Swedish Hungarian Trade and Knowhow Days

1
Swedish Hungarian Trade and Know-how Days

• Briefing material
• October 18-19

2
Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

3
Welcome to Hungary

• Hungary is highly industrialized nation with
  strong and further improving economics. The
  country shows stable growth at a good level and
  has a number of competitive advantages, e.g.,
  infrastructure, industrial clusters, salary and
  educational level.
• Many Swedish companies have succeeded well with
  their establishments in Hungary and there is a
  good basis for further development of
  Swedish-Hungarian business relations. However,
  although trade has grown significantly over the
  last 10 years , the potential for further growth
  is still large.
• The Swedish-Hungarian Trade and Know-how Days is
  a two-day event to fuel business contacts between
  Swedish and Hungarian companies.

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Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

5
Schedule for the Trade Days
Monday
Tuesday

• 08.15-09.45 Registration and coffee
• 09.00 I. Sweden - an interesting
  market for Hungarian exporters Trade
  seminar
• 09.45 II. Sustainable Food Production" -
  Food seminar
• 11.00 Opening ceremony
• 11.30 Swedish Lunch Buffet
• 12.00-12.30 Registration Seminars (II.,
  III.)
• 12.30 II. Sustainable Food Production" -
  seminar continues
• III. Renewable energy" - seminar
• 15.00 Coffee Break
• 15.20-17.30 II. Sustainable Food Production"
  - seminar continues
• III. Renewable energy" - seminar
  continues
• 18.30 Restaurant Box utca

• 08.30-09.30 Registration and coffee
• Seminars (IV.,V.)
• 09.00 IV. Automotive Industry" - seminar with
  match-making activities
• 09.30 V. Food from Sweden" - seminar with
  match-making activities
• 12.00 Swedish Lunch Buffet
• Seminars (IV., V.)
• 13.00 IV. Automotive Industry" - seminar
  continues
• V. Food from Sweden" - seminar
  continues
• 15.00 Coffee Break
• 15.20-17.30 IV. Automotive Industry" -
  seminar continues
• V. Food from Sweden" - seminar
  continues

Estimated transportation time from Danubius Grand
Hotel to Matav HQ 20 minutes
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Important Locations during the Trade Days

• Matav Headquarters
• Box Utca Restaurant
• Mariott Hotel
• Danubius Grand Hotel
• Swedish Trade Council Office

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Venues of the Trade Days

• Venue of the seminars andmatch-making
  (1)Matáv Székház /Matáv Headquarters
• Tölösi Conference Center, H-1013 Budapest,
  Krisztina krt. 55
• Box Utca Restaurant (2)
• Bajcsy-Zsilinszky u. 21.
• Tel[phone]

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Accommodation in Hungary

• Budapest Marriott Hotel (3)
• The five-star Mariott Hotel is located in the
  inner city, just beside the Chain-bridge.
• Add Apáczai Csere János u. 4
• 1052 Budapest
• Tel [phone]
• Fax [phone]
• www.marriotthotels.com/budhu marriott.budapest_at_axe
  lero.hu
• Danubius Grand Hotel (4)
• The four-star Danubius Grand Hotel Margitsziget
  is located in the Northern part of Margaret
  Island.
• Add Margaret Island 1138 Budapest
• Tel [phone]
• Fax[phone]
• www.danubiusgroup.com/grandhotel
• resind_at_margitsziget.danubiusgroup.hu

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Swedish Trade Council contacts

• Exhibition Stefan Vincze 36 30 456 3713
• Export seminar Dénes Bán 36 30 210 9954
• Sustainable Food Production seminar Marianna
  Lázár 36 30 639 6520
• Energy seminar Mónika Kisnémet 36 30 343
  6468
• Food from Sweden seminar Dénes Bán 36 30 210
  9954
• Automotive seminar Marianna Lázár 36 30 639
  6520
• ALMI seminar Mónika Kisnémet 36 30 343 6468
• Trade commissioner Joakim Bergman 36 70 370
  1111
• Svedületes project leader Marcus Landelin 36
  30 515 5181
• Swedish Trade Council/ Svéd Kereskedelmi
  Kirendeltség (5)
• Add H-1132 Budapest, Váci út 22-24.
• Tel [phone]
• Fax [phone]

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Transport in Hungary

• In Budapest
• Taxis stopped in the street are expensive
• English speaking taxi City taxi
• To order City taxi, please call 36 1 2 111 111
• Payment possibilities Cash and credit cards - if
  indicated at the order ViSA, Master Card and
  American Express
• Official prices Basic fares 300HUF, Km fares
  180HUF/Km, Waiting fares 45HUF/min
• Airport transport - Tourist taxi
• Tourist taxi is cheaper than City taxi
• To order a taxi, please call 36 1 365 55 55
• Official prices
• Airport Margaret Island 5600HUF Airport -
  Matav Headquarters or Mariott Hotel 5200HUF
• Pest side of Budapest Airport 3000HUF
• Payment possibilities Cash and by credit card -
  if indicated at the order American Express
• Exchange rate 1SEK27HUF, 1EUR250HUF

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Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

12
Basic facts on Hungary
Basic facts on Hungary

• Area 93,000 km2
• Population 10 million
• Population density 109 persons / km2
• GDP 2003 18 600 b HUF
• Inflation rate 2003 4,7
• Unemployment rate 5,9 2003.
• Capital Budapest
• Average monthly gross 137 200 HUF salary
  2003
• Currency Forint
  12 Oct 2004 (1 SEK 27.21HUF)
• PC penetration 100
  families/14
• Internet penetration 25
• GSM penetration Jan 2003 69
• Main line penetration 2000 38

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Hungary shows high and stable economic growth
GDP growth Percent

• Stable GDP growth since 1997 despite turbulent
  global economy in 2001-2002
• Overall GDP growth fuelled by public and consumer
  spending 2001-2004

SourceHungarian National Bank, Forecast
14
The increase in industrial production has been
higher than GDP growth
Industrial production Percent

• Industrial growth hit by international economic
  downturn in 2001

Source Ministry of Finance, Hungary
15
Inflation has fallen to a moderate level,
providing financial stability
Inflation Percent

• In 1995, the government launched a program to
  reduce public spending and the state deficit
• The reforms attracted massive FDIs
• Expansive government policy drove up inflation in
  2004 and give some reason for concern for future
  inflation rates

Source Central Statistic Office and
http//www.oecd.org/document/62/0,2340,en_2649_345
69_25354622_1_1_1_1,00.html Forecast
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Hungary is a highly industrialized country
Share of GDP in 2002, percent
Industrial share of GDP is 31 in Hungary
compared to 28 in Sweden
Source Central Statistic Office, Hungary
17
Industrial production by sector
BACK-UP
Percent
Source Central Statistic Office, Hungary
18
Strong machinery sector, particularly in
automotive assembly
BACK-UP

• Rich supply of mechanical companies
• Large vehicle production during communist period
• Rapid switch to car assembly and car part
  production after 1989
• Massive FDIs from Audi, Opel, Suzuki and Ford

Export opportunity for Swedish suppliers of car
parts Many potential partners in Machinery
production
Sourcehttp//www.global-production.com
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Good infrastructure and a strong logistics sector
BACK-UP
The availability of 'basic' and 'modern'
infrastructure 2003

• Hungary has long had the ambition to become a
  central European business and logistics centre
• As a result, large investments have been made in
  infrastructure
• Currently, there are several hundred high-quality
  Hungarian and multinational logistical service
  providers available in Hungary
• Hungarys role as a transit-country will further
  grow as it borders four non-EU countries

Easy to get goods in and out of Hungary Easy to
find distributors within Hungary
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Macroeconomic Forecast 2004-2008

• The GDP growth rate may increase from 4 in 2004
  to 4.5-5 by 2008.
• The volume of foreign direct investments is
  expected to rise again, partly as a result of EU
  accession, and partly as a consequence of global
  recovery, thus in the business sector the
  investment increase may even reach 8-10 .
• On a medium term basis, gross average wages will
  increase by 6-7 a year, and real wages will
  increase annually by 1-3 .
• Reduction of the total tax burden on enterprises
  on a long-term basis, in which the first step is
  to increase the deductible amount of local
  business tax from the corporate profit tax.
• The fiscal criteria for joining the euro area can
  be fulfilled by 2008, and the inflation criterion
  can be met at the same time, i.e., based on
  macro-economic conditions, Hungary can adopt the
  euro relatively safely in 2010.

Source http//www.kulugyminiszterium.hu/Kulugymin
iszterium/EN/Policy/Trade_and_Economy/forecast.htm
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Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

22
Strong Swedish business presence in Hungary

• Business relations since the beginning of the
  century. SKF and Ericsson being the oldest firms
  present
• Virtually all major companies present, e.g., ABB,
  AstraZeneca, Atlas Copco, Ericsson, Volvo, Akzo
  Nobel, MTG Metro, Skanska
• Swedish related firms in Hungary employ more than
  14 000 people. Electrolux is the largest, and was
  Hungary's 15th biggest exporter in 2003
• Swedish Direct Investments during the last five
  years - 190,4 M EUR. Around 600 M EUR since 1990
• The Swedish Chamber of Commerce in Hungary was
  inaugurated on October 27, 1995 in Budapest.
• Gripen
• Svédületes during 2004

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Swedish-Hungarian trade has grown steadily, but
slower than overall Hungarian import
SEK billion

• The trade has been balanced
• Strong trade growth, with Swedish export up 230
  since 1996
• However, Swedish export lag total Hungarian
  import (up 330 since 1996)

Source Customs statistics / Statistics Sweden
24
Engineering products dominate Swedish-Hungarian
trade
2003, percent
Source Swedish Trade Council/Handelsstatistik/STA
TISTICS SWEDEN
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Details on the three largest Swedish export
sectors
BACK-UP

• Dominated Swedish export for long. Hungarian
  export has grown as a result of large FDIs and
  the establishment of Swedish production units,
  e.g., Electrolux
• Swedish export dominated by telecom equipment
  (30), electrical machinery (12) and power
  generating machinery (8)
• Swedish export consists mainly of paper and
  board, and iron and steel. The Hungarian steel
  industry is crumbling, increasing the demand for
  foreign products. Swedish steel and iron export
  grew 24 in 2003
• Mainly paper pulp. The distance between the
  countries and availability of suppliers in the
  region for most materials prevent large trade

Engineering products Semi-manufactures R
aw materials and fuel
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Many successful Swedish establishments in Hungary
In the 90s Ericsson Hungary has become one of
the largest communication manufacturing companies
in East Central Europe and one of the biggest
suppliers of the telecommunication market in this
country.
We wanted to reach the greatest possible segment
of society. Surprisingly quickly, after only a
few years we became profitable and have been so
ever since as a result of the increasing incomes
of the population. I just read statistics that
last year the purchasing power grew faster than
the GDP! Nobody could have predicted such an
upsurge back in 1990..
István Fodor, CEO Ericsson, Autumn 2002
Gunilla Clementson, MD IKEA Hungary, Spring 2002
János Takács,CEO of Electrolux, Spring 2002
In the first year after privatisation we had 450
thousand products of which 70 per cent were sold
in the home market. As a result of RD and
investments the number of products sold ten years
later jumped to 3 million that is seven times the
1991 figure! And of this only 30 per cent were
sold in Hungary. This means that the same
population bought twice as many Electrolux
appliances last year than a decade earlier.
Source SCCH, Newsletter
27
Large potential for further export growth
Swedish export to Hungary, Poland, Denmark and
Norway in 2003, SEK billions
10 million
39 million
10 million
Population
Source Swedish Trade Council/Handelsstatistik/STA
TISTICS SWEDEN
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How to do business in Hungary from a Swedish
point of view

• Business life is hierarchical. Titles and
  positions are important
• Hungarians are direct and like to have
  discussions, especially when it comes to history.
  Wallenberg and 1956 always works. However, try to
  avoid politics.
• Official clothing on meetings
• Count on that you will be invited for dinner by
  your partners.
• Useful words KözönömTack. Igenja. Nämnej. Jå
  okej. Kerämplease
• Swedish products associated with high reliability
  and quality, but also more expensive than
  average.

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Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

30
Hungarian food and drinks

• Not everybody knows it, but according to an
  unofficial (probably Hungarian) rating,
  Hungarian cuisine is among the three best
  cuisines in the world the first is French, the
  second is Chinese and the third one is the
  Hungarian!The traditional Hungarian kitchen is
  characterized by spicy dishes rich in calories
  and carbohydrates. Most dishes are made with lard
  and are not lacking in the rightly famous
  Hungarian onions and paprika.
• Famous wine is produced in the wine region known
  as Tokaj, which covers the triangle between
  Sátoraljaújhely, the Sátor Hills in Abaújszántó,
  and Tokajs Kopasz Hill. The wine regions most
  famous speciality is Tokaj aszú, the vinum
  regum, rex vinorum the king of wines, the wine
  of kings. The number of puttony (3, 4, 5 or 6)
  designates how many portions of aszú mixture
  have been added to a Gönc barrel of wine (136
  litres). The time needed for the wine tomature
  is two years more than the puttony number. Hence,
  a 6 puttony bottle produced using grapes from
  the year 2000 will first appear in the shops in
  theyear 2008.
• Unicum is well-known spirit based on an old
  Hungarian recipe.

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Did you know?

• Hungary has 8 places on UNESCOs World Heritage
  list.
• Hungary has the most Nobel-prize winners per
  capita in the world. For example, Albert von
  Szent-Györgyi. He was awarded the Nobel-Prize in
  Medicine in 1937 for his discoveries in
  connection with the biological combustion
  processes, with special reference to vitamin C
  and the catalysis of fumaric acid". It was
  extracted from the famous Hungarian Paprika.
• Folk songs are popular lyrical genre linked to
  very specific events within rural culture. The
  songs form part of an oral tradition, each song
  having been passed downfrom generation to
  generation, with variations being created along
  the way.
• Folk music has also influenced the work of
  classical composers. The two most famous
  collectors of the regions folk songs were Béla
  Bartók (1881-1945) and his contemporary Zoltán
  Kodály (1882-1967).

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Hungary in pictures
Eger
Köszeg
Budapest
Tihany, The lake Balaton
Szeged
Hortobágy
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Budapest in pictures
Vajda Hunyad Castle
Art Gallery
The Parliament
Hero's Square
Matthias Church
Margaret Island
Castle Hill

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Table of Contents

• Welcome to Hungary
• Practical Information in connection with the
  Trade Days
• Information about Hungary
• Swedish-Hungarian Trade
• Nice to know
• Introduction to the Swedish Trade Council

35
Facts about the Swedish Trade Council

• Mission Statement We make it easier for Swedish
  companies to grow international
• Areas of operation Export Information, Export
  Programmes, Export Consulting
• Customers 6,000 Swedish exporting enterprises
• Organization 50 offices in 35 countries,
  co-operation with Swedish embassies, Consulates
  and Chambers of Commerce in around 100 countries
• Staff 420, of whom 250 outside Sweden
• Owners The Government and the Swedish business
  community

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The Swedish trade councils network
The Swedish Trade Councils offices Swedish
Embassies Chambre of Commerce
37
Export Information - example

• Customs duties
• International economy
• Taxes
• The political situation
• Fees
• Financing
• Products and standards
• Foreign payments
• Document requirements
• Statistics
• Business culture
• Company addresses
• Electronic marketplaces

Our strength is our extensive external contact net

Free of charge service
38
Export Consulting

• Are the set goals reached?
• Is the form of establishment right for continued
  growth?
• New customer segments or product development?
• Is the local organization and its communication
  with the parent company functioning?

• Is there a market?
• How are similar products and services sold today?
• How does the market function?
• competitors?
• price level?
• distributors/partners?
• characteristics?
• Specific product requirements?

• Execution of the chosen strategy
• direct sales
• partner discussions
• acquisition discussions..
• marketing
• Setting up infrastructure
• incorporation
• office, NP,
• recruitment
• Develop the local network

• How should we position ourselves in this market?
• What short/long term result can we achieve
  depending on
• target groups
• distribution/partners
• form of establishment
• Where shall we locate?
• Decision of form of establishment and development
  of market plan

More better business
Yes / No ? Priority?
First business! and local organisation
How to enter?
Consulting fees charged
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Export Programmes

• Trade seminars,
• e.g. Swedish-Hungarian Trade and Know-how Days
• Exhibition Programme
• Advice and quality assurance
• International Trade Competence SME
• Resource strengthening and training
• Business Sector Cooperation
• New business possibilities and joint activities

Never underestimate the need for international
business expertise

Targeted, financially supported activities and
events