone Foundation start-

The Christmas Trees Festival organized by Save the Children draws on the talents of Romania’s top designers

ed its Voluntar de profesie program (Professional Volunteer), through which members of the public were invited to work as a volunteer for any NGO in Romania, with the foundation paying the

volunteers’ salaries for the four months of the program. Of over 500 applicants, 12 were selected as finalists. Vodafone continued its partnership with the NGOs Habitat for Humanity, Hospice Casa Sperantei, Sfantul Stelian, SOS Satele Copiilor, Special Olympics, Motivation, Edelweiss Sibiu and others.

The United Way NGO has a similarly broad approach, dealing with issues concerning education, health, social and economic integration. United Way has raised RON 2 million as part of its November 2010-October 2011 campaign to date, says Veronica Guzun, resource development manager at the NGO. Compared to last year, “company contributions decreased by 29 percent while, paradoxically, individuals’ contributions grew by 7 percent, which makes us very happy,” adds Guzun. What the crisis has taught the NGO is that people need to be convinced that even the smallest contributions can bring important changes, she concluded.

Staying with the crisis theme, another timely issue is the reintegration of laid off workers. Petrom put up funds worth EUR 5.2 million for the re-employment of 25,000 and the training of workers active in conditions of high risk.

vember 2010, 21,000 trees were planted in Bacau County by almost 900 volunteers, following the 25,000 trees planted in April by 500 volunteers in Ploiesti.

The educational component consists of a camp on eco-civic themes, in which 600 pupils participated this year, winners of a contest which 5,600 entered.

MaiMultVerde NGO, founded in 2008, focuses on environmental awareness, cleaning up and tree planting, as well as encouraging the use of bicycles. According to a study by the NGO in 2010, in collaboration with Gfk, 29 percent of young Romanians have been involved in volunteering (compared to 13 percent in 2004), of whom 54 percent chose environmental activities. In 2010, MaiMultVerde had a total of 3,000 volunteers involved in projects that saw 32,500 trees planted and 18.5 tons of garbage collected.

Education for all

Education is an issue of concern for children from Romania in financial difficulties. 2010 was the second year of Ovidiu Rom’s public awareness campaign Scoala te face mare (School Makes you Big), emphasizing the importance of early education for all.

The campaign stresses the right of every child to a good education and also Going green encourages people in general to be more Clean the whole country – in a single day! proactive when they know of children is the slogan with which Let’s Do It, Rowho are not attending kindergarten or mania! aimed to encourage as many peoschool, says Leslie Hawke. She started the ple as possible to contribute to improving Ovidiu Rom NGO with Maria Gheorghiu, the environment. Inspired by the project that successfully turned Estonia into a “for the purpose of addressing the wide waste-free country in 2008, Let’s Do It, gap in educational attainment between impoverished children and other children Romania! gathered over 150,000 volunin Romania,” as Hawke puts it. “The teers on national clean-up day, Septemmost exciting thing we did this year was ber 25, collecting over 187,000 sacks of to invite mayors in Romania to apply for waste and becoming one of the biggest funds to get every child in their commuenvironmental drives of recent years. nity in kindergarten. We got over 100 apAnother green initiative, Tara lui Anplications and ultimately we selected 13 drei (Andrei’s Country) was started by communities to participate in Fiecare Petrom in 2009, with its focus the plantcopil in gradinita (Every Child in Kindering of trees, as well as educating the garten),” she continues. public about environmental issues. In No-

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14 FOCUS

Steps towards a healthier society

gether for Each and Everyone projects used USD 170,000 and the communication of the CSR platform the other USD 230,000. In 2009, Rompetrol allocated a total CSR budget of USD 1.75 million, USD 1 million of which went on implementation and USD 750,000 on communication and marketing.

The topic of health was of concern to fellow energy firm Petrom, too. This year, it launched the Respect pentru viata (Respect for Life) program, in collaboration with the Ministry of Health, aimed at the development of emergency telemedicine in Romania. Through this project, Petrom invested in connecting the Floreasca Emergency Clinical Hospital to 16 other locations across Romania, adding to the seven linked up in 2009 by the Ministry of Health. The project, which began in November 2010 and will be finished by February next year, consisted of a total investment of EUR 410,000, says Mona Nicolici, CSR communication manager at Petrom. This year, Nicolici estimates that Petrom invested a total of EUR 3 million in social responsibility programs, a similar sum to previous years.

Healthy living is a popular cause

Courtesy of Rompetrol

It does not take a prominent and well funded NGO to raise awareness of a good cause. One example of a health issue promoted by an individual is Iulian Vacarean’s Pasi catre viata (Steps towards life) initiative, which consists of a series of cultural-urban events taking place in unconventional spaces, all for the benefit of child cancer sufferers at the Marie Curie hospital. At Street Delivery, for example, Iulian calls himself a professional lemonade maker, and the lemonade that he and his colleagues make is sold for RON 7 (around EUR 1.5), with proceeds going to the children at the hospital. In 2009, EUR 2,400 was raised for Iulian’s cause – building a sterile room for the pediatric oncology department at Marie Curie hospital – a small, yet significant part of the

required EUR 20,000. On December 15, at Kulturhaus club in Bucharest, a charity concert will be held as part of Vacarean’s Pasi catre viata initiative, for the same purpose.

Health was also of major interest to larger companies. To provide assistance and financial support for vulnerable sectors of society, in May 2009, the Rompetrol Group launched the CSR platform Energy Comes from the Heart, which includes the national program Together for Each and Everyone and timely projects in the healthcare and environmental protection areas. Together for Each and Everyone is designed for NGOs, local authorities and public-spirited individuals who want to get involved in the development of the local communities they belong to, by proposing and implementing healthcare or environmental projects (with full financial support from Rompetrol). As a result of the project, in 2009, eight medical units (seven in rural areas) were refurbished and equipped with medical equipment.

The budget of Energy Comes from the Heart was USD 400,000, of which To-

Courtesy of Hospice Casa Sperantei

The Halloween Charity Ball is Ovidiu Rom’s only fundraising event. At the ball, 188 donations from individuals were received, twice as many as last year, raising over EUR 500,000 for the benefit of 1,200 children in need.

Rompetrol’s CSR has a medical theme

Courtesy of CSMB

CSR is most effective with teamwork

Cultural projects take center stage Medieval Monuments of Bukovina, a collection of images of Bukovina, has been released in aid of the promotion, conservation and restoration of heritage monuments in the area, eight of which are UNESCO listed. The book was launched at the National Art and Medieval Civilization Symposium in Suceava, at the end of November, by the Art Conversation Support publishing house.

The NGO was set up in 2009 to benefit the cultural heritage and includes restorers, art historians and chemists, as well as heritage supporters. In the words of the NGO’s president, Anca Dina, such an initiative is important for the Romanian people, as the preservation of historic monuments brings a better understanding of the nation’s history.

Fundatia Calea Victoriei (Calea Victoriei Foundation) is an alternative school for children and adults alike, organizing workshops and events on cultural themes such as Bucharest’s history, anthropolo-

“Company contributions decreased by 29 percent while, paradoxically, individuals’ contributions grew by 7 percent, which makes us very happy,” states Veronica Guzun Guzun about United Way’s current fundraising situation

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Photo: Vlad Basca

Mai Multe Verde’s tree-planting efforts are creating a cleaner, greener Romania

What lies ahead?

Taking an overview, is there a secret to philanthropic campaigns? “Companies seek most to involve employees in their CSR activities and projects, but especially communities and project beneficiaries, as well as non-governmental, non-profit organizations. I think that this is the ‘success formula’, if we may call it that, that an NGO needs, and with which companies cannot fail when it comes to social responsibility,” suggests Loloiu.

The biggest challenge that Romanian society is faced with when tackling community issues: “Inertia due to a sense that nothing will ever change,” Leslie Hawke, Ovidiu Rom

change,” answers Leslie Hawke bluntly.

The above-described cases show, however, that change is emerging locally and positive signs of social involvement are appearing on the horizon, albeit slowly.

The above is by no means an exhaustive list of philanthropic activities undertaken by companies or NGOs this year. Numerous worthwhile projects, campaigns and causes have been omitted, on account of space limitations, but all are doing their bit in a society seeking more involvement from all of its members.

corina.dumitrescu@business-review.ro

Photo: Stelian Pavalachee

gy, design, architecture, art history, costume history, cinematography, theater, philosophy, photography and creative writing, among others. Using funds that the foundation raised in 2010 through its courses and events, 150 students received scholarships to follow courses.

The most notable event of 2010 organized by the foundation was Balul Bucurestiului Interbelic (the Interwar Bucharest Ball), held in May, and structured as a time trip through Bucharest’s history.

Major cultural figures attended the event.

She also recommends companies put more focus on fundraising activities and promotion. According to the State of the Non-governmental Sector study, “31 percent of the responding NGOs did not have a dedicated fundraising department and 12 percent did not have a PR department through which they can communicate their activity”. When it comes to raising money, the most important aspects are relevance, translated as the way in which the project responds to issues in the community, the cost-benefit analysis, which involves obtaining good and durable results with low resource consumption, the project’s impact and the originality of its approach, outlines Loloiu.

“In many of the projects submitted in 2010 to the Civil Society Gala, financial resources have been replaced by volunteer work, material resources, products, services, expertise or know-how, found at the basis of the partnerships, especially with private sector players,” says Loloiu. And the most important issue that NGOs active in Romania are faced with? “Inertia due to a sense that nothing will ever

Get on your bike!

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16 FOCUS

Romanian beauty firms try to conceal market blemishes COMPANY PROFILES Farmec Cluj-Napoca Founded Roots go back to 1889, modern history begins in 1967 Estimated 2010 turnover approximately EUR 17 million

Elmiplant Courtesy of Farmec

The cosmetics market is not going to win any beauty contests this year as far as profits go. 2010 proved to be an ugly time for manufacturers with the market decreasing for the first time in recent years.

Nevertheless, local companies take pride in their renewed consumer popularity and what they call more than skin deep profits, announcing plans that should scrub off the effects of the crisis.

Pots of promise: the local market is still small compared to others in the region

Ivatherm Founded in 2005 by Rucsandra Hurezeanu. It continues to be the only Romanian derma cosmetics manufacturer Estimated 2010 turnover EUR 2 million

∫ SIMONA BAZAVAN

Gerocossen Founded 1990 Q1 2010 turnover EUR 1.3 million

Courtesy of Farmec

Courtesy of Ivatherm

The cosmetics market has declined on specific segments in the past year compared to 2010, but continues to count itself among those fortunate enough not to have experienced the full blown effect of the economic crisis, Ioana Borza, marketing manager at Farmec Cluj-Napoca, one of the main local cosmetics manufacturers, tells BR. Estimated at around EUR 550 million, the market is expected to drop in 2010 for the first time after years of constant growth. According to Raluca Raschip, consumer tracking director at GfK Romania, the personal care segment was hit the hardest, falling by ten percent in the first nine months of the year due to the fewer shopping trips made and less money spent by consumers. “The numbers show that the local market is about ten times below those in countries like Poland or the Czech Republic. This also means that there is still room for growth in future years, but only after the current economic context picks up,” Rucsandra Hurezeanu, Ivatherm’s founder and GM, tells BR. In the battle with their bigger international counterparts, local manufacturers have become more vocal, choosing to invest more coherently in promoting their brands. New products were launched in 2010 and as elsewhere in the FMCG sector, promotions lent a helping hand to boost sales, albeit affecting profitability. So far the efforts are paying off, manufacturers say. “From our data, local products are growing against international ones, especially in the skin care segment. By local, I mean Romanian brands and not various no-name products made in Romania,” Andreea Cremenescu, brand manager at Elmiplant, tells BR. The tighter purse strings brought about by the recession have made cautious consumers pay more attention to the price-quality ratio, and this has also worked in favor of local brands.

For Farmec Cluj-Napoca the recipe for

Founded in 1992 by Elena Cremenescu and sold to Sarantis in 2007 for EUR 6.5 million Estimated 2010 turnover EUR 5 million

Rucsandra Hurezeanu, Ivatherm’s founder and GM

Ioana Borza, marketing manager at Farmec Cluj-Napoca

success was investing in marketing and brand promotion and extending its distribution network while keeping a balance between modern and traditional retail. This year the company limited largescale investment projects and threw more money into marketing with a budget of over EUR 1 million for communication and brand promoting, according to Borza. The Gerovital H3 Evolution and Gerovital Plant Tratament product lines were among the brands which benefited from the funds this year. The promotion of the latter also included an online campaign targeting bloggers.

For 2010 Farmec Cluj-Napoca announced a RON 72 million (approximately EUR 17 million) turnover for the first three quarters of 2010, a 9 percent growth against the same period of 2009, according to company representatives.

About 10 percent of the company’s turnover is generated from exports, with Gerovital and Aslavital being Farmec’s most popular brands among foreign consumers. Farmec Cluj-Napoca exports to over 30 countries, but Japan, Lebanon and the United Arab Emirates are its top three external markets, says Borza. “For the past two years we have mainly con-

centrated on growing on the local market but in the future we intend to focus intensively on developing new partnerships outside Romania,” concludes the marketing manager. International expansion is also on the cards for another local manufacturer Ivatherm, who will target neighboring markets in 2011, says Hurezeanu. Ivatherm was established five years ago and is Romania’s first and only derma cosmetics manufacturer. Until 2010 the market for derma cosmetics had proved very dynamic, with growth rates of as much as 40 percent in 2008.

This year, however, the market will follow the general trend and will most likely drop by about 10 percent, estimates Hurezeanu. Consumer behavior is also changing. “While previously consumers knew they would find safe and efficient products at a fair price in pharmacies, now they are starting to look for promotions here also,” says the GM, explaining that the company has had to adjust by shifting to more consumer-friendly communication and sacrificing profitability to market share. Nevertheless, Romanians are receptive consumers who are getting more and more accustomed to the derma cosmetics concept and the

market offers a lot of room for future growth, Hurezeanu adds.

For 2010 Ivatherm expects a EUR 2 million turnover, an increase of approximately 10 percent against the previous year. The bulk of the investment budget for this year went into marketing, research and innovation, with the launch of new products such as the UNA anti-aging product line and Resveratrox Forte Anticellulite. Although a Romanian brand, Ivatherm products are manufactured in France and contain thermal water from Baile Herculane, a local spa resort. Distribution is done exclusively through pharmacies, with the company having a distribution network of about 1,000 units.

Elmi Prodfarm is another local cosmetics company betting on growth in 2011 with an 18 percent turnover increase this year, to EUR 5 million. Taken over by Greek Sarantis in 2007 for EUR 6.5 million, the company underwent an extensive rebranding campaign, launching 65 new products in 2009 and ten more this year. “After the takeover by Sarantis, all efforts were targeted towards rebranding the product portfolio (…). In fact, Elmiplant finally got the well-deserved support we had been searching for for a long time,” Cremenescu says. The company is market leader on the anti-cellulite product segment with its Bodyshape and Cellulight brands. As for what 2011 may bring, Cremenescu predicts that overall the cosmetics market will continue its downward trend, at least in the first semester.

simona.bazavan@business-review.ro

www.business-review.ro Business Review | December 13 - 19, 2010

POWER 17

Wind farms whip up a storm of interest

WIND FARM PROJECTS The total installed capacity of the top ten windmill projects reaches some 1741 MW, more than the capacity of nuclear units one and two in Cernavoda power plant.

CEZ, Enel, Energias de Portugal, E.ON, ButanGas, Verbund and Martifer are all internationally-known companies whose names have been linked to wind energy production. And local entrepreneurs, such as the Muntmark family and Sebastian Ghita, the Asesoft group founder, have also sensed profits in this exciting field. Market specialists are talking about 600-650 MW of installed capacity for this year and double that for 2011, leading to billions of euro in investments. But is the picture so straightforward?

Tomis Team (CEZ) Locality: Fantanele Installed power (MW)*: 255 Beta Wind (Marius Iliev & Astropoint Limited - Cyprus) Locality: Casimcea, Daeni, Topolog Installed power (MW)*: 232 Sabloal Energie Eoliana (RWE) Locality: Pestera Installed power (MW)*: 204 Land Power (Inergia) Locality: Dorobantu-Topolog Installed power (MW)*: 168 Alfa Wind (Verbund) Locality: Casimcea, Daeni, Topolog Installed power (MW)*: 150 Ewind (Muntmark family) Locality: Pantelimonu Installed power (MW)*: 150 Sabloal Energie Eoliana (RWE) Locality: Valea Dacilor Installed power (MW)*: 147 MW Team Invest (CEZ) Locality: Fantanele Installed power (MW)*: 90

∫ DANA VERDES STOCKEXCHANGE

At the beginning of the year investors were reluctant to announce a new wind farm construction, big or small, or even the merest hint of involvement in such a project on the long run, as the crisis bared its fangs. The government was – still is – just reacting to the severe international and national climate, and commentators say it has been taking measures which just exacerbate the fiscal and political instability, making the business environment even more unpredictable.

Yet, in the second half of the year private companies took courage and started to pull their heads out of the sand and move forward with wind farm projects that had hitherto existed just on paper.

The most recent announcement was made last week by Italian energy producer Enel. Through Enel Green Power, the company has started works on the Agighiol wind power plant, near the town of Tulcea.

The wind farm – which will include 17 wind turbines with a capacity of 2 MW each – will have an annual production of about 100 million KW, and will be able to meet the electricity needs of more than 35,000 households. At an average cost of EUR 1.5-1.8 million per MW of installed power, Enel’s investment could reach about EUR 60 million.

“This is the beginning of Enel Green Power’s electricity production in Romania. We have a substantial list of projects under construction and will significantly increase our presence in the country over the next two years,” said Francesco Starace, the firm’s CEO. According to Transelectrica information, the top ten wind energy projects on

Wind of change: this sector of the energy market is developing rapidly

the market have a combined total of 1,741 MW of installed capacity. But according to officials from the Romanian Wind Energy Association (RWEA), by the end of the year just 600-650 MW, worth EUR 1 billion, is likely to be installed in local wind farms. “We estimate that by the end of next year some 1,300 MW of wind farms will have been installed,” said Dana Duica, the executive manager of RWEA. Meanwhile, this year CEZ’s project in Fantanele began producing green energy.

And E.ON started three wind farms in Vaslui County, of 30 MW, 46 MW and 36 MW, at the end of September this year. Investments could reach EUR 200 million.

ButanGas Romania has also announced that it will have a wind farm of 25 MW in Constanta County functional at the beginning of next year, following a EUR 44 million investment. And Vestas has said that it will install at least 143 wind turbines with a 429 MW capacity this year and in 2011, at a cost of EUR 700 million, at Energias de Portugal’s wind farm project in Constanta.

The profits are blowing in the wind Local players are also getting on board.

Emanuel Muntmark inked a new trans-

action involving wind farm projects at the end of last month. The RomanianSwedish businessman, whose name has been linked with major windmill projects sold to CEZ, Petrom and ButanGas, has sold a 50 MW wind farm to Danish company Global Wind Power. Market sources, quoted by media reports, put the value of the transaction between EUR 7-9 million.

The Muntmark family has big plans considering its demand for premises for 664 MW wind turbines – close to a nuclear power reactor at Cernavoda – in Vulturu, Crucea and Pantelimonu, Constanta County. Given the average price per 1 MW of wind energy, the total investment for the projects initiated by the family could reach EUR 1.1 billion.

Meanwhile, businessman Sebastian Ghita, the founder of the Asesoft group – which controls IT&C retailers eMag and Flanco – is developing along with other investors a 70 MW wind farm project in Galati County. According to Transelectrica information, the project has already received a permit to connect to the grid.

An ill wind?

So far, so dynamic. But wind energy projects are not all milk and honey. Renewable energy investments are expected to hike the electricity price, which could rise by up to 30 percent from the

Renovatio Power (Energias de Portugal Locality: Pestera Installed power (MW)*: 90 *The list presents information from the first nine months of 2010.

Source: Transelectrica current level by 2017. Energy specialists say that this price surge could increase the cost of Romanian-made products. Another consequence could be that expensive energy generators are taken out of the game.

The gaps in legislation and energy transportation infrastructure are issues which are cooling investor’s enthusiasm.

According to Transelectrica estimations, the necessary investments in the grid for the wind farms alone reach EUR 250 million.

“From the financial point of view we do not have a good situation. The current lending conditions are very difficult and we can afford to cover only some of the necessary investments. Currently, Transelectrica can connect some 3,000 MW to the grid. There will probably be delays due to the financing issues of the energy transport operator,” said Dan Preotescu, network development manager at Transelectrica, at a Business Review event.

It remains to be seen if the Romanian authorities will find solutions to attract foreign investments or blow hot and cold over this revenue generator as they have done with others.

dana.verdes@business-review.ro

www.business-review.ro Business Review | December 13 - 19, 2010

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New-look BR launches club at Foreign Investors’ Forum Industries such as agriculture, energy and IT should be made priorities for the government, because of their potential to give Romania a competitive advantage, according to business representatives who attended the Business Review Foreign Investors’ Forum last week. ∫ STAFF The event gathered businesspeople and state representatives, who discussed the challenges that foreign investors face in Romania as well as ways to encourage investments. Government officials gave their side of the story, announcing state measures to boost the economy. The government has approved a proposal for the formation of a transparent national registry of all public debts in relation to the private sector, they said. It has also reduced or amalgamated more than 215 non-fiscal taxes and payments, out of 500.

The decentralization process has been sped up, added state officials. For example, in the healthcare system, more than 370 hospitals out of 435 are now managed by the local administration. Education, agriculture and culture will follow suit.

The state also has in place a financing framework for large companies, small and medium sized enterprises and young entrepreneurs.

In turn, the business community voiced its discontent with the new PPP law, which was “rushed to adoption before the summer holidays” along with flaws pointed out by the President that were not addressed in the approved version. Business leaders repeatedly complained about the lack of a fully fledged agency to serve as a one-stop-shop of information for potential investors, the lack of a real dialogue with state authorities and the lack of predictability and stability, especially in fiscal policies. They expressed their hope that before the next elections, the government will engage with the business community and government experts in a mixed working group to really reconsider the re-formulation of fiscal legislation in Romania.

Business Review also officially launched the BR Club at the event. Members will receive a premium subscription package with benefits from BR partners, the Maastricht School of Management, Samburesti wines, Aqua Carpatica and La Blanca restaurant. Most importantly, BR Club members will enjoy free access to all BR private events in 2011, which in the first part of the year will take place at La Blanca restaurant. Also at the event, BR introduced the magazine’s new layout, which includes a bigger and bolder format.

With this issue, the print run has been significantly increased, and BR is preparing to re-enter the BRAT next year. We look forward to your feedback on the new layout and would like to thank our partner Unlock Research who conducted the focus groups and interviews.

editorial@business-review.ro

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1. The panel of the Foreign Investors’ Forum 2. Jean Valvis, CEO and GM of Valvis Holding 3. Tom Hargreaves, CFO of Vodafone Romania 4. Andreea Paul (Vass), personal advisor to the PM 5. Dan Pascariu, president of the supervisory board of Unicredit Tiriac Bank 6. Cristina Filip, partner at PeliFilip 7. Hargreaves and Anca Harasim, executive director of AmCham Romania 8. Peter de Ruiter, president of the Netherlands-Romanian Chamber of Commerce and partner tax and legal services at PwC 9. Jose Luis Gilabert (middle), GM of Austrian Airlines, and Stefan Versemann (right), GM of Lufthansa

www.business-review.ro Business Review | December 13 - 19, 2010

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All Photos: Laurentiu Obae

10. The event provided an opportunity for high-level networking 11. A string quartet set a sophisticated tone for the evening 12. Sorin Vasilescu, director from the Economy Ministry (left), Mihaela Pohaci, associate at Popovici, Nitu & Asociatii, and Dan Schwartz, managing partner at Scot & Company Consulting 13. Robin Martens, general manager of Archicom, de Ruiter and Mihnea Anastasiu, media relations officer at PwC 14. Paul Renaud, CEO of Renaud Investments, with Vasilescu 15. Brian Arnold , partner at PwC, and Monica Spiteri, business development manager at TMF Romania

www.business-review.ro Business Review | December 13 - 19, 2010

20 CITY TRAVEL

READING

Eastern Europe’s only ice hotel to open by Christmas

Bukovina photography book promote cultural heritage

A new ice hotel is being built at Balea Lac, the focal point of the Ice Complex, which will include a church among other ice constructions, all part of the tourist marketing program Ice Hotel Balea Lac 2011.

The hotel will be built in the same location as in previous years, near the Balea Lac funicular. Its shape will be similar to last year, but the location will include more rooms, 14 in total. The

structure will also feature a bar and restaurant. This year’s theme is Ice Hotel – Light and Stones, each room bearing the name of a precious stone.

Given favorable weather conditions, Ice Hotel will be open by Christmas Eve, say organizers. Until then, however, visitors are invited to the construction site to observe the project’s development more closely. ∫ Corina Dumitrescu

Courtesy of ACS

Courtesy of BDR Associates

Ice to see you: unusual hospitality is on offer to cool customers at Balea Lac

Medieval Monuments of Bukovina, a collection of images of Bukovina, has been released in aid of the promotion, conservation and restoration of heritage monuments in the area, eight of which are UNESCO listed. The book was launched at the National Art and Medieval Civilization Symposium in Suceava, at the end of November.

“Monasteries and churches are the main points of attraction of the area, both those painted on the inside and on the outside; they are of global acknowledgement, as they are registered on the List of Universal Heritage, as well as of national interest,” said art historian Tereza Sinigalia, one of the two authors of the book.

“This book presents numerous images of the painting that was recovered from consistent dust and smoke accumulation. We would like to raise awareness of the effort made by restorers both towards painting conservation, as well as putting a focus on the artistic heritage passed down throughout time,” added coauthor Oliviu Boldura, an expert restorer with a 40-year background in the restoration of monuments in Bucovina and across Romania.

The book is raising funds for heritage Medieval Monuments of Bukovina is the first book launched by the Art Conversation Support publishing house. The NGO was set up in 2009 to benefit the cultural heritage and includes restorers, art historians and chemists, as well as heritage supporters. ∫ Corina Dumitrescu

FESTIVAL

French Film Festival brings long-awaited premieres to town

CELEBRATION Courtesy of the French Cultural Institute

National Culture Day set for January 15

National poet Mihai Eminescu

The Romanian president, Traian Basescu, has signed a decree officially making January 15 National Culture Day, newswire Mediafax has reported. Members of the Chamber of Deputies had previously voted for the move in November. It also pledges material and financial support from the authorities for the organization of cultural-artistic displays, to which the Ministry of Culture will also develop a guide. The initiative came from the Social Democrat Party (PSD), who chose the day in honor of poet Mihai Eminescu (January 15 1850 – June 15 1889), known as Romania’s “national poet”. ∫ Corina Dumitrescu

Medeea Marinescu in Donnant Donnant Romain Gavras’s first feature, Luc Besson’s most recent film, an homage to French director Alain Corner and a portrait of actor Romain Duris all form part of this year’s French Film Festival.

Over ten premieres will be broadcast to Bucharest audiences at Studio Cinema, Elvira Popescu Cinema and CinemaPro, from December 10-16.

The festival will open with Donnant, Donnant, Isabelle Mergault’s third feature,

starring Romanian actress Medeea Marinescu. Romain Gavras’s first film, Notre jour viendra, will close the festival, as one of the year’s most awaited arrivals.This year’s festival is dedicated to the late French director Alain Corner.

The festival will also include the debut works of now established movie directors, Luc Besson, Abdel Kechihe and Patrice Chereau. ∫ Corina Dumitrescu

www.business-review.ro Business Review | December 13 - 19, 2010

CITY 21

FILM REVIEW

Bringing geeky back: Justin Timberlake and Jesse Eisenberg in the Facebook film

The Social Network ∫ DEBBIE STOWE Directed by: David Fincher Starring: Jesse Eisenberg, Andrew Garfield, Justin Timberlake On at: Cinema City Cotroceni, Cinema City Sun Plaza, Cityplex

Welcome to the age of the geek. A time when brains finally trump brawn. A time when the richest man on the planet is a bespectacled techie who made his billions through computer programming. Which makes The Social Network an appropriate parable for our times. The film charts the meteoric ascent of Mark Zuckerberg, the Harvard student whose dorm room

website has made him the world’s youngest billionaire.

Dumped by his girlfriend for his absolute absence of social skills and arrogant pomposity, a drunken and bitter Zuckerberg (Jesse Eisenberg of The Squid and the Whale) spends the night setting up a website on which fellow students can rank the attractiveness of their co-eds.

Charming. But his petulant prank brings him to the attention of ambitious twin Olympic-rowing Harvard bluebloods, who task him with setting up an exclusive social network connecting fellow students online. As untroubled by intellectual property ethics as he is by sensitivity and modesty, Zuckerberg steals the idea and sets up a rival version. It would go on to be the global phenomenon Facebook.

This modern-day fairy tale juxtaposes the website’s path to global domination with two lawsuits that Zuckerberg was faced with, one launched by the irate twin rowers, and the other, more emotionally, from co-founder Eduardo (the adorable Andrew Garfield), Zuckerberg’s erstwhile best friend. Though involved from the beginning, financing the venture and providing the important programming code, Eduardo is royally screwed over when Mark falls under the spell of jumped up Napster founder Sean Parker (a wonderfully obnoxious turn by Justin Timberlake – who knew he could act?). Parker, Zuckerberg and their posse of super-geek programmers and underage dope-smoking local girls set up (and near destroy) house in California, from where the site goes corporate and global.

The big challenge was to make what could look fairly boring – nerds computer programming – exciting on film. To do that director David Fincher has played fast and loose with the truth, with raunchy frat parties, trendy clubs and plenty of sex and drugs interspersed between the techy stuff. Needless to say, many of those portrayed have complained about the version of events that Fincher presents.

Smart, snappy dialogue and superb performances from the leads, especially Eisenberg, whose gauche yet driven geekboy is masterful, keep things fizzing along. But The Social Network is mainly compelling viewing not because it’s about one of the internet phenomena of our time, but for its human angle. The spurned outsider taking on the establishment, rejection, friendship, loyalty, ambition, revenge, betrayal – the subject matter may be 21st century but the themes are timeless. Whatever the ethics of putting a fictionalized version of a living 20-something on the big screen – and Fincher’s Zuckerberg does not come out of it well – this cracking Facebook film is one of the most entertaining, energetic and exciting of the year.

editorial@business-review.ro

www.business-review.ro Business Review | December 13 - 19, 2010

22 IN TOUCH

QUOTE of the week

FROM OUR READERS Talking point CSR

A country of mommies and babies Irina Gheorghe, “I have noticed lately that Ro- G&T “On the corporate side, mania no longer has CSR has probably women but mothers. And it carried the battle between being a no longer has children but demanded combabies. The entire country is ponent of a comone of mommies and babies. pany’s activity and making/not makThere are women who need ing/coping with the to have a chance to reintebudget for the new year. With corpograte socially after giving rations, the key birth and you will see that to successful CSR stands with acthe dynamic option will be its perfect and tivity much more sought after by genuine alignlie with women than the static one,” ment to comtheir managepany objectives ment and marsaid President Traian and, I have to keting.

Basescu in reference to the say, to the genIt might be uine commitment interesting to see public debate about the and dedication of how the public’s perceplength of maternity leave the management & CSR tion of CSR-practicing compaand the benefits received by teams. nies has changed over the last two In times of downturn, I have years. As a consumer/buyer of prodnew mothers. found that CSR and social involvement ucts/services, I cannot help myself from Basescu spoke in favor of have gained ground as they present perceiving such organizations as more themselves as an opportunity to break humane. the two available options from the work schedule and give genuine – one-year or two-year ma- time away to good causes, which people Special offer on the local FMCG ternity leave – saying might currently find more rewarding. market this year: 7 percent off On the NGO side, the NGOs that are they allow for flexibility, well-organised and proactive have a lot to stimulate the return to gain. Those NGOs that achieve good visDave Jordan ibility and the attention and support of a FMCG companies do seem keen to work of new mothers large pool of (proactive) supporters will reach their 2010 numbers despite the and prevent de-professionget at the front and reach their objectives. economic woes. Is Q1 2011 being held to alization.

The keys for their organization and proransom?

WE ARE WORKING ON Otilia Haraga Senior Journalist is preparing a piece on how online auction sites are faring during the crisis. The downturn has everyone looking for good deals, which is boosting the popularity of these overhead-light sites. otilia.haraga@business-review.ro

Simona Bazavan Journalist is writing a review of the local retail market, researching the expansion strategy of the retail players active on the local scene in 2010 and their future development plans. This year has seen the announcement of some big names looking to enter the Romanian market, hinting at a positive 2011. simona.bazavan@business-review.ro

Corina Dumitrescu Journalist is working on a piece comprising holiday gift suggestions, whatever your budget and taste. From ethical eco gifts to the latest gadgetry, the article will include suggestions to reflect all the latest trends. corina.dumitrescu@business-review.ro

EVENTS, BUSINESS & POLITICAL AGENDA December 13 12:00 URBB Romania celebrates the 13th anniversary of the Tuborg beer factory in Pantelimon.

December 13 – December 18 19:00 Principesa Margareta Foundation and Carturesti organize the Story-telling Evenings.

December 14 11:00 Kingston Technology organizes a press conference to talk about future plans at

the Embassy Club in Bucharest. By invitation only

an Action Plan for Success". The event is free of charge.

December 15 11:00 LeitnerLeitner organizes a press conference at Grand Café Galleron to discuss the company’s results for this year and plans for 2011. By invitation only.

December 16 19:00 Lion House Consult is launching the first integrated concept on “Law Marketing” and a new website dedicated to the legal and consultancy firms in Romania at Ambasad’Or Events. By invitation only.

18:30 Maastricht School of Management organizes an MBA Open Class held by Rick Milter at Putul lui Zamfir 36. The main topic of the event will be "Leading Your Company Toward Sustainability: Building

19:30 Enel organizes a farewell party for Emanuela and Paolo Chighine at the Parliament Palace. By invitation only.

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ISSN No. 1453 - 729X

FOUNDING EDITOR Bill Avery EDITOR-IN-CHIEF Simona Fodor SENIOR JOURNALISTS Otilia Haraga, Dana Verdes JOURNALISTS Simona Bazavan, Corina Dumitrescu COPY EDITOR Debbie Stowe COLLABORATORS Anca Ionescu, Michael Barclay PHOTOGRAPHER Laurentiu Obae LAYOUT Beatrice Gheorghiu

EXECUTIVE DIRECTOR George Moise SALES & EVENTS DIRECTOR Oana Molodoi MARKETING MANAGER Adina Milea SALES & EVENTS Ana-Maria Nedelcu, Claudia Munteanu RESEARCH & SUBSCRIPTION Lili Voineag PRODUCTION Dan Mitroi DISTRIBUTION Eugen Musat

ADDRESS No. 10 Italiana St., 2nd floor, ap. 3 Bucharest, Romania LANDLINE Editorial: 031.040.09.31 Office: 031.040.09.32 Fax: 031.040.09.34 EMAILS Editorial: editorial@business-review.ro Sales: sales@business-review.ro Events: events@business-review.ro