4. Finpro – Finnish business partner globally
We help you to succeed
• Customized consulting services
• All phases of
internationalization
• “One-stop shop”
• Analyzed market information
& networking
• Partner network at your
service: in Finland and target
markets
The International Trade Centre (ICT), a joint technical cooperation agency of the United Nations and
the World Trade Organization WTO, awarded Finpro as the best trade promotion Organization of the
developed countries as well as the Best of the Best TPOs in the world in 2008.
8. CSEE: Attractive Business Region
Fresh and upcoming EU
members
Growing economic interdependence
with Western Europe
Improving business climate
Rising living standard
Lower transaction costs
Developing infrastructure
Less regulatory barriers
Cultural similarities
EU funds to development of knowledge
based economies
Cost advantages
Favorable Location Employment costs still 20-40 % lower than in the
Central location in Europe Western Europe
Geographic proximity to Finland Centralization of supporting activities bring cost
Good transportation possibilities
G advantage e.g. buying of goods, services or logistics
Tax benefits for investments
Fast growing markets
GDP growth rates 4-9 % before the
g Westernization of customer behavior
2009 crash
•Appreciation of western products and life-style
In short: An attractive location for any business operations – still! /
16. Cumulated FDIs in Hungary & Finland
in million euros
Hungary has accumulated
g y
much more FDIs than e.g.
Finland!
Sources: ITD & Bank of Finland, 2008
17. Hungary is a pretty easy place to run business
The World Bank has recognized Hungary’s reforms to reduce bureaucracy
Top Rank - Global
p
Indicators of the index
1. Starting a business
2. Dealing with licenses
3. Employing workers
4. Registering property
5. Getting credit
6. Protecting investors
7. Paying taxes
8. Trading across borders
9. Enforcing contracts
10. Closing a business
Source: World Bank, The Doing Business project 2009
18. Among OECD countries, doing business in Hungary is feasible
NOTE: Eastern European countries are compared, too: see the website!
Source: Doingbusiness.org, 2008
19. Corruption exist in the region, but is manageable
57: GR
58.TR
62: CR
70: RO
72: BG, MAC
85: ALB, CG
85: SRB
Total 180 countries
Source: Transparency International, 2008; Target, 3/2009 NOTE: ranking is based on
perceived corruption
20. Capitals are the key growth locations – but other options exist
The number of companies expecting to locate in European cities
Expats tend to like to work in the region – it is a
p g
NOTE ALSO: Budapest ranked among top20 favourable
challenging but rewarding business area!
expatriate locations globally!
Source: European Cities Monitor, Cushman and Wakefield, 2007; FDi Magazine, 2008
21. Competitive average wages
Monthly gross average wages in EUR in 2008
5000
4500
4000
3500
3000
2500
EU27 - average
2000
1500
1000
500
0
*latest available year: 2007
Source: National statistical offices, 2009
22. Strenghts of the Hungarian labour force
Competent senior managers
Finance skills
Availibility of skilled labour
Working hours ('000)
Labour regulations
Knowledge transfer between companies and universities
Availibility of qualified engineers
0 1 2 3 4 5 6
Hungary Slovak Republic Czech Republic Poland
Source: IMD Competitiveness Yearbook, 2009
24. Mapping talent: Hungary ranks 4th of 13 European countries
Rank
R k Talent I d
T l t Index
Country
2012 rating 2012
1 Austria 57.9
Russian
2 53.8
Federation
3 Poland 46.6 The EIU ranks
Hungary 4th of
4 Hungary 46.2
Czech
13 countries in
5
Republic
45.7
the CEE Talent-
6 Slovenia 45.6 Index
7 Bulgaria 43.9
8 Slovakia 41.4
9 Ukraine 40.3
10 Turkey 37.7
37 7
11 Romania 37.0
12 Croatia 36.6
13 Serbia 30.0
Source: Economist Intelligence Unit – Heidrich & Struggles, 2009
25. Good availability of labour
1 Ireland 7.90
2 Japan 7.24
• IMD’s World
3 Switzerland 6.94
Competitiveness Yearbook 4 Sweden 6.90
ranks 57 countries by the 5 Denmark 6.89
6 Finland 6.88
availability of skilled
7 Philippines 6.87
6 87
labour … … …
• Hungary is among the best 27 Hungary 5.74
… … …
10 European countries 30 United Kingdom 5.60
31 Czech Republic 5.58
33 Slovak Republic 5.43
42 Bulgaria 4.83
46 Romania 4.58
52 Poland 4.34
57 Venezuela 2.67
Source: IMD, World Competitiveness Yearbook 2009
26. Strong scientific capacity
The World Economic Forum Country Ranking
ranks Hungary 24th of 131
Switzerland 1
countries for the quality of
scientific research USA 2
institutions
Germany 5
France 19
Norway 21
Hungary 24
Czech Republic 30
Slovenia 33
Spain 49
China
Ch 56
6
Poland 64
Greece 76
Source: Global Competitiveness Report, World Economic Forum, 2007/2008
28. Excellent access to key markets
• At the cross roads of
4 main European
transportation
corridors
• Extensive road and
railway
transportation
network
• Highly developed
logistics and
telecommunications
infrastructure
Source: ITDH, 2009
29. Expanding highway network
Total Highway Network: 1100 km.
g y
Warsaw, 10
W
hrs
Prague, 5 hrs
Munich, 6 hrs
Hamburg, 8h
H b 8hrs
Kyiv, 12 hrs
Vienna, 1 hr
Rotterdam, 12 hrs
Bucharest,
Bucharest 10 hrs
Constanza, 12 hrs
Zagreb, 1 hr
Trieste, 6 hrs
Koper, 6 hrs Beograd, 4hrs
Source: ITDH, 2009
31. Logistics: Excellent geographical position
• Centre of gravity for
distribution in the CEE
• 13 logistics centres
serving at least two
transport modes
• Modern warehousing and
industrial facilities
Source: ITDH, 2009
32. Logistics: recent developments
Nokia: opened new logistics centre in Komárom (2007)
Panasonic: set up regional distribution centre (2007)
DAF: established distribution centre in Zsámbék (2008)
( )
Pfizer: relocated its Central-Eastern-European Distribution
Centre to Hungary, supplies 15 countries from here (2008)
Porsche Parts: further expansion in Törökbálint (2008)
Spar: opened new logistics centre in Ü (2008)
Üllő
Rail Cargo Austria: acquired MÁV Cargo (2008)
Záhony:
Sophisticated economic development programme
Renovation of wide gauge railway system commenced
„Hungary has a good geographical location and transport infrastructure
for distribution to our traditional European and non-European
markets.” Amos Anatot, Vice President, TEVA Pharmaceuticals.
markets ” Anatot President Pharmaceuticals
Source: ITDH, 2009
33. Automotive: Major production hub
Original manufacturers: Suzuki,
Audi
Suzuki: 282,000 pcs (2008 est.)
Audi Motor: 60,000+ TT coupés and
roadsters, A3 cabriolet
Engine manufacturing (2008):
Audi Hungary: 1.9 million engines
GM Opel: 400 thousand engines
14 of the world’s top 20 TIER-1s
present in Hungary
World’s 2nd largest powertrain plant in Hungary by Audi!
Source: ITDH, 2009
34. Automotive: What happened in 2008?
• Daimler investment announced
• Audi upgraded its plant to produce 12-valve, 6-
liter 500 HP diesel engines
• Bosch provided the ISG for the KIA cee’d
• Audi started production of engine and body
parts for the R8 GT3
• Suzuki began exporting the Splash to Japan
• The solar-powered Solo hybrid was introduced
at the Paris Motor Show
„A well trained labour force, a dense
A ll t i d l b f d
supplier network and favourable logistical
conditions were the main arguments in
favour of Kecskemét.” Dieter Zetsche, CEO,
Daimler
D i l AG
Source: ITDH, 2009
35. Biotechnology & Pharmaceuticals
„It is worth investing in Hungary since, in the very recent years, Hungarian researcher
have discovered two original molecules which are in development phase now.” Jean-
Francois Dehecq, CEO, Sanofi-Aventis
• The 5th largest drug producer
in Europe (note: vaccinations!)
• Largest biotechnology innovation and
spin-off sector in the CEE region
• University biotechnology centres
clustered in four academic towns
Source: ITDH, 2009
36. Bio & Pharma: What happened in 2007/2008?
Beike Biotechnology from China launched a
stem cell research project in two locations
(Budapest, Debrecen)
Sauflon Pharmaceuticals (UK) began building
a contact lens factory near Budapest. Capacity
is expected to reach 100 million contact lenses
per year
Pfizer (USA) opened a logistics and
distribution centre in Budapest
TEVA (Israel) expanded its capacity further in
Debrecen
Richter Gedeon (H) opened R&D facilities in
Budapest and Debrecen
Source: ITDH, 2009
37. Electronics: Major production location
• Largest electronics producer and
exporter in the CEE
• Major global manufacturers: Samsung,
GE, Philips, Sanyo, Sony and Jabil,
Flextronics
• Booming sectors: IT manufacturing
telecommunications, consumer
electronics
„
„Hungary p
g y provides an ideal environment for electronic manufacturing services as
g
the country has good industrial infrastructure and a strong industrial culture.”
Hannu Hanatala, Managing Director, Elcoteq
Source: ITDH, 2009
38. Electronics: What happened in 2007/2008
• NCR relocated ATM manufacturing to
Hungary
• Nokia is expanding its Budapest office
to oversee 11 national markets
• Electrolux expanded its facility in
Eastern Hungary
• Schaffner Holding (Switzerland) is
relocating production to Kecskemét in
Central Hungary
• Flextronics expanded in South-Western
Hungary
• Infineon expanded its manufacturing
base in Eastern Hungary
Source: ITDH, 2009
39. ICT & software development: Regional hub
• Several major well known software
developers are present including IBM,
present, IBM
HP, Siemens, CISCO, SAP, Oracle and
TATA
• Several IT companies, such as BT, EDS-
HP and Getronics operate technology
service centres in Hungary
• Strong cooperation between business
and academia in R&D (IBM, CISCO,
Oracle and SAP)
Source: ITDH, 2009
40. ICT: What happened in 2008?
• Cognizant: BPO, software development, Budapest
• CAS: software development, Szeged
p , g
• Cognex: software development, Budapest
• IBM: data storage, Székesfehérvár
• Broadband penetration: leading role in the region
Did you know that in the wake of the attacks against the World Trade
Center, a Hungarian company recovered data necessary for the world's
continuing financial development?
Source: ITDH, 2009
41. Renewable energy: Good source
• Hungary plans to reach 13% of RES in total energy production by
2020
• Major
M j areas of growth: biomass, biogas, wind power
f th bi bi i d
• Investments into biofuel and biomass production have already
increased
• Compulsory feed in tariff of between 5 13 cents depending on
feed-in 5-13
plant size
• EU provides EUR 600 million to support renewable energy-related
investments
• Emerging solar panel technology industry
Source: ITDH, 2009
42. Green tech: What happened in the past few years?
• Sanyo doubled its solar panel production capacity to 340 MW
for EU export
p
• Iberdrola Renovables set up several wind farms, total
capacity 158 MW
• Rossy Biofuels opened a 150,000-tonbiodisel plant in
y p , p
Komárom
• Zöld Olaj BB opened a 40,000-ton biodisel plant in
Gyö gyösö
Gyöngyösön
• Ökoline increased its biodisel capacity to 50,000 tons in
Bábolnán
Did you know that
Hungary’s renewable energy potential is 220 PJ/year and that
H ’ bl t ti l i PJ/ d th t
the country receives as much as 2,200 hours of sunshine a year?
Source: ITDH, 2009
43. Shared Service Centers: Popular location
Hungary had the highest
number of shared service
b f h d i
investments between 2002-
2006 in Europe (Ernst&Young,
)
2007)
SSCs throughout the country:
Debrecen, Miskolc, Pécs,
Székesfehérvár etc
Székesfehérvár, etc.
Positive feedback from
companies already present in
Hungary
Source: ITDH, 2009
44. SSCs: What happened in 2009?
• BP: financial service centre, 1100 employees, Budapest
• IBM: expansion of IT service centre, Székesfehérvár
• Vodafone: new financial centre in Miskolc
• Celanese: Honorary Mention for Best New Captive Shared
Services Organization in Europe
„EDS would not be employing a thousand workers here if we did not
believe in this country and in its people.”
László Szakál, Managing Director of EDS Hungary
Source: ITDH, 2009
45. R&D in Hungary
• Large presence of multinationals investing into R&D activities
• Continuously expanding R&D investments in automotive
manufacturing, software development and life sciences
• World-class tertiary education and scientific research
• In summer 2008 EU ministers chose Budapest as the headquarters of
p q
the European Institute of Innovation and Technology
• The institute focuses on energy, climate change and information
technology
„…I think that Hungarians are at least as good as their American, Chinese, Indian or
Western European peers. Their enthusiasm and motivation are the key factors. In
addition, they are extremely innovative...” Michael Fritts General Manager of
Engineering at GE Healthcare in Hungary
Source: ITDH, 2009
46. Real Estate: Office market trends
Major challenges in the office
markets in the next few years
Sources: Colliers; Cushman & Wakefield, 2009
47. Retail space estate market trends in Budapest
At the edge of overcapacity
in retail space
Source: Colliers, 2009
49. Major Finnish Investors in Hungary
Cca. EUR 1 billion investment value – largest share in the region – 200
companies/20,000 employees
Elcoteq
Finnforest
Halton Group
Helkama Forste
Huurre
Nokia
Sanoma WSOY
Savcor, Scanfil
Stora Enso
Tunturi
ICM, Lindström
,
Mecanova, Raflatac
Source: ITDH, 2009
53. Region is the leading growth market in Europe
Growth will return, b id
G th ill t besides th global challenges
the l b l h ll
In selected sectors, CSEE and Hungary are still growing and
markets are very attractive to new operations and operational
development
d l t
The downturn makes timing excellent for new busines development
and partner seeking
Finns can gains cost savings, but also get new customers
Salary and other cost difference still exists, but less than in the
y ,
past. Yet, the difference can be significant e.g. in manufacturing
business
European and also global companies have and still are shifting their
p g p g
global & regional service centers to the CSEE region. This can
open up interesting opportunities for Finnish service providers.
Moreover, there is a constant flow of FDIs to the region. This
enable international and to growing extent local sales to be realised
IN SHORT: Time to act is today!
54. Each market needs to be understood as a local market.
Act locally and:
1. do not accept the first person you meet
to be your exclusive agent/representative
2. check the background of whatever
potential partner
3. learn cultural matters and pay attention
to cross-cultural communication
4. adapt yourself to each particular market
5. plan and allocate enough time, money
and human resources
Finpro is locally present to help Finnish
companies to tackle these challenges!
55. Something to take home from Hungary …
Tokaj wines and
aszu (dessert wines)
Zwack Unicum
salami
Herb liqueur
salami Törley Sparkling Wine Goose liver
Tibi Chocolate
56. Let’s go international!
Tommi Pelkonen
tommi.pelkonen@finpro.fi
www.finpro.fi
www.markkinoille.com +36 20 250 10 77