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WHY Hungary?
WHAT in Hungary?
Gergely Mikola
Chairman, British Chamber of Commerce in Hungary
Director of Corporate and Regulatory Affairs in CEE, BAT
A call for action
Two major mistakes in business:
– Focusing too much on what we sell
instead of focusing on the customer
– Keep doing the same thing and expect a
different result
Why Hungary?
Main macroeconomic indicators
in Central Europe
2011
Bulgaria
Czech
Republic
Hungary
Poland
Romania
Slovakia
Inflation
3,4%
2,1%
3,9%
3,9%
5,8%
4,1%
GDP per capita *
$ 7.202
$ 20.444
$ 14.050
$ 13.540
$ 8.863
$ 17.644
GDP growth **
1,6%
0,6%
1,4%
4,3%
1,9%
3,3%
Export statistics
(bn)
$ 28,1
$ 138,5
$ 110,1
$ 193,9
$ 62,7
$ 77,4
Import statistics
(bn)
$ 30,9
$ 133,2
$ 105,9
$ 208,0
$ 73,1
$ 74,3
Unemployment rate
11,2%
6,7%
10,9%
9,7%
7,4%
13,5%
Minimum wages
(EUR)
122.7
319,2
280.6
348.7
157.2
317
Source: Eurostat, 2011; Economist Intelligence Unit, 2012; IMF, 2011, Trading Economics, 2011
Statistical Office of the Republic of Serbia, 2011
*IMF staff estimates
**Trading Economics estimates
Budget deficit as percentage
of GDP in 2012
State debts
Europa.eu
Lower Labour Costs –
Western Europe vs. Hungary
Hourly labour
costs
(EUR)
Minimum
wages
(EUR)
2011
2010
2011
Bulgaria
3,5
Bulgaria
122.7
122,7
Romania
4,2
Romania
141.6
157,2
Slovakia
8,4
Slovakia
307,7
317,0
Hungary
7,6
Hungary
271.8
280,6
Czech Republic
10,5
Czech
Republic
302,2
319,2
Poland
7,1
Poland
320,9
348,7
Average gross annual earnings in EU states, 2012
Lembo Tanning, PhD: Labour Costs and Productivity Analysis of East-European Countries
High quality labour pool available
throughout the country
 400,000 students in 70 higher education institutions
 100,000 majoring in business administration faculties
 90% of students speak English
 20% of fresh graduates have international experience
 61% of students have professional experience
 Seniors and executives with several years of
experience readily available
Reality
External reality
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•
•
•
Increasing global competition
Troubled Europe
Strong regional race for investment
Local challenges
Internal reality
• Boardroom and webex fights
• Internal competition for funds
• Increasing shareholder demand and costbase vs.
stagnating/shrinking disposable funds
Investors’ view
•
•
•
•
Geographical location
Labour market, employment quality and cost
Political environment
Regulatory environment
– Complexity
– Change frequency
•
•
•
•
•
•
Infrastructure
Consumer/partner/competition
Financial and ITC systems
Tax environment
Incentives
…
Hungary - most active
industries/sectors
Automotive industry
Manufacturing
Information and communication technology
Chemicals and pharmaceuticals
Transportation and logistics
Agriculture
Overview of existing service
sectors
BAT Central Europe
Business Unit
• Established in April 2012
• 12 end-markets – (Bulgaria, Serbia, Montenegro, Czech
Republic, Slovakia, Albania, Kosovo, Slovenia, Bosnia,
Macedonia, Croatia, Hungary)
• BAT Hungary as cluster leader
• Number of employees: appr. 1400
• 3rd biggest volume contributor in Europe
Why BAT HU?
1. 100 years heritage in tobacco production with 20 years
presence of BAT
2. Mature organisation with highly skilled employees
3. Central geographical location, good infrastructure
Strategy recommendation
The 3 C’s
• Competitiveness
– Know what you are
– Know what you are not
– Know what you do best
• Consistency
– Keep the storyline
• Communication
–
–
–
–
Say it
Do not assume I know what you want to say
Do assume I read newspapers
Tell others so that they tell others