Exports are crucial to Hungary’s economy, and increasing the appetite for those exports is the job of Zsanett Ducsai-Oláh, CEO of the Hungarian National Trading House. In this exclusive interview with the Budapest Business Journal, she explains how it is done.
Hungary’s strong export performance is a key driver of growth in the economy, and the government is working to keep it that way. In April, Zsanett Ducsai-Oláh became the CEO of the Hungarian National Trading House (MNKH), a government body charged with promoting Hungarian exports around the world. She spoke to the Budapest Business Journal about the challenges and rewards of pushing Hungary abroad.
You became CEO of the Hungarian National Trading House (MNKH) in April 2015. How would you evaluate your first months in office?
MKNH was established to help Hungarian SMEs extend their export activities. For that purpose, we provide our partners, among other things, with specific business opportunities and up-to-date market information. Bearing that in mind, my primary goal was to boost the efficiency of our operation. The export of innovative technologies and knowledge and expertise enjoy priority. Therefore the Directorate for Technology and Knowledge Transfer was set up, the explicit task of which is to assist domestic innovative enterprises in entering markets abroad. The number of our trade representative offices has also increased: Now we are present in nearly 40 countries.
The latest statistics show exports up 7.3% in January-November 2015 and the foreign trade surplus up €1.4 billion compared to the year before. This is the global picture. But is there a targeted strategy for CEE as well?
The Central and Eastern European region is treated with special care, which is shown by the fact that, under our trade development program, we are opening 22 offices in total in seven neighboring states and Poland. Our performance is reflected by the success of Hungarian companies and export growth. In this regard, I find the past eight months of our activity positive and I expect even better results in 2016.
Hungary’s economic growth is buoyed by its trade surplus. To further exploit the potential of exports, you pushed an ambitious agenda this fall. Can you explain your reasoning?
Our program, called “Export Express” aims to accelerate the export activity of domestic SMEs. There were many driving forces behind the initiative. First off, thanks to continuously conducted market research and incoming requests, it has become clear what Hungarian products and services there is real demand for in certain countries and regions. Our country is competitive in several sectors; it can pride itself on innovative solutions with reason.
Hungarian firms still have lots of obstacles to overcome, including bottlenecks caused when huge orders come in and firms struggle to live up to expectations.
Indeed. A frequent problem is that they simply can’t meet volume demand on a large scale, so we need to find partners inside and outside of the borders in order to satisfy such requests. On the other hand, Hungarian companies often don’t have appropriate information on the needs of a particular market, or they lack resources to enter export markets. The already mentioned “Export Express” program should tackle this issue and so should the umbrella brand called “Áldomás”, which was created to support the export of domestic premium quality food products and high value-added hand-made goods.
The breakthrough of hand-made Zador soaps and fashion label BYME are great examples of products you personally promoted during your trip to the United States in October. What further measures are included in your “Export Express” program that could lead to similar success stories?
In parallel to the demand-driven approach applied thus far, we have drawn up a supply-oriented strategy focusing more strongly on domestic products and services. Under this scheme, we are looking for sales opportunities for products and services of 20 to 30 already successful exporters on international markets, which will then pave the way for other Hungarian companies to prevail. The second pillar strives to help startups and innovative SMEs succeed in foreign countries, and that is why our “InnoTrade” program has been launched. As a third cornerstone, we’d like to deepen cooperation with businessmen with Hungarian roots living abroad who, through their network, can give impetus to our companies to get on the right track.
What short-term results are expected under the program?
This is a long-term building process. We’ve got decades to make up for. After the collapse of communism the foreign trade enterprises were dissolved, whole sectors were left on their own and focused only on meeting domestic demand; SMEs could not deal with how to enter foreign markets. We want to fill this gap. We need to build a global reputation for Hungarian sector-specific know-how and other hot tech stories outside the European Union.
Are you sensing that the target markets abroad are getting your message about Hungarian exports?
I am confident that high quality Hungarian products and services, Hungarian knowledge and expertise are recognized and well received worldwide. In the food sector in particular there are world-class products – just look at how much Japan is interested. But innovative solutions in ITC, health care, engineering, and smart city technology are much sought-after too. In early December an agreement worth €25 million was signed with the municipality of Mongolia’s capital, Ulaanbaatar, where major city development projects will be executed with Hungarian smart city technology.
Currently, 81% of exports and 76% of imports involve EU Member States, and non-EU members on the continent are major trading partners. What are the results of MNKHʼs effort to increase trade volume with territories outside the continent?
There’s fierce competition out there for Eastern and Southern markets. Our ambitions to boost exports with the East are hampered by sanctions against Russia, and the conflict with Ukraine has an impact on all of our foreign trade activities with the entire community of the Commonwealth of Independent States (CIS). Under such circumstances, even maintaining the former export volume is a huge task. In Africa, only eight representative offices have been opened, whereas three have been set up in Latin America, where local experts will be charged with representing Hungarian products. As a result of the trip of the prime minister and 200 businessmen who travelled with him to South Korea and Kazakhstan, business opportunities worth HUF 23 bln and HUF 37 bln, respectively, are expected to materialize in the near future.
MNKH has launched its own startup program too. How can a government agency support private-sector startups?
Under “InnoTrade”, startups planning to go global are given the chance to attend international events, where they can meet potential investors and get invaluable market feedback. We help them build a professional image: We provide exhibition stands, accommodation and admission. We are ready to consider supporting their attendance at events other than those listed on our website as well. The first such select gathering was CES in Las Vegas. We are excited to learn how it went for our protégé startups.