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A business of convenience

The relationship between multinationals and SMEs is like a marriage – full of conflicts, yet an unavoidable institution. While the former repatriate profits, have strong lobbying power and dominate certain sectors, they also undeniably provide jobs, know-how and business for the latter.

Hungarian weekly Figyelő has published its latest list of the country’s Top 200 firms, according to which the top three companies in terms of 2010 net revenues remain oil and gas company MOL, followed by German car maker Audi and Finnish handset producer Nokia.

Figyelő also handed out various awards at its Top 200 gala event. The award for the country’s best financial institution went to home savings fund Fundamenta-Lakáskassza Zrt. Plastic and battery producer Jász-Plasztik Kft was voted the best job creator of 2011, while the most successful firm and Hungarian firm, respectively, were communication network provider Ericsson Magyarország Kft and waste management firm Alcufer Kft. The year’s best performer in organizational restructuring was newspaper distributor Magyar Lapterjesztő Zrt. 

Beauties or beasts

Setting multinationals and Hungarian SMEs against one another is wrong and harmful, as both play a key role in the development of the Hungarian economy, concluded the participants of the Figyelő Top 200 conference on multinationals versus SMEs. While multinationals can behave either as “beauties” or “beasts” in an economy, market players need to strive for win-win situations, said Erzsébet Czakó of the Budapest Corvinus University.

The relationship between multinationals and SMEs is like a marriage – full of conflicts, but still an unavoidable institution, János Csák, Hungarian ambassador to the United Kingdom said. “It is a series of good and bad compromises,” he noted. Among the country’s main strengths, he mentioned that Hungarians’ skills and talents are outstanding and they are “true cosmopolitans with internationalism in their blood”, with Hungary being an open country with several hundred years of trading traditions. 

Give and take

German car maker Opel has invested over €1.2 billion in Hungary so far, including a new €500 million investment announced last year, said Opel Magyarország brand director Tamás Kovács at the conference. Opel laid the cornerstone of a new engine plant at its base in Szentgotthárd, western Hungary, in April this year. The 30,000 sqm plant is expected to start making three engine families from the end of 2012.

Like Audi and Mercedes, Opel has contributed to the country’s development through bringing its know-how here, as well as its cooperation with local educational institutions. In its new plant, Opel will use the latest technologies, proving wrong the fears that in Hungary multinationals use outdated equipment that is redundant elsewhere, Kovács stressed. 

In terms of employment, 1,000-1,500 families earned a living at Opel during the past ten years. The company will provide about 800 new jobs in the new facility and several thousand indirectly in the region. The auto industry in Hungary provides jobs for more than 100,000 people through direct or indirect employment. 

The value of products supplied by local businesses reached €400 million in 2010, Kovács said. “Despite the already high value, we would like to further increase the proportion of Hungarian suppliers within the total,” he said. In March, Opel concluded an agreement with the Hungarian Investment and Trade Agency in order to facilitate contacts with potential Hungarian suppliers. 

Hungary is one of Opel’s most successful markets, Kovács noted. Market share rose 2 percentage points to 11.6% in the first half of this year from the same period a year earlier. Opel sold 2,980 passenger cars and light commercial vehicles in Hungary in H1. Corporate sales accounted for 70% of the total. 

However, the market of new cars in Hungary has been shrinking since 2004, Kovács pointed out. New car sales dropped to 54,000 in 2010, a 70% decrease from 2008. “Seeing the extent to which Hungary’s economy is lagging behind that of the region is shocking,” he said. In 2010, the number of cars per 1,000 people was only 315 in Hungary, compared to 444 in the Czech Republic, 473 in Poland and 565 in Slovenia. Kovács pointed out that motorization strongly correlates with GDP growth.