As part of the Carpathian Basin cooperation framework, the Carpathian Expo on March 12-13 aims to further strengthen trade relations between Hungarian companies from within the borders and those in neighboring countries. Zsanett Oláh, CEO of the Hungarian National Trading House (MNKH), a state-run agency, tells the Budapest Business Journal this ecosystem will allow ever more Hungarian companies to go global. Larger corporations, in particular, have much to gain.
BBJ: Where does the idea of the Carpathian Basin cooperation stem from?
Zsanett Oláh: The concept itself is not entirely new since a network of trade offices has existed for years now in neighboring countries with the purpose of fostering business relationships between Hungarian companies from within and outside the borders. The initial goal, however, was to export products and technology to those areas from Hungary. Under the current scheme, this aspect remains important, with the Carpathian Basin being a key export market for SMEs and large corporations alike. Smaller enterprises can capitalize on the proximity of markets that pose less risk. Another key aspect is that the export of certain products and services is viable only to those countries because of logistics-related reasons and customer service issues.
BBJ: What added value has MNKH to offer in this connection?
ZO: The idea was to take this Carpathian Basin cooperation to the next level by establishing an ecosystem where Hungarian companies located in Hungary and in neighboring countries will not be competitors but rather partners. This can happen by either forging new supplier relationships among themselves or joining our ‘Build Your City’ concept.
BBJ: What is this latter scheme, specifically, and how can companies benefit?
ZO: ‘Build Your City’ is tailored to offer complex solutions, not just given products or services, that can be marketed as a package to third countries. Under this framework, the phases of planning, execution and related services are bundled. In many cases, the products themselves are innovative, but the enterprise behind them is not competitive enough to go global on its own. Joining forces this way will also give the opportunity to promising, yet internationally inexperienced companies to gather references abroad.
BBJ: Getting back to the Carpathian Basin cooperation, how difficult was it to find and engage ethnic Hungarian companies in neighboring countries?
ZO: Our trade office network identified those under Hungarian ownership and those employing mostly Magyars. As a result, we now have a data base comprising some 3,000 such enterprises. We have organized a lot of events where the word was spread about MNKH’s services, opportunities to attend international fairs with our help or benefit from our export academy, a cutting-edge training program for firms wishing to make it big on foreign soil. The export academy has an e-learning curriculum as well, which is available at all times, without any geographic limitations. On the other hand, though, sessions are held not only in Budapest but also on the spot in the bordering regions.
BBJ: To what extent do the figures justify the enthusiastic expectations you have towards this regional initiative?
ZO: Since the opening of our first such trade office focusing on Carpathian Basin integration, deals worth HUF 5.7 bln have been closed. Last year alone the amount totaled HUF 2.1 bln. But there is a lot more to it than just business transactions. Hungarian companies from both sides of the border have set up subsidiaries, thus creating jobs and growth. This phenomenon also helps boost exports and improve competitiveness, since subsidiaries set up on nearby foreign soil might open the gate towards undiscovered third country markets as well.
It is also important to note that the border regions with major Hungarian populations have also started to do business with each other, so we have already achieved our goal that Hungary should become the leading economic force of the Carpathian Basin and get Hungarian products to remote destinations with the help of an existing network. The pillars are there to build on. What we lacked for a long time was the framework that makes this whole cooperation work and the processes along which it can come into existence.
BBJ: Where does Carpathian Expo come into the picture?
ZO: The first event was held last year in Hajdúszoboszló, a town in eastern Hungary, with the purpose of creating a specific platform for this Carpathian Basin network. Some 600 companies attended that event, with attendance expected to double in this year’s gathering at the Castle Garden Bazaar, a prestigious venue in Budapest. These summits are crucial to build this ecosystem; we get to meet the major players, most of whom typically represent the food industry and agriculture, with machinery, furniture and tourism-related services being slightly less dominant.
BBJ: So the Carpathian Expo is like a typical B2B trade show?
ZO: The set-up will resemble that, but there will also be a huge exhibition area. This is where Hungarian companies from across the border will have the chance to put on display what they have to offer. On the other hand, a plenary session is also scheduled to reflect on related economic issues.
BBJ: What is envisaged in the longer run for the Carpathian Basin cooperation?
ZO: We would like to maintain the existing dynamics. Both smaller innovative companies and larger capital-strong corporations have a lot to gain. In particular, if large-sized companies are open to complement their own solutions with innovative concepts from outside sources with our help, they could enter third markets with a more complex range of services. This would certainly boost their competitiveness. They could also access new markets, not least because MNKH has its own trade offices on the spot that are bound to facilitate the launch of operations greatly. The role of large enterprises is even more crucial in countries where there have been no successful Hungarian projects. In those cases, large companies have the potential to deliver the first relevant references that can pave the way for further projects from Hungary.