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Hungary's new strategic trading partner

The growth in trade between China and Hungary truly is impressive once you see the figures. But plenty of opportunities still lie out there, Ambassador Jian Gao told AmCham members, if only Hungarians can promote their products better.

I don’t think Hungarians are very good at promotions,” Jian Gao jokingly chided at a business forum on May 26. “Many people in China don’t know what Tokaj is. We have such a big market, what you are sending to us we can consume over night. In China we only know French wines and French libamáj [goose liver, the Hungarian foie gras].”

Despite the seriousness of the subject, there was a light-hearted feeling to the forum, held at the Budapest Marriott. In his introduction, AmCham President István Havas noted that diplomatic links between the countries were established in 1902, and the first Chinese delegation to Hungary arrived in 1906. “I didn’t lead it!” Gao joked. Much has changed since then.

“Bilateral trade is obviously growing. Last year the trade volume reached $8.72 billion, 28% more than the year before. It is also 156 times more when compared with 1991.” The figures for the first two months of 2011 showed 27% growth year-on-year at $1.47 billion. “We are expecting that trade volume will hit a record high this year,” Gao told delegates.

“According to UN standards, some 150 million Chinese are living under the poverty line. This is 15 times the whole population of Hungary.”

What is traded has changed, the ambassador noted. What she described as “traditional labor intensive goods” now make up only 5% of the whole, while technology, IT products and the like account for 90%. “The growth has obviously been on both sides. We import more electrical engines, cars and IT products from Hungary.” One-quarter of all the petrol engines imported into China come from Hungary, she said, a business worth some $650 million.

Investments, too, are expanding, with $2.5 billion having been plowed into agriculture, logistics, chemicals and IT interests in Hungary. “These joint ventures have recruited around 10,000 local people.” And Hungarian companies are also increasingly evident in China. “By the end of last year, Hungarians had set up over 670 projects of different sizes in China.” She put the total value of investments at $340 million spent on, among other things, water treatment, fisheries and business consultancy.

“Our cooperation is taking on more forms, that is to say it is expanding from traditional areas to the green economy.” The now familiar buzzwords of sustainability and environmental protection are gaining currency here too. In yet another example of how far the two countries have traveled, what is claimed to be the first Chinese international law firm in the world, Yingke Várnai, was established in Hungary in September 2010.

The pace of change in China has been bewildering, Gao acknowledged. “Sometimes I also feel dizzy and disorientated, let alone foreigners.” But she acknowledged that China still has much to do.

“According to UN standards, some 150 million Chinese are living under the poverty line. This is 15 times the whole population of Hungary. Many remote areas still have no electricity or clean drinking water. Challenges for China remain, we know still have long way to go…. I don’t paint a rosy picture, but I am not too pessimistic. As long as we stick to our open door policy, our people work extremely hard and education remains our first priority, we will move forward.”

She insisted China would address its problems. Among other things, domestic consumption must be raised to balance China’s trade profile, and that means attracting more FDI. “We will continue to pursue our policy of opening up to the outside. The only experience international trade has taught us is that there is no way to shut our door again, instead our door will be open even wider.” She promised there would be no bias against foreign investors, who would be welcomed and treated fairly “like Chinese nationals”. She added, “China is firmly opposed to trade protectionism of all forms.”

Gao urged people to travel to China and see the country “with their own eyes” and recommended getting out beyond Shanghai and Beijing. “They are not typical of China, go to the backward areas, the rural areas.”

The ambassador’s overall message gave a nod to the challenges both countries face, in their different ways, but was far from pessimistic. “I am optimistic about our [joint] future. I wish all of you present here would help make our ties closer. I believe this will conform to our interests, and US interests as well, and our peoples will benefit from these very strong bonds.”

This article was originally printed in the June issue of AmCham's membership magazine Voice under the title "Promoting better trade"