For years, Hungary’s biggest foreign investor has been Germany (the subject of our Country Focus in the last issue). But that does not mean the authorities here have not been actively seeking to attract FDI from elsewhere.
While the award-winning Hungarian Investment Promotion Agency is the personification of this approach, the most obvious policy example in recent years has been the “Opening to the East”. China is the main target here, but is far from the only one, with the three governments Viktor Orbán has led since his return to power in 2010 keen to benefit from what they see as the international pivot in terms of money, trade and, increasingly, influence away from the old Western powerhouse toward the East.
There have been notable milestones along the way. Russia is financing the expansion of Hungary’s nuclear power plant in the Paks II project with a EUR 10 billion loan. Beijing is providing Budapest with 85% of the loan for a long-awaited USD 2.1 billion high-speed rail link between the Hungarian capital and Belgrade.
For all that eastward pivot, the vast majority of Hungary’s trade is still with the European Union (77% of exports were with the EU26 in July 2020, according to the Central Statistical Office, and 71% of imports came from there). And yet, top spot in the FDI league table last year did feature a new face; for the first time ever, it was South Korea (with an investment volume of EUR 2.557 bln), from Germany (EUR 808.33 mln) and Japan (EUR 526.71 mln).
While the number one investor title may be new, Korean FDI in Hungary is not. Samsung Electronics has been making TVs here since its first factory started production in Jászfényszaru (73 km east of Budapest) in 1990. Other investments represent a much more modern concept: batteries for electric vehicles.
According to Keewon Park, director of the Korean Trade-Investment Promotion Agency, a strategic decision was taken by the likes of Samsung SDI, LG Chemical and SK Innovation to invest heavily in R&D early so they could supply the European market once EV sales, and thus the growing need for batteries from the manufacturers, started to take off. Hungary is the ideal location for Korean factories looking to supply those very same manufacturers.
Links between Hungary and South Korea are not built on trade alone, though. This May saw one year since the tragic Danube River sinking in which 26 Korean tourists lost their lives. COVID restrictions meant the victims’ relatives could not make the trip to mark the anniversary, but Keewon Park says the Hungarian government has always shown “wholehearted support” and the shared experience means “this relationship deepened.”
It is a reminder that while trade may link us, it is fellow human feelings that bind us together.