German Chamber Eyes Prudent Optimism

Analysis

On August 6, the German-Hungarian Chamber for Industry and Commerce celebrated the 100th anniversary of the establishment of its predecessor organization, the German-Hungarian Chamber of Commerce in Budapest. The basic principles laid down back then, independence, bilateral relations and a practical approach, are still being pursued in the 21st century. 

András Sávos

For years, Germany has been Hungary’s most important commercial partner, far ahead of other partners (at least until the emergence of South Korea last year). In 2019, the United States ranked 14th in Hungarian imports, and 12th in Hungarian exports; altogether, the Hungarian-German merchandise trade volume was more than tenfold than that of Hungarian-U.S. trade.

No wonder then, that besides close political cooperation between the two countries, a proactive commercial organization is needed to sustain the impetus in bilateral German-Hungarian commercial relations. That organization is the German-Hungarian Chamber for Industry and Commerce (DUIHK).

While the inauguration of the chamber in 1920 may seem far distant, it was not the first of its kind. That honor goes to the German Chamber of Commerce established in Brussels in 1894. Such organizations thus have long experience in catalyzing exchanges and investments.

DUIHK aims at being a bridge between German and Hungarian business, but also seeks to act as a channel to the Hungarian government. The chamber is part of an international organization, says András Sávos, its current president.

“The network is present in almost 100 countries and with 140 offices around the world. It is very important to understand that DUIHK and the whole network are not traditional lobby organizations,” Sávos explains. The international association of chambers facilitates access to markets and provides various services, like consultancy in legal and tax issues.

“What we are especially proud of is that we have a professional institution offering training and education in several areas,” Sávos tells the Budapest Business Journal.

Intense Cooperation

During the last few months, DUIHK has been in very intense cooperation with decision making institutions, acting as a link between the government and companies, Sávos explains. For example, DUIHK participated in all the weekly discussions that have been going on between the government and the business sphere in Hungary since the outbreak of the coronavirus pandemic.

Talk about German companies doing business in Hungary, and the ones that come most easily to mind are the big players like Mercedes, Audi or BMW, but in all, DUIHK has more than 900 member companies.

“Most of them are not even large enterprises. More than three quarters are small- and medium-sized businesses. So, our activity largely concentrates on supporting these companies. We have members from basically all sectors of the economy, machine production, logistics, pharma, food industry and many others,” Sávos says.

And support was needed a-plenty this year. As soon as the pandemic started, communication with the member companies intensified. DUIHK says it collected a huge number of requests and transmitted them to the government.

“We, the staff at DUIHK gave a lot of thought to how we can structure the problems raised by our members and what our proposals and recommendations should be to the government,” the president says.

“One of our major accomplishments was the implementation of the German kurzarbeit [short time working] model in Hungary, based on a DUIHK recommendation. We received a lot of feedback from members that this measure has been a tremendous help for them. Even now we have an ongoing dialogue with the government regarding the regulations for those working in home office,” Sávos says.

Of course, in such extreme situations it is impossible to achieve an ideal solution for 100% of the member companies, the president added.

The most difficult problem companies encountered in the past months was losing markets. Once gone, these cannot be recaptured immediately, but there are solutions to ease the burden of missing revenue. For small companies, that might mean paying lower rental fees, for larger companies, maintaining production on a significantly narrowed market, ideally without laying off employees. Kurzarbeit was an important measure to this end, Sávos notes.

Complementary Roles

Besides being president of the chamber, Sávos is also managing director at Knorr-Bremse Rail Systems Budapest. How can one cope with two such high profile positions in such a difficult business environment? The roles actually complement each other, Sávos explains.

“Being the managing director of a large company greatly helps my work as president of DUIHK, since I have to solve very specific problems day by day, similarly to those that our members are forwarding to us as a chamber,” he says.

“I have to say that my company is in a privileged position, as our business in the rail industry has barely been affected by the COVID pandemic. The volume of orders is stable, basically unchanged from last year. The challenge for us, contrary to other companies, was rather to fulfil the large amount of orders, that is, to go at full speed ahead, so to speak. We expect the same level of orders, or even more, for next year,” Sávos adds.

One important publication released every year by DUIHK is its annual survey on the business outlook. The is usually conducted in February and in 2020, just before the pandemic pushed the economy into a crisis, it was again ready to go to print. But then everything changed and all prospects instantly evaporated.

“So, there was no point in publishing the report. What we did instead was to continuously survey our members, every two weeks, trying to figure out their status and future outlooks. Soon we will survey our members again and we hope to gather a lot of information about their order volumes, future prospect, how they perceive the effects of the pandemic,” Sávos says.

As for the confidence index among member companies, this is very different, depending on the sector.

“The automotive industry shows cautious optimism. As for tourism and others in the service industry, we see everything except optimism. In most sectors we see signs of prudent optimism, but much depends on what and how health measures will be implemented, how they will impact the economy and, most important, will there be a vaccine available in a few months or not. A lot depends on this,” Sávos concludes.

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