ANALYSIS Despite repreated price cuts, car sales have been in free fall since the start of the year, and dealers expansion plans are being scaled back See pages 10-11 BUSINESS REVIEW ROMANIA’S PREMIERE BUSINESS WEEKLY JUNE 15 - 21, 2009 / VOLUME 14, NUMBER 22 www.business-review.ro INTERVIEW Serban Radu, GM of Carturesti bookstores, says the company plans to expand with a new outlet in Bucharest and upgrade the existing locations See page 9 Italian footwear producer Geox has recently sold its Romanian factory in Timisoara to VT Manufacturing, following the company’s reorganization strategy See page 4 Italian footwear producer Geox has recently sold its Romanian factory in Timisoara to VT Manufacturing, following the company’s reorganization strategy See page 4 NEWS Investment fund Black Sea Global Properties Limited, owned by Dinu Patriciu, has acquired another real estate fund listed on the LSE See page 4 STEPPING OUT STEPPING OUT CONSULTANCY COMPANIES ARE CONFIDENT 2009 WILL PROVE A GOOD YEAR; SEE FEATURE ON PAGES 12-15
Transcript
A N A L Y S I SDespite repreated price cuts, car sales have beenin free fall since the start of the year, and dealersexpansion plans are being scaled back
S e e pages 10-11
BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY JUNE 15 - 21, 2009 / VOLUME 14, NUMBER 22
www.business-review.ro
I N T E R V I E WSerban Radu, GM of Carturesti bookstores, says thecompany plans to expand with a new outlet inBucharest and upgrade the existing locations
S e e page 9
Italian footwear producer Geox has recently sold its Romanianfactory in Timisoara to VT Manufacturing, following thecompany’s reorganization strategy
See page 4
Italian footwear producer Geox has recently sold its Romanianfactory in Timisoara to VT Manufacturing, following thecompany’s reorganization strategy
See page 4
N E W SInvestment fund Black Sea Global PropertiesLimited, owned by Dinu Patriciu, has acquiredanother real estate fund listed on the LSE
S e e page 4
STEPPING OUTSTEPPING OUT
CONSULTANCY COMPANIES ARE CONFIDENT 2009 WILL PROVE A GOOD YEAR; SEE FEATURE ON PAGES 12-15
BUSINESS REVIEW / June 15 - 21, 2009 3
Audited 1H 2007
BMG is a founding member of the Romanian Audit Bureau
ROMANIA’S PREMIERE BUSINESS WEEKLY JUNE 15 - 21, 2009 / VOLUME 14, NUMBER 22
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N E W S
BUSINESS REVIEW / June 15 - 21, 20094
BRIEFSDEBTORS ASK INSOLVENCYFOR ARCOMé Construction company Arcom,owned by 71.6 percent bycontroversial businessman GigiBecali, faces insolvency requests filedby several suppliers. According tothem, the firm is late paying theafferent debts. On the other hand,representatives of Arcom say thatthey have to cash in some EUR 10.5million from their beneficiaries, whilethe company’s debts reach only EUR3 million. According to Arcom, halfof this debt is represented by the pre-contracts signed by individuals whichare not willing to pay for theirapartments in the current economicsituation.
FRANKLIN TEMPLETON TOMANAGE PROPRIETATEAFUNDé Franklin Templeton InvestmentManagement Ltd won the assetsmanagement of Fondul Propietatea,with the lowest priced offer amongthe other tenders. Franklin TempletonInvestment Management Ltd willactivate the management operationsafter the decision will be approved bythe board of Proprietatea fund,according to officials. MorganStanley Investment Management Ltdhas been its competitor for wining theassets management and filed its offeralong with other 8 candidates.
BOSTINA SI ASOCIATIILAUNCHES INSOLVENCYCOMPANY é Law firm Bostina si Asociatiientered the insolvency operationsmarket by launching the companyBostina si Asociatii Insolvency SPRL.According to the partners with thelaw firm, the new company will focuson the commercial insolvency casesand crisis situations amongcompanies. The new firm’s serviceswill be backed up with consultancyprovided by the others divisions ofthe law firm, as Bostina Accounting &Fiscal Consulting and Bostina &Associates Financial Consulting. In2008, the law firm posted a turnoverworth EUR 16.67 million, with over130 lawyers and partners. The lawfirm has offices in Bucharest and 13other Romanian cities, while abroad,it runs subsidiaries at Vienna,Fribourg and Nicosia.
Italian footwear producer Geox hasrecently sold its factory in Timisoara toV T Manufacturing, as a result of Geoxproduction reorganisation strategy, Geoxrepresentatives have told Business Re-v i e w. “Our shoe production realized inTimisoara in 2008 was the 5 percent ofthe total amount, while the 95 percent
was realized in outsourcing thanks topartners based in Far East and SouthAmerica,” according to Geox. All theactivities related to the design, the re-search and the development of the mate-rials are carried out at the Geox head-quarters in Montebelluna, Italy.
“Looking at the Eastern European
area, Romania is one of the countriesmore affected by the crises. Taking intoconsideration all these different situa-tions, Geox is confident that 2009 glob-al sales will be in line with the 2008sales,” Geox representatives went on.
The firm has five stores in franchis-ing in Romania and is planning to opena new one in 2009.
According to previous reports,Geox' investment in the Timisoara facto-ry was mid last year close to $70 million.
Geox posted EUR 384 million insales in the first quarter of this year, up 5percent on the similar period of the last.Footwear sales made 91 percent of theamount, with the rest being covered byapparel. Its sales in Europe made 48 per-cent of total sales, slightly below the firstquarter of last year. Geox sells its prod-ucts in both franchising units under itsbrand and directly operated stores, aswell as multi-brand stores. Geox had953 stores at the end of March this year,out of which 220 directly operated. InApril, the firm opened 29 new stores.
The alliance between the SocialDemocrat Party (PSD) and the Con-servative Party (PC) is arguably thewinner of the elections for the Euro-pean Parliament (EP) that tookplace on June 7 in Romania, havingclaimed 11 mandates as a result ofreceiving 31.07 percent of the votescast (1,504,218). It was closely fol-lowed by the Democrat-Liberal Par-ty (PD-L) which won 10 mandateswith 29.71 percent of the ballot(1,438,000 votes). In fact, the twopolitical formations are tied, as Ele-na Basescu, who ran as an inde-pendent candidate and won a seat inthe EP with 4.22 percent of thevotes cast (204,280), has decided tore-join the PD-L.
The two frontrunners were fol-lowed by the National Liberal Party(PNL) which won five mandateswith 14.52 percent of the votes(702,974). The fourth party that willsend representatives to the EP is theHungarian Minority Party (UDMR)
with three mandates and 8.92 per-cent of the votes (431,739). The lastparty on the list is the Greater Ro-mania Party (PRM) which obtainedthree mandates with 8.65 percent ofthe ballot (419,094 votes).
Turnout was low. The total num-
ber of citizens who cast their votewas 5,035,297, or 27.6 percent ofthe electorate.
The list of people that will repre-sent Romania in the European Par-liament includes more traditionalcandidates such as the former minis-ter of justice Monica Macovei (PD-L), who enjoys a very good reputa-tion in Brussels, former PMTheodor Stolojan (PD-L), on hissecond mandate in the EP, journalistTraian Ungureanu (PD-L), formerminister Adrian Severin (PSD+PC),on his second mandate, Ioan MirceaPascu (PSD+PC), second mandate,Norica Nicolai (PNL v i c e - p r e s i-dent) and Renate Weber (PNL), sec-ond mandate. More “eccentric” fig-ures in the line-up include ElenaBasescu, the daughter of PresidentTraian Basescu, nationalist leaderCorneliu Vadim Tudor and contro-versial businessman George Becali,owner of Steaua soccer club.
Otilia Haraga
PSD+PC pip PD-L to claim most mandatesin European Parliamentary elections
Geox has five franchise stores in Romania
Elena Basescu, daughter of president TraianBasescu, is one of the new European MPs
N E W S
BUSINESS REVIEW / June 15 - 21, 2009 5
Investment fund Black Sea GlobalProperties Limited (“BSGP”), ownedby Romanian businessman Dinu Patri-ciu, has went on to acquiring anotherLondon Stock Exchange listed real es-tate investment fund and placing an of-fer for the second, after taking over in-vestment fund Fabian at the beginningof the year. BSGP has subscribed for30 percent in Deutsche Land's sharecapital increase, an investment fundwith properties in Germany. In total, thefund has raised EUR 16.4 million fromthe share issuance, which puts DinuPatriciu's fund investment in the fund atsome EUR 5 million. “We are pleasedto become Deutsche Land's larg e s ts h a r e h o l d e r. Subject to shareholder ap-proval, we will invest an additional 20million pounds in Deutsche Land in or-der to strengthen the company's bal-ance sheet further,” said Obie Moore,BSGP's proposed representative in theDeutsche Land's board.
Black Sea Global Properties has al-so placed a cash offer for Rutley Euro-pean Property investment fund, at 6pence in cash for each Rutley share. T h eo ffer values “the existing issued re-deemable preference share capital ofRutley at approximately GBP12.5 mil-lion and at an enterprise value of ap-proximately 446 million pounds, in-cluding net debt of approximately 434
million pounds as at the end of 2008,”according to the off e r. The offer repre-sents a premium of approximately 107percent to the closing price of 2.9p perRutley Share on 27 March 2009.
B S G P originally approached theboard of Rutley in March 2009 with aproposal to recapitalize Rutley and inApril BSGP announced that it had ac-quired 150,000 Rutley shares at 4.25pand was considering making an offer forthe fund. “We are launching this Off e rat a time of ongoing uncertainty in Eu-ropean real estate markets. Our offer isdesigned to accommodate those share-holders who are seeking a cash exit aswell as those who wish to remain in-vested. Assuming we achieve control ofRutley via the off e r, we intend to stabi-lize the company's financial positionand take other measures to improve thecompany's performance,” said DinuPatriciu.
Rutley has properties in Belgium,G e r m a n y, Netherlands, Poland and Swe-den. Deutsche Land is a property in-vestment company that concentrates onGerman real estate with a focus on com-mercial assets. The fund owns a portfo-lio of office, retail and hotels in Ger-m a n y, valued at EUR 593 million midlast year, down 3 percent on the value atthe end of 2007.
Dinu Patriciu's real estate invest-ment fund bought at the beginning ofthe year investment fund Fabian, withproperties in Romania. The offer valuedthe fund at EUR 50.8 million. Follow-ing the takeover, BSGP delisted Fabianfrom the AIM market of the LondonStock Exchange. Dinu Patriciu's recentinvestments in real estate propertiesboth in Romania and abroad are amongthe biggest such deals on the real estatemarket, which has seen little activitylast year and since the beginning of thisy e a r.
Corina Saceanu
Dinu Patriciu continues real estate shoppingin Western Europe with two more funds
Mobexpert is operating advancepayments to all the current financ-ing lines contracted by the companyso far.
“I can estimate that, since thebeginning of 2009, we droppedcredit lines exceeding EUR 15 mil-lion Further, we plan to sustain ouractivity using our own funds. Wethink that the financings costs arenot realistic at the moment and theycan not be supported from furniture
and accessories retail operations,”Dan Sucu told Business Review.
The businessman expects the furniture market to recoversometimes in 2011 or 2012 and, on-ly at that moment, the companycould establish annual financial tar-gets.
Last year, Mobexpert reported aturnover of EUR 69 million, cover-ing the business activities of the 10retail companies of the group, 8 fur-niture plants, 6 import companiesand 3 services business units.
Since is establishment in Ro-manian in 1993, Mobexpert invest-ed over EUR 100 million in chainexpansion, real estate activities, pro-duction and logistic. Also last year,Mobexpert attained 79 percent fromthe overall sales from house furni-ture and accessories, while 21 per-cent from the sales represented thecorporate segment.
For this year, Dan Sucu esti-mates a slightly decrease on the cor-porate, compared with thehome&deco segment.
Magda Purice
Anew casino, Olympic Casino BoraBora, has opened in Bucharest at the re-cently re- branded Pullman Hotel (for-merly Sofitel). The casino was openedby the Estonian company Olympic En-tertainment Group which has investedapproximately EUR 6.4 million in it, ac-cording to media reports.
This is the group’s largest casino onthe local market. It covers two floors andan area of approximately 14,000 sqm.The venue includes a restaurant, 72 slot
machines, three electronic roulette ma-chines and 17 tables. Olympic Entertain-ment Group is present in Romaniathrough six casinos, five of them inBucharest and one in Pitesti, staffed by224 employees. The six are coordinatedin Romania by the company’s sub-s i d i a r y, Olympic Casino Bucharest. T h egroup entered on the Romanian marketafter taking over three casinos from Em-pire International Game World in 2007.
Otilia Haraga
Pullman Hotel bets on casino
Businessman Dinu Patriciu
Mobexpert owner Dan Sucu
Mobexpert cancels EUR 15 million creditlines this year
N E W S
BUSINESS REVIEW / June 15 - 21, 20096
BRIEFSTERRA NOVA CONSTRUCTSELLS RESIDENTIAL COMPLEXIN POPESTI LEORDENI WITHEUR 9.6 MILLIONé Romanian company Terra NovaConstruct plans to sell a residentialcomplex located in Popesti Leordeniwhich has been started 6 monthsago, with EUR 9.6 million, includingVAT, the company announced. Thecomplex called TerraNova Residencedelivers a built area of 16,000 sqmand comprises 240 residences. Thecompany is controlled with 87percent shares by Romanianbusinessman Marian Bucur.
OTP ASSET MANAGEMENT TOLAUNCH CLOSED-ENDINVESTMENT FUND é Asset management company OTPAsset Management plans to launch anew closed-end investment fund withguaranteed capital, the companystated. The bank plans to launchseveral new products in order todifferentiate from other competitors.OTP Asset Management currentlymanages 3 open-end investmentfunds: shares- type OTP Avantis,diverse operations OTP Balansis andmonetary-type OTP Comodis.
CAPGEMINI OPENSOUTSOURCING SERVICESCENTER AT IASIé Technology and outsourcingservices provider Capgemini plans toopen an outsourcing center in Iasi.The center will be designed after thebusiness structure of the centers inPoland, Katowice and Krakow. In2008, Capgemini reported overallturnover of EUR 8.7 billion. TheEuropean region contributed withEUR 592 million to the group’sworldwide results. Last year, theRomanian subsidiary of Capgeminireported a EUR 30 million turnover.
ALSTOM TRANSPORT PLANSEUR 45 MLN TURNOVER é Alstom Transport estimates toreach a EUR 45 million turnoverlocally this year and plans to focuson the transport segments of tramsand railway installations. AlstomTransport holds a portfolio ofcontracts signed with Metrorex, andthe Romanian railway company(CFR). The contract signed withMetrorex is worth EUR 20 million andconsists in maintenance services to bedelivered until 2014.
Retailer Mega Image, part of Bel-gian group Delhaize announced it in-creased its share capital with EUR 17million in April 2009, in order to fi-nance the expansion of the supermarketchain in 2009. “The share capital in-crease will be used for speeding upMega Image’s expansion with 8 newunits in 2009,” said Raluca Pavel, mar-keting manager of Mega Image. Sincethe beginning of this year, Mega Imageopened a supermarket in Constanta,representing actually a relocation of theformer unit located in Stefan cel Mareto a space rented within Tomis Mall. InMarch 2009, Delhaize signed an agree-ment of purchasing 4 supermarkets inRomania through the subsidiary MegaImage, according to the group. A s t a t e-ment reads that the company has en-tered into an agreement to acquire four
stores operated under the banner ProdasHolding Supermarket in Bucharest,through its fully-owned subsidiaryMega Image. For 2008, it is estimated
that the revenues of the four acquiredstores amounted to more than EUR 12million. The four stores, which have asize of 400 to 750 square meters, willbe converted to Mega Image supermar-kets. The acquisition of the four ProdasHolding Supermarket stores is subjectto the customary conditions, includingthe approval by the Romanian antitrustauthorities. The transaction is expectedto close in the third quarter of 2009.
At the end of 2008, Mega Image'snetwork consisted of 40 stores, 37 inBucharest, 2 in Constanta and 1 inPloiesti. The number of employees atthe end of 2008 was approximately2000 people. Delhaize Group acquireda 51 percent stake in Mega Image in2000 and four years later, it fully ac-quired the chain.
Magda Purice
Mega Image assigns EUR 17 mln for chain expansion in 2009
Mega Image has 40 stores in Romania
Retailer Spar has started legal proce-dures at the Bucharest Court of Justicecalling for the insolvency of IT&C re-tailer Flanco, part of the Flamingo Inter-national Group, over an unpaid debt ofRON 150,000 (less than EUR 36,000)representing unpaid rent. The file waslodged by Spar on June 4 with the firsthearing scheduled for September 1.
Representatives of Flamingo Inter-national issued an official statement ex-pressing their surprise over the actionsof Spar Romania, in part owing to thesize of the debt. “We were surprised tosee there is such a request from Spar, es-pecially since no prior communicationhad taken place with us. The debt thatFlanco has to pay to Spar is a small andrecent one, and the issue will most like-ly be solved without court intervention,”said Jiri Rizek, CEO of Flamingo Inter-national.
“Their way of acting is undoubtedlyquestionable, especially in the currentmarket conditions, which will compro-mise our commercial relations with this
p a r t n e r,” goes the official statement. The Flamingo CEO added that the
current international context, in whichthe economic crisis has made its pres-ence felt in all business areas, should“tighten the partnerships between com-panies, based on a winning long-termapproach for all the parties involved.”“ We are convinced that the current eco-
nomic situation will generate an align-ment of commercial practices to interna-tional standards so that minor litigationcan be resolved through direct commu-nication,” said Rizek.
Spar entered the Romanian marketin 2006 and currently has 21 units.Flamingo International, the secondl a rgest retailer of electronic products,home appliances and IT&C on the mar-ket, posted sales of approximately EUR23.8 million (RON 100 million) in thefirst quarter of 2009, 34 percent down onthe same period of the previous year. Butits evolution was still above that of themarket which dropped overall by 40 per-cent. The company says it will end theyear with a positive EBITDA due to re-o rganization in the structure of opera-tional costs. The company ended Q12009 with a negative EBITDA of ap-proximately EUR 3.2 million (RON13.6 million) compared to only EUR0.14 million (RON 0.6 million) duringthe same period of last year.
Otilia Haraga
Spar to spar with Flanco in court over unpaid debt
Spar is calling for the insovency of Flanco overunpaid EUR 36,000 debt
Romanian refrigeration equip-ment installation firm Frigotehnicaplans to enter the Ukrainian and Ser-bian market, after the company al-ready set up a subsidiary in Bulgaria,for which it expects a turnover worthEUR 4 million this year, the companysaid.
The company invested so far EUR700,000 in developing regional cen-ters and estimates a total amount of
EUR 1 million for its expansion plans.Frigotehnica is a group of divisionscomprising Clima Industrial,Frigosystem, Tehnoelectric and FrigoLeasing.
At the end of 2008, 75 percentfrom the company’s shares have beenacquired by the Balkan A c c e s s i o nFund (BAF), a EUR 110 million pri-vate equity regional fund, following atransaction worth EUR 25 million.
The rest of 25 percent from Frig-otehnica is owned by Romanian in-vestor and the company’s generalmanager, Nicolae Bara.
The company was established in1949 and, according to its estima-tions, within the overall refrigerationsystem market, it holds 75 percent onthe commercial segment and 20 per-cent on the industrial segment.
Magda Purice
Frigotehnica plans expansions and investments in 2009
N E W S
BUSINESS REVIEW / June 15 - 21, 2009 7
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Some 70 projects in Romania bene-fit from EUR 98.5 million in nonrefund-able funds, allocated through the EEAFinancial Mechanism (the EEA G r a n t s )and The Norwegian Cooperation Pro-gram (Norway Grants). About EUR98.5 million are granted for projects inpriority sectors such as environment, en-e rg y, health, sustainable production, hu-man resources development and culturalheritage. The evaluation process endedin April and 30 bilateral projects wereapproved under the Norwegian Cooper-ation Program with Romania.
Since the official launch of the pro-gram in November 2007, as many as182 applications were received, consist-ing of 13 travel support applications, 98seed money applications and 71 individ-ual projects. The total value of projectproposals was three times the total grantavailable under the program.
“Now that the project selectionphase is over, we are looking forward tothe implementation stage,” said A n n e
Lise Rognlidalen, commercial counselorfor the Norwegian co-operation programat the Royal Norwegian Embassy inBucharest. The deadline for project im-plementation expires end of April, 2011 .
Through the EEA Financial Mecha-nism, 40 individual projects were ap-proved for a financial non-refundableassistance of EUR 50.5 million, fromwhich 47.5 are Norwegian contribution.
The 40 projects approved are as fol-lowing: 10 projects in the environments e c t o r, 6 projects in the cultural heritages e c t o r, 13 in human resources and ad-ministrative capabilities developmentand 11 projects in health and childcare.
The European Economic A r e a(EEA) Enlargement Agreement wassigned by Romania in July 2007.Through the EEA Agreement, threecountries non-members of the EuropeanUnion, Norway, Island and Liechten-stein take part in the Common Europeanm a r k e t .
Dana Ciuraru
The main projects to be financed through the EEA mechanism are in environment, energy, and health
Businessman Marius Ghenea,owner of several online retail stores,has announced he has invested EUR200,000 in an online fashion mall,the first in Romania. The mall offersclothing, footwear and accessoriesby famous designers. Fashion Upjoins the portfolio of sites that Ghe-nea owns, which include PCfun.ro,E l e c t r o F u n . r o , T O Y f u n . r o ,S h o p I T.ro, FlorideLux.ro andBrazideCraciun.ro.
“Through www. f a s h i o n u p . r o ,we are entering an area of onlinecommerce that is just starting out inRomania, so we intend to developthis market and prove there are nomore taboos regarding the productsand services that can be offered on-line. Using the experience and syn-ergies from the other online stores
in which I have invested, I believewe will be able to grow very rapid-ly in the preferences of online shop-pers in Romania,” said Ghenea,president of Online Fashion Group.
The store sells more than 1,000products from a portfolio of over 50brands of clothing, footwear and ac-cessories. Items are delivered tocustomers three days after the orderis placed.
The main brands whose prod-ucts are sold through www.fash-ionup.ro are Adidas, Baldinini, Ba-ta, Dada, D&G, Diadora, Formenti-ni, Gabor, Geox, Goliath, Jolidon,Kruebeck, Lacoste, Le Coq Sportif,Levi's, Olsen, Otter, RayBan,Reebok, Versace, Vogue Eyewearand Zodiaco.
Otilia Haraga
Marius Ghenea opens online fashion mall
The two national energy companiesto be established this year will be listedon the Bucharest Stock Exchange, saidAdriean Videanu, the Economy Minis-t e r. According to him, Electrica will bedivided in two parts and Romgaz willtakeover from Termoelectrica the unitfrom Iernut.
The three energy complexes inTurceni, Rovinari and Craiova, the nu-clear reactors 1 and 2 at Cernavoda,SNLO, half of Electrica and two hydro-electric plants of Hidroelectrica in Va l-cea and Slatina will be part of the firstc o m p a n y. The second company will in-clude ELCEN Bucuresti, the thermo
power plants Deva and Paroseni, CNH,the other half of Electrica, Portile de Fi-er and the hydro power plantsCaransebes, Hateg, A rges, Cluj, Bistri-ta, Sibiu, Sebes, Buzau and Ta rgu Jiu.Romgaz, through the thermo powerunit from Iernut, will also be includedin the second energy unit.
According to the minister, the twocompanies will have almost the samemarket shares. Thus, the first companywill have a market share of 48 percent,while the second one some 44 percent.According to him, these percentagesare expected to decline in 2017, whenthe nuclear reactors 3 and 4 will be ful-ly operational.
The two energy companies willhave energy production costs of someEUR 45 per MWh, lower than the cur-rent cost of EUR 48 per MWh. Cur-r e n t l y, the cheapest producer of energ yin Romania is Hidroelectrica (EUR 26per MWh). Videanu also announcedthat the Ministry plans to list these twocompanies on the Bucharest Stock Ex-change.
Dana Ciuraru
Videanu announces the constitutionof the energy giants
Economy Minister Adriean Videanu
EUR 98.5 million non-refundable funds grantedin the Romanian-Norway cooperation program
BUSINESS REVIEW / June 15 - 21, 200910
A N A L Y S I S
Sales of the major car firms on the local market have been in free fall since thebeginning of the year, company figures show, and even lower prices have failedto temper the slide. Expansion plans have been postponed or scaled back, withPorsche Romania for example finishing its Bentley showroom six months laterthan scheduled. And the market shows no signs of improvement, which carcompany officials blame on the difficult access to financing and fiscal barriers.
Price cuts fail to putbrake on car sales slump
Rocky road: new car sales are down, with even price reductions failing to halt the slide
By Dana Ciuraru
Local carmakers never dreamedthat sales would fall so hard as a re-sult of the economic crisis. Saleshave been sliding since the begin-ning of the year, with little sign ofimprovement.
“In the first four months of thisyear, Porsche Romania’s new carsales have followed the generalmarket trend. We have registered 50percent lower sales compared to thesame period of last year,” Brent Val-mar, Porsche Romania GM, toldBusiness Review. The firm importsthe Porsche, Audi, Seat, Skoda andVolkswagen car brands.
Nor has Mercedes-Benz Roma-nia, importer of Mercedes-Benz,Smart, Maybach, Chrysler, Jeep andDodge, enjoyed good results. Ac-cording to company information,car deliveries have dropped by 60percent in the first five months ofthis year, compared to the same pe-riod in 2008. The most significantfall, 72 percent, was recorded byMercedes-Benz commercial vehi-cles while Jeep posted a sales de-crease of 58 percent over the sameperiod.
It’s the same story at BMW’s lo-cal importer. “In the first months ofthis year new car sales have regis-tered a drop in line with the marketperformance,” Michael Schmidt,Automobile Bavaria Group presi-dent, told BR.
But the same fate has not befall-en the second hand segment.Schmidt said that the BMW usedcars segment had registered a “verygood performance” since the begin-ning of 2009.
Even the long awaited car re-placement program hasn’t boostedsales greatly on the Romanian mar-ket, compared with Germany, for in-stance. “Mazda participated in thefirst stage of the program, throughits dealers in the country, but thesales generated during this programweren’t significant for our compa-ny,” Dragos Grapinoiu, marketingmanager of Mazda, told BR.
The Porsche Romania GMechoed the fact that the car replace-ment program hadn’t enjoyed thesame success as last year.
CAR PRICES DRIVEN TO ROCKBOTTOM
“Car prices will never be ascheap as in recent months. The dis-counts offered this year were due to
BUSINESS REVIEW / June 15 - 21, 2009 11
A N A L Y S I S
the dramatic decline in sales, thecurrent market conditions and thewrong car stock, which was calcu-lated at last year’s sale volumes,”said Valmar.
He added that different carmak-ers and importers have respondedd i ff e r e n t l y, depending on theirstrength and brand image, the finan-cial muscle of their distribution net-work and their capacity to competeon the long run, even if sales headsouth in the short term.
Not everyone agrees that lower-ing prices is a wise strategy. “Mostcar firms have made irrational pricereductions in the attempt to shiftstock,” said Valmar.
One company which has cutprices is Mazda. “Mazda launched acampaign with special prices for thecars in stock, with reductions vary-ing between EUR 2,500 and EUR3,000, depending on the model,”said Grapinoiu.
But not everyone has followedsuit. The Automobile Bavaria presi-dent said, “BMW prices have beenkept at the same level, because thevalue of a premium model isn’t de-termined by market conditions, butby the technologies used to makethe car.” However, the used carssold by his company are going forless, because of the current econom-ic climate.
EXPANSION STALLSWith sales so poor and compa-
nies all keeping a beady eye on ex-penses, expansion plans are grind-ing to a halt. Porsche Romania toldBusiness Review that certain ongo-ing projects would be delayed.
“Those investments which arenow in the project phase involvingPorsche Romania or our dealer net-work will be delayed by one, evenone and a half years. The investmentin the new Bentley showroom willbe also put back by six months,”said Valmar.
This year, Mazda has increasedits network by one unit, placed inArad, bringing the total number ofMazda partners across Romania to13, with 16 selling points.
Meanwhile, Automobile BavariaGroup has inaugurated a new show-room, but has also focused on mo-torcycles sales.
“In May, our company opened anew showroom at one of our dealersin Sibiu, which required a EUR 3million investment. Also in Sibiu,the first showroom dedicated exclu-sively to BMW motorcycles will beinaugurated by the end of the year,”
said Schmidt. Mercedes-Benz Romania off i-
cials told BR that since the begin-ning of the year seven “workingpoints” – smaller than the usualshowrooms – which can providesales and after-sales services, havebeen opened, and they estimate thatanother five or six units will beopened by the end of the year.
MARKET GOES INTO REVERSE“The car market will be very
subdued compared to last year, ”predicted Valmar.
He added: “We estimate a 50percent decrease. Some factors toimprove the situation in this fieldwould be extending the car replace-ment program to leasing, restartingbank lending and eliminating taxbarriers whose implementation hascaused many negative effects.”
According to Mazda estimates,the imported car market will reach115,000 units sold this year.
The Automobile Bavaria Grouppresident subscribes to the generalconsensus on this year’s market.“The main problems are access to
finance and its restrictive condi-tions, and the unwillingness of thosewho have money and want a car toinvest.”
The car market has certainlygone into reverse this year, from aprosperous one to a poorer one. Ex-perts say further industry consolida-tion is likely, not via the acquisitionof smaller dealers by larger ones,but through dealers waiting for thecollapse of their competitors to pickup their assets and brands at bargainbasement prices.
On the local management consultancy market, which has a value of approximately EUR 4 millionand around 1,000 players of various sizes, consultants’ fees are three-four times lower than thoseof their counterparts working in Western European countries. The Romanian market is on thesame footing with other countries in the region but not nearly mature enough to reach the level ofthe West. Still, most consultancy firms are confident this year will be one of solid growth.
Consultancy companiesconfident 2009 will be a good year
Most consultancy companies were confident this will be a year in which they wil register consistent growth in spite of the financial crisis, report shows.
By Otilia Haraga
A report drawn up by the Euro-pean Federation of ManagementConsultancies Associations (FEA-CO) estimates that the value of theconsultancy market in Romaniareached over EUR 400 million lasty e a r.
“ We estimate that in 2009 themarket will post similar values as in2008,” Robert Maxim, managingpartner at Ensight ManagementConsulting, tells Business Review,adding that in 2009 there will defi-nitely no longer be the same spec-tacular growth seen in recent yearsbecause the current economic con-text does not allow it.
There are two kinds of consul-tancy companies: local firms withRomanian capital that count on localknow-how and do not have interna-tional experience and internationalcompanies that have the advantagethat they can import internationalknow- how, methodology and meth-ods that are already standard andused internationally. “In Romaniathere are large companies that per-form auditing and have a departmentof management consultancy, otherswhich are specialized in IT c o n s u l-t a n c y, and the third category, that weare part of, is that of companies spe-cialized exclusively in managementc o n s u l t a n c y,” Aura Cadis, consultantin Horvath& Partners, tells BusinessR e v i e w.
The company posted in 2008 aturnover of approximately EUR 4million and estimations for 2009 arethat the business will be up to EUR4.5 million.
Most of its clients are companieswith foreign capital such as OMV,Petrom or Daimler, but 20 percent ofits clients are local firms. “Oursmallest client has a turnover ofEUR 5 million. Most of them how-ever run on a market between ofEUR 30 million- EUR 200 million(excepting large international corpo-rations),” says Cadis.
C u r r e n t l y, Horvath& Partnershas 10 Romanian consultants andworks with over 25 consultants fromthe German space who come to Ro-mania to work on specific projects.“ We want to employ other 2-3 Ro-manian consultants with specific ex-pertise in certain industries thisy e a r,” she says.
At the moment there are approx-imately 1,000 management consul-tancy firms on the local market. T h e
BUSINESS REVIEW / June 15 - 21, 2009 13
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majority of these have just one ortwo consultants and generateturnovers of less than EUR 200,000,according to data from the Roman-ian Management Consultancies A s-sociation (AMCOR). Still, a “lead-ing squad” is in the making, made upof approximately 20 companies thatwork with over 10 full-time consult-ants and post annual turnovers aboveEUR 1 million per year. T h i s“squad” is followed by around 50-70companies that post between EUR200,000 and EUR 1 million, MihaiSvasta, president of AMCOR, tells
Business Review. The FEACO study on the Euro-
pean market places the local consul-tancy scene on a par with markets inthe Czech Republic, Hungary andBulgaria. This raking takes into con-sideration quantitative factors (suchas the volume of consultancy servic-es in relation to the gross domesticproduct [GDP], the dimensions ofthe consultancy market, its annualgrowth rates and the fees charged) aswell as qualitative factors such asthe novelty of the management pro-fession and the “atomic” structure of
the market. Western European states have
much more mature and profitableconsultancy markets. Some 75 per-cent of the total volume of consul-tancy services invoiced on the Euro-pean market come from Germany,France, England and Spain. “Thisfigure is the natural consequence ofthe existence of more mature consol-idated markets, the profession ofmanagement consultant being well-paid and sometimes regulated,” saysSvasta.
Maxim explains that while it is
true that there has been very rapiddevelopment over the last few yearsboth from the point of view of thevalue of the market and the numberof companies and consultants, Ro-mania is not there yet. “I am con-vinced that the current economiccontext will contribute to the grow-ing maturity of the market in man-agement consultancy even though attimes this will be a forced process,”he says.
“The first months of this yearhave brought some limitations to thebudgets allocated by most clients to
c o n s u l t a n c y, for reasons that had todo with caution rather than as a re-sult of real modifications to busi-nesses,” adds Svasta.
Most managers have not cutbudgets for consultancy entirely, butrather preferred to opt for servicesthat serve the current business needsof the company. Generally, each in-dustry solicits help in the areaswhere it has been affected worst,says Maxim.
“While a year ago consultancywas regarded as a luxury or as aservice for companies that were ori-ented towards innovation and devel-opment, now it is instead becominga solution for ‘getting out of trouble’for companies in dire straits,” ex-plains Maxim. Currently, the firm’steam comprises 60 employees, 6 ofwhom are foreign specialists. T h econsultants used by Ensight are spe-cialized in strategy, operations, fi-nancial domain, human resourcesand technology.
On a yearly basis, the companyruns approximately 40-50 projectsof various sizes and complexity.
The study “The ConsultancyMarket in Romania between 2008and 2009,” put together by A M C O Rbased on market research carried out
at the end of last year, flagged upsome of the challenges that playersin this domain are up against. Sincethe most important asset of a consul-tancy company is its human re-sources, companies that were ques-tioned identified as their main chal-lenges the recruitment of specializedpersonnel (around 43 percent of thecompanies that were questioned)and staff retention (around 30 per-cent.) “It is necessary to improve thesystem of recruitment, formationand integration of new consultants,”says Svasta.
Another challenge relates to thepromotion of consultancy services.“Romanian companies need to de-fine a marketing strategy or revisetheir current strategies,” she adds.
Romanian companies have diff i-culties in controlling activities,process optimization, the trans-parency of revenues and costs, themanagement of the portfolio ofclients and products they offer andprice strategies, according to Cadis.
This same study shows that 42percent of the companies questioned
Mihai Svasta, president of AMCOR. Robert Maxim, managing partner in EnsightManagement `Consulting
BUSINESS REVIEW / June 15 - 21, 200914
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perceived 2009 as a year in whichturnover would increase by morethan 15 percent. Some 32 percent ofthe companies believed that therewould be indeed growth, but nothigher than 15 percent. Last but notleast, 21 percent of the firms sur-
veyed believed that this year themarket would stagnate.
The demand for consultancy of-fers is much greater than in previousyears (80 percent greater) preciselybecause “this is an auspicious mo-ment for changes, restructuring and
rapid short- term solutions, whichmost of the time cannot be imple-mented without outside assistance,”says Cadis.
Industries that have bore thebrunt of the crisis such as bankingi n d u s t r y, insurances, car industryand constructions, are also those thathave most initiatives for the opti-mization of their internal perform-ance. “Companies that are used toworking with management consul-tancy firms are focusing on projectswith a positive impact on the EBITand cash-flow on the short andmedium term (such as the reductionof working capital, process eff i c i e n-c y, transparence of the costs andprofitability at the level of servicesand products). These are the servicesin the cost controlling area that mostemphasis is laid upon in periods ofcrisis,” explains Cadis.
Out of the most confident con-sultancy players, most believed thatthe public sector, infrastructure, lighti n d u s t r y, transport and tourismwould be the most lucrative sectors.These also provided a revenue boomlast year.
“ G e n e r a l l y, a company that hasforeign capital will be more willing
to resort to consultancy services.There is still a shortfall in the men-talities of Romanian managers,”says Svasta.
But Maxim finds that the ratio offoreign to Romanian companies inthe make-up of Ensight Manage-m e n t ’s clients is about even. “In re-cent years, Romanian managershave started to understand the im-portance and role of consultancyservices,” he says.
Even though these are toughtimes, companies that offer qualityconsultancy services should havenothing to fear: clients might comefrom different domains, becausemany sectors are affected but, in to-tal, the volume of demand for con-sultancy services will stand up.
“ We believe that projects of the‘nice to have’ type will disappearfrom the market. The ‘must be done’projects will continue, even if budg-ets are negotiated more attentively.We also believe that the start of theprocess of absorption of structuralfunds will be a stimulus for compa-nies that have developed their busi-nesses in this sector,” says Svasta.
In order to face sharper competi-tion, consultancy companies will
IIndustries that were affected by the crisis, such as banking, car industry and insurances create de-mand for consultancy services.
BUSINESS REVIEW / June 15 - 21, 2009 15
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have to focus on offering cus-tomized solutions for each businessand industry,” she explains.
The major change that the crisishas brought to such firms’ activity is
reflected in the portfolio of serviceso ffered to clients, which mirror cur-rent economic demands. “While be-fore companies asked for consult-a n t s ’ help with issues that had to do
with expansion and development,now the targeted domains are thosethat can counteract the crisis: cost re-duction, treasury management, re-structuring and transformation of thebusiness, mergers and acquisitions,”says Maxim.
LO C A L C O N S U L T A N T S C H E A P E RT H A N T H O S E I N WE S T E R NEU R O P E A N
An AMCOR study has foundthat fees earned by consultants inRomania vary from EUR 100-300per day for a junior consultant andEUR 300-800 for a senior one. “Theflexibility in the level of the fee isdetermined by a series of factorssuch as the geographical area, the di-mension and reputation of the con-sultancy company on the market andthe seniority of the consultant,” out-lines Svasta.
Maxim suggests that beforecomparing the salaries of Romanianand Western European consultants,it is necessary to take a look at thecost of the consultancy services inRomania versus Western Europe,since there is a close connection be-tween the two.
The FEACO report found that
the average daily fee of consultantsworking on the top three Europeanmarkets – Germany, Great Britainand France, which together have amarket share of 65 percent – is ap-proximately EUR 1,600/day for aconsultant.
“In Eastern European stateswhose professional managementconsultancy associations are mem-bers of FEACO – namely Bulgaria,the Czech Republic, Poland, Slove-nia and Greece – the average fee forconsultancy services has notchanged much over the last twoyears. Greece reported that the aver-age fee for consultancy surpassesEUR 400 per day per consultant.”
The same report found that thefees of Romanian consultants arethree-four times lower than those oftheir Western European counter-parts, “even though we are talkingabout projects with a similar degreeof difficulty and consultants withcomparable preparation and experi-ence. This is one of the aspectswhere the Romanian managementconsultancy market needs to mature:the correct evaluation of consultancyservices and the adjustment of thefees,” says Maxim. ■
Consultancy firms say the key to the good running of companies is to improve their efficiency andcost management, among other things.
BUSINESS REVIEW / June 15 - 21, 200916
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BUSINESS REVIEW FORUM Manage your business environment !
Estates&ConstructionM A R K E T
Tiriac Imobiliare focuses on Residenz andStejarii as it keeps other projects on hold
Developer Tiriac Imobiliare, partof Tiriac Holdings, the group con-trolled by Romanian businessman IonTiriac, has announced it has so far sold150 apartments of the 350 completedunits within its Chitila-located Resi-denz project. The figure representshalf of the first two construction phas-es of the residential complex, whichwas started in 2006.
The developer recently started tomarket almost 100 new apartments, inthe project’s third development phase.By the time of completion of thefourth stage, Residenz will have a to-tal of 489 apartments. The last devel-opment stage will deliver 130 flats butno completion date has yet been deter-mined. While in 2007, when the localreal estate market was still booming,the developer managed to sell up to 15
homes a month, but since the begin-ning of 2009 the figure is more likethree or four.
“ We have noticed an improvementin sales in the last few months. Fromthe 150 sold apartments, 65 percent ofthem were paid for in cash, while therest were acquired using bank loans,”said Jurgen Reich, country manager ofL B B W Immobilien, the German de-veloper that joint ventured with Ti r i a cImobiliare for the Residenz project.
Like so many developing compa-nies that have launched various fi-nancing schemes in order to sell theirprojects in tough financial times, Res-i d e n z ’s developers off e r, among otherthings, the “rent to buy” financing fa-c i l i t y. The scheme involves a tenantpaying rent for three years after whichhe or she can buy the apartment, with
the total rent paid being deductiblefrom the overall apartment price. Renthas been estimated at EUR 6 per sqm.
Prices at Residenz start from EUR87,000 for a two-room flat and couldreach EUR 270,000 for a four- r o o mapartment, not including VAT. A c-cording to representatives, the mostpopular homes are the two- and three-room categories.
The acquisition package includes aterrace, parking space, and, dependingon the apartment location, a courtyard,on top of the project’s all-inclusive fa-cilities such as the private kinder-garten, Plus discount market, foodmarket, banks, pizza place, pastryshop, an artificial lake and play-grounds.
Residenz, which has a current esti-mated market value of EUR 70 mil-lion, is funded by UniCredit Ti r i a cBank, while Herberger has been ap-pointed project constructor. Projectmanagement is being carried out byA L B A Project Management, the ar-chitects are Artre Studio and NethingGeneralplaner while the exclusiveagent is CB Richard Ellis Eurisko.
According to Bjarne Vi r e n f e l d t ,CEO of Tiriac Imobiliare Group, thecompany is only focusing on its twoongoing projects, the German districtResidenz and Stejari compound’s firsttwo development stages.
“Besides these two projects, wed o n ’t plan to start anything else justyet and we are waiting to see how themarket will fare,” said Virenfeldt. A c-cording to him, the first developmentstages at Stejarii are set for comple-tion between 2009 and 2010.
Magda Purice
The Residenz project will have a total of 489 apartments
BUSINESS REVIEW / June 15 - 21, 200918
E S T A T E S & C O N S T R U C T I O N M A R K E T
Global distribution facilities firmPrologis has announced it recentlyleased a space of 8,400 sqm withinProLogis Park Bucharest A1 to to Ge-odis, a third party logistics and inter-national transport provider and sub-sidiary of French railway nationalcompany (SNCF).
“It is not atypical to see a flight toquality as economic conditions soften,and this dynamic is increasing in Cen-tral and Eastern Europe,” said BenBannatyne, managing director of Pro-Logis.
According to Pierre Kosc, generalmanager of Geodis Calberson in Ro-mania, this is the third leasing contract
signed between the two companies. ProLogis Bucharest A1 consists of
four buildings totaling 108,600 sqm ofindustrial space, of which 28,000 sqmis A-rated. In addition to Geodis, othercustomers at the park include A u g s-b u rg International Impex, carg o - p a r t-n e r, Centrum Logistics, Flamingo Ro-mania, Gefco, Kuehne+Nagel andOmega Transport & Logistics.
By the time of completion, ProLo-gis Park Bucharest A1, which is thecompany's first project in Romania,will deliver 12 buildings totaling ap-proximately 300,000 sqm of distribu-tion space at full build-out.
Magda Purice
Spanish developer HL1, locallyrepresented by Area 10 EasternWorld, plans to start construction ofresidential compounds on TimisoaraBoulevard and in the Mogosoaiaarea of Bucharest in fall of 2009, the company has announced. Currently, it is in talks to find a con-struction company for the two proj-ects.
The development on TimisoaraBoulevard consists of an office tow-er block and residential complex,which the firm plans to sell in thenear future. The Mogosoaia projectwill cover 21 ha.
Shares in Area 10 Eastern Worldare equally owned by Area 10 NewWorld and HL1. It is currently de-
veloping a residential complex inthe Delea Veche area of Bucharest,comprising 197 apartments pricedat some EUR 95,000 for around 102sqm and parking per unit, accordingto the firm.
The complex will be built on a5,900-sqm plot and is set for com-pletion in June 2011, when it will al-so deliver 1,500 sqm of class A of-fices, according to the project draft.
In Romania, the Spanish Area 10company plans to sell a residentialcompound in the Lacu Morii area ofBucharest. Other Bucharest-basedprojects developed by the companyare located in the Lacul Grivita area,consisting of 100 apartments builton a 10,000-sqm plot, and PisculMosoului in district 1 in Bucharest,where the company plans to build250 apartments on a 20,000-sqmplot.
In 2008, the developer borrowedEUR 24 million from the Romaniansubsidiary of Caja de Ahorros yPensiones de Barcelona bank. Theloan was backed up with the 6,000-sqm land plot in Delea Veche.
Magda Purice
Spanish HL1 to start work on two Bucharestresidential compounds in fall
Geodis rented 8,400 sqm Construction works at the Bucharest projects areset to start this fall
Industrial and construction equip-ment producer Rehau Polymer Roma-nia, part of German group Rehau, pre-dicts its turnover to decrease by 35percent in 2009, from the EUR 70million attained in 2008, the companyhas announced. That figure was 17percent up on the previous year.
“For this year, we estimate a fallof 25 to 30 percent below last year’sresults,” said Emil Pop, general man-ager of Rehau Polymer Romania. Ac-
cording to him, the construction mar-ket in Romania is likely to rebound inthe near future, the first signs ofwhich became visible in May. For thisperiod though, the company’s generalmanager said that the local construc-tion market had registered a drop of30 percent.
However, he added that the specif-ic market of tubes used in construc-tion should record a slight increaseover the overall value of EUR 60 mil-lion posted in 2008. Since the begin-ning of 2009, the company has invest-ed some EUR 3 million in opening alogistic center, a sum which also in-cludes the value of the land.
Last year, the company said it waslooking for a partnership with a Ger-man company to develop a biomassstation in Romania, in order to pro-duce electric and thermo energy. Asfor its investment plans for 2008, Re-hau intended to spend EUR 20 millionon expanding the company's plant inSibiu.
Magda Purice
Rehau tips business to go down the tubes by 35 percent this year
Rehau’s turnover is taking a plunge, along withthe entire construction market
From Thursday, June 11 2009,Water Park Otopeni is opened un-til the end of the summer. Theopening was organized, like everyyear, by Diana Metiu Internation-al PR&Advertising agency and thistime the theme was “Sunshine toIbiza”. For the first day, the regis-tered 2000 persons and all ofthem enjoyed fashion shows andconcerts sustained by AnamariaFerentz and Claudia (ex-Sexxy).
For this year, Water Park in-vested EUR150 000 into a gamingroom and a new Twister waterslide for strong sensations andthey are expecting their visitorswith many surprises.
Water Park is situated inOtopeni, near Confort Rin hotel
and it is not only the biggest wa-ter park from Romania, but it isthe only one in Bucharest area. Ithas 40 000 sqm, 4000 chaiselounge, 9 pools and 26 waterslides and that is why it can re-ceive about 4000 persons/day. Ithas a children area, a bar &restaurants one, music & dancespace and, of course, the first andmost important thing: slides fore v e r y b o d y !
The clients from Water Parkwill have, unlimited and for free,umbrellas, chaises and all thecomfort for the entire summer,from Monday to Friday between10.00 o’clock and 20.00 and durin week-ends between 09.00si 20.00.
You can go to the seaside 6 kmfrom Bucharest!
Prologis signs 8,400 sqm lease contract withGeodis Calberson in ProLogis Park Bucharest A1
BUSINESS REVIEW / June 15 - 21, 200920
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■ 1.l to r: Peter de Ruiter, partner of tax and legal services at PwC, H.E. Jaap Ambassador of Royal Netherlands Embassy ■ 2. Peter de Ruiter, part-ner of tax and legal services at PwC and also representing the Netherlands Romanian Chamber of Commerce ■ 3. Pieter Wessel, partner specializingin VAT at Deloitte Balkans ■ 4. H.E.Jaap Werner Ambassador of Royal Netherlands Embassy ■ 5. H.E.Jaap Werner Ambassador of Royal NetherlandsEmbassy , Peter de Ruiter, partner of tax and legal services at PwC and also representing the Netherlands Romanian Chamber of Commerce, Bill Av-ery, publisher Business Review ■ 6. H.E.Jaap Werner Ambassador of Royal Netherlands Embassy ■ 7. l to r panel : Pieter Wessel, Deloitte Balkans’spartner on tax partner specializing in VAT, Bill Avery publisher Business Review, H.E.Jaap Ambassador of Royal Netherlands Embassy, Peter de Ruiter,partner of tax and legal services at PwC, Edwin Warmerdam, CFO Avrig 35 ■ 8. l to r: Marjolijn van Deelen, head of Economic Department of RoyalNetherlands Embassy, Pieter Wessel, Deloitte Balkans’s partner specializing in VAT, Edwin Warmerdam, CFO Avrig 35 ■ 9. Dutch Business Forum’spanel speakers and representatives of Dutch business community in Romania ■ 10. Edwin Warmerdam, CFO Avrig 35
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The Dutch Business Forumo rganized by Business Reviewlast week brough together top-lev-el executives, institutional and pri-vate investors. A panel includingH.E. Jaap We r n e r, the A m b a s-sador of Royal Netherlands Em-bassy and Peter de Ruiter, partnerof tax and legal services at PwCand also representing the Nether-lands Romanian Chamber ofCommerce, stated the challengesahead for the Dutch businesscommunity in Romania.
The event’s hot topics referredto the recently restructured fiscalcode, the problem of VAT r e f u n d-ing in Romania, the fractured linkbetween suppliers and developersin the real estate industry, and thelack of good professional localproject managers in Romania.Jaap Werner said that since 2007the approach in choosing businesspartners has changed and Dutchcompanies operating in Romaniafocus on the priority sectors as in-frastructure, logistic, structuralfunds and industrial due to avail-ability of EU funds in these sec-tors.
VAT refunds were also a hotissue on the discussion panel, withPieter Wessel, Deloitte Balkans’spartner on tax partner specializingin VAT, referring to “a big unwill-ingness” from the part of authori-ties involved to solve this problemin Romania. “The new fiscalcode seems to surprisingly have amore pro-crisis structure,” PieterWessel stated.
The problem of delays in re-covering VAT has been highlight-ed by Avrig 35’s CFO EdwinWarmerdam. The representativedescribed the Romanian economyas flexible, estimating that, 2009’sautumn will bring a “fresh start”.Avrig 35 is working on severalresidential, office and retail proj-ects in Romania, of which 3 proj-ect are under construction and fewothers are on the planning stage.As Edwin Warmerdam stated,“the company is still building atthis stage, within a very diff i c u l tbusiness climate. The banks arenot lending yet, but they are soft-ening their approach on this mat-t e r.” ■
Dutch keep cool indealing with crisis
BUSINESS REVIEW / June 15 - 21, 2009 21
E V E N T S
The fourth Street Delivery, anurban architecture and arts event,will take place between June 12 and14, during which time cars will bebanned and pedestrians will havefreedom of movement on ArthurVerona Street. Under the RegionalUrbanism Plan, the street is to be-come a cultural route for pedestri-ans, linking Icoanei Garden to Cis-migiu Garden. The plan stipulatesthe enlargement of sidewalks – tra-ditionally the domain of pedestriansnot cars, as is the case in Bucharest– and the creation of a walkingspace for people and undergroundparking, among other things.
During Street Delivery, art willdescend on the street with culturalevents taking place that aim to drawattention to the fact that the city isthe joint responsibility of those wholive in it.
Furthermore, the event calls forthe restoration of 25 historic build-ings along this route, which includethe Central School, A n g l i c a nChurch, Dimitrie Sturdza house, IonMincu house and Hotel A m b a s-sador.
“Sibiu is a city that has under-gone extraordinary developmentprecisely because it turned to cul-ture. Bucharest seems to bet less onculture. We are the victims of thissituation because our habitat is be-ing destroyed. I am now fightingwith the despair of an animal whosehabitat is being destroyed,” said cul-ture minister Alexandru Paleologu,who attended the event launch.
In Bucharest there is currently 2sqm of green space per inhabitant,while the average under Europeanstandards should be 12 sqm. Thereis also a huge number of cars andfew parking spaces available (16cars per parking space), as a resultof which many drivers park theircars on the sidewalk, forcing pedes-trians dangerously onto the road.
Otilia Haraga
Cars are banned as pedestriansre-claim the street
Karousel art gallery has openedthe photography exhibition “HigherGround,” by Cornel Lazia. The pic-tures on display can be seen untilJune 17 at The Place Concept Store.“Higher Ground” is a selection of
24 photos of New York skyscrapersfrom multiple perspectives, fromthe ground up to the clouds. Thepictures were taken during the threetrips the photographers made toNew York and offer a personal per-spective of the classic symbols ofthe American city.
Lazia is one of the most promi-nent contemporary photographers,celebrated for his spontaneous styleand the way he uses light. Many ofhis fashion photos have appeared inglossy magazines such as Elle,Tabu, Cosmopolitan, The One andBeau Monde. He has also takenphotos of some of the top Romanianbands and artists such as Paparude,DJ Vasile and Omul cu Sobolani.The works in the exhibition are forsale for between EUR 120 and 500.
Otilia Haraga
New York skyscraper photos go on show
New York sky- scrapers are presented from var-ious perspectives in Lazia’s exhibition.
Companies with functional computers or computer components they no longer need can donatethem to poor children as part of the program “Each Child in School” from the non-governmental or-ganization Ovidiu Rom. The NGO has teamed up with IT company Blackbox and the MaiMultVerdeAssociation, collecting computers and IT parts which are then re-conditioned and donated to poorchildren who can in this way learn how to use a computer and get internet access. Companies thatwish to donate their old computers can contact Blackbox which will take the equipment and repairit before it reaches its final owners. Through its educational programs, Ovidiu Rom identifies the chil-dren who need a computer and assists the Blackbox team in delivering the items. MaiMult Verde ispromoting the campaign among its partners and beneficiaries.
The National Forum of Childrenand Young People, which took placebetween June 6 and 9 in Bucharest,gathered teenagers from Bucharestand 13 counties, who called for theprevention and eradication of vio-lence against children in families, atschool, in the community and on theinternet. The event was organizedby the Save the Children non-gov-ernmental organization
The participants in this forum,aged 13-18, were split into sixworking groups moderated by expe-rienced volunteers from Save the
Children. The projects drawn upduring this year’s event were on thetopics of the workings of the Chil-dren’s Council, the necessity of theinstitution The Child’s Lawyer, en-forcing parent-child-teacher rela-tions, reporting online abuse andteacher training.
Participants turned their propos-als into projects that will be broughtby the representatives of each work-ing group before the authorities dur-ing a final debate session so theycan be implemented.
Otilia Haraga
National Forum of Children and Young Peoplecall for end to violence against the youth
Violence on Romanian T V c h a n n e l shas risen, according to the study “TheRepresentations of Televised Vi o l e n c eand Child Protection.” The report wasreleased by UNICEF Romania in part-nership with the National A u d i o v i s u a lCouncil (CNA) and Center for MediaStudies and New Communication Te c h-nologies at the University of Bucharest.Its aim is to warn of the impact violencehas on children and emphasize the re-sponsibility of the school, family, andmass media in protecting them from it.
The number of acts of violencebroadcast in one hour (excluding adver-tising and promos) ranges from 9 onTVR 1 to 23.4 on PRO T V. Cartoonchannels are even worse offenders, with20 on Minimax and 37 on Jetix. Ve r b a labuse makes up 44 percent of violentacts presented, and physical violence
33.6 percent. In a quarter of cases, the violence
takes place in the home or domesticsphere. The consequences of the crimi-nal acts on the victim are not shown inalmost 44 percent of the cases whiletheir consequences for the criminal arenot depicted 66 percent of the time.
“ Too much television creates immu-nity and indifference to the horrors of vi-olence. By watching T V c h a r a c t e r skilling and hurting too much, childrenlose their capacity to discern between vi-olence in real life and simulated violenceon the screen. Through such shows, theycan be deceived into thinking violence isthe way to solve problems, imitatingwhat they see on T V,” said EdmondM c L o u g h n e y, UNICEF representativein Romania.
Otilia Haraga
TV getting more violent, study finds
Street Delivery will fight for the rights of pedes-trians to walk on the city streets.
BUSINESS REVIEW / June 15 - 21, 200922
E V E N T S
The largest paintball venue in Bucharest has
been opened by CityPaintball, five minutes
away from Free Press Square. The site has a sur-
face area of over 10,000 sqm and comprises
three paintball courses where up to 500 people
can play every day. It also includes a terrace
with video projections that can accommodate
100 people and 70 parking spaces. The location
is also equipped to function at night. As the eco-
nomic crisis has prompted companies to reduce
budgets for corporate, entertainment and team
building events, the owners decided to open this
location which, they say, could help companies
save on travel and accommodation expenses.
“We put at the companies’ disposal the same
services offered in a typical team building exer-
cise but at much lower cost, since the location is
very accessible,” said Mihai Voiculescu, manag-
ing partner of CityPaintball.
Water Park, the largest water park in Romania,has reopened. The venue is located 6 km fromBucharest near the hotel compound Confort RINOtopeni. It welcomes between 150,000 and250,000 visitors per season, both tourists and lo-cals. The compound has a capacity of 4,000, andis a popular destination for many families. Onceinside, visitors can use the chaise longues, ofwhich there are approximately 4,000, free ofcharge as well as the sun umbrellas, with notime limit imposed. The park has nine pools, 26slides, fast food, bars and terraces. There isparking space for over 2,500 cars.
The fundraising campaign for the 35 social proj-
ects that United Way is aiming to support this
year is underway. The NGO plans to raise over
EUR 600,000 for projects in Bucharest, Cluj and
Timisoara, which involves a concerted effort
from a large number of companies, employees
and volunteers. The proceeds collected this year
will be used to help children who run the risk of
being abandoned by their family or dropping
out of school, homeless people, HIV/AIDS suf-
ferers, the terminally ill, elderly and people who
need home care. So far, United Way counts on
the support of 43 partner companies.
BUSINESS REVIEW / June 15 - 21, 20098
C A L E N D A R / W H O ’ S N E W S
W H O ’ SEVENTS, BUSINESS AND POLITICAL AGENDA N E W SAL E X A N D R U RE F F, 33, a Legal Services
Partner of DeloitteRomania, was ap-pointed the Partnerin Charge of theDeloitte BalkansTax & Legal prac-
tice. Reff joined Deloitte in 1998,straight after finishing his law de-gree at the University of Bucharest.His mixed background (tax and le-gal) and international experience(including a one-year secondmentto Deloitte Paris) helped him play aleading role in multi-disciplinaryand cross-border projects.
AN D R E I BU R Z- PI N Z A R U, 37, former SeniorManager of Reff &Associates, wasappointed EquityPartner of DeloitteCentral Europe.He has been work-
ing for Deloitte for over sevenyears, generating a significant con-tribution to the Firm’s performancein banking, M&A and capital mar-kets. While a Senior Manager withR e ff & Associates, he was also ap-pointed leader of Deloitte’s teamfor banking and finance law, andhead of the Deloitte Tax & LegalFinancial Services Industry Groupin Romania. He previously workedin Ernst & Young and its aff i l i a t e dlaw firm for 2 years and for other 3years in a securities firm.
CA T A L I N A MI R C E A is the new Senior Part-ner of Mircea & Partners LawFirm, replacing Valentin Mircea,who remains Honorary Founding
P a r t n e r. Mircea has an extensiveexperience in corporate law, laborlaw and financial matters. Beforejoining Mircea and Partners in2008, she held the position of Legaland Corporate A ffairs Manager ofAgroalim Group of Companies.
EU G E N I A FL O R I A N – HA I D A has been pro-moted as Partner of Mircea andPartners Law Firm and in this posi-tion she will coordinate the LaborLaw Department of the firm. Mrs.Eugenia Florian – Haida has morethan 12 of experience in labour law.
RO M A N I T A OP R E A joined MilleniumCommunications as PR Manager.She is the new member of the Pro-ject Division of Millenium Com-munications and her mission willbe to coordinate the Internetics fes-tival. Previously, she was a journal-ist for various print and online pub-lications such as www. s t r a t e g i c . r o ,Campaign, IQads, Marca Inregis-trata, Biz, AdMaker and MediaWe e k .
GI A N I N A TU D O S E was appointed ProjectManager KFC, be-ing in charge withdeveloping newprojects of theAmerican brand inRomania. She
joined the KFC team in 1999 andshortly became restaurant managerof KFC Tomis, the first KFCrestaurant opened in Constanta. In2007 she was promoted as Area Manager for Moldova andDobrogea.
JUNE 17é 10.30- Cinema City network organizes press conference at La Gondola
restaurant.
*10.30- Intel organizes event that marks the end of competition “Oldest
Notebook” at Hard Rock Cafeé 11.30- IBM Romania organizes press conference "Building A Smarter
Planet –The Next Leadership Agenda" at ''Taverneria La Gigi'' (11
Uruguay St.)
JUNE 18é 09:30 The ExP Group organizes the Acquiring Basic Financial Fluency
seminar in Bucharest. Registration required.
JUNE 19é 09:30 The ExP Group organizes Analyzing Financial Statements semi-
nar in Bucharest. Registration required.
JUNE 23é 09:30- The ExP Group organizes Business Valuation Essentials seminar
in Bucharest. Registration required.
JUNE 26é 09:30- The ExP Group organizes Strategic Performance Measures for
Survival and Growth seminar in Bucharest. Registration required.
Business Review welcomes information for Who’s News from readers.Feel free to contact us on 206 0680 (10 lines), by fax at 335 3474 or e-mail: [email protected]
Automobile Dacia is launchingthe new model Sandero Stepway onthe local market this week. SanderoStepway is the European version ofthe Stepway model which has beenselling under the Renault brand inBrazil since last year. Stepway is notthe Dacia SUV model that will belaunched next year. The new car,which was fist presented at theBarcelona Auto Show on May 7, is built at the Dacia factory inM i o v e n i . ■
Sandero Stepway gets local launch
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BUSINESS REVIEW / June 15 - 21, 2009 9
I N T E R V I E W
When thinking about buying a book, one of the names that immediatelyspring to mind in Romania is Carturesti, one of the posh and preferreddestinations of bookworms but also lovers of music, tea and decorativeobjects. The owners of this chain of book stores have great plans this year,some of which they have already put into practice, even if it meant at somepoint fighting against big real estate sharks. SERBAN RADU, generalmanager, talks to BR about some of the keys to its success.
Carturesti bookstore inmassive expansion mode
By Otilia Haraga
What type of books were best- sell -ers this year in Carturesti?
If we are talking about books byRomanian authors, the best-sold titlesin the Carturesti bookstores in the first3 months of this year were “About theBeautiful Man,” and “Who We A r e , ”both by Dan Puric, “The Confessionsof a Coffee Lover,” by Ghe. Florescuand “Deadly Stories” by Mihai Gai-nusa.
The best-sold foreign titles are T h eReader by Bernhard Schlink, BlackSwan, by Nassim Nicholas Taleb andThe Shock Doctrine by Naomi Klein.The sales of hundreds of copies are
probably supported by the fact that wehave the largest offer of books in Eng-lish in Romania, with over 10,000 titlesin stock.
Of the total number of books on theshelves of Carturesti novelties and rec-ommendations, 30-35 percent are localtitles, which does not reflect necessari-ly the public’s appetence for theseproducts but our effort to promote Ro-manian authors.
Other explanations would be thepromotion efforts made by publishinghouses and book stores both in the me-dia and through successful launchevents such as the launch of “TheGolden Age for Children” by StefanConstantinescu and “The Book ofRestlessness” by Fernando Pessoa.
Some of the titles are aided by uniquecinema productions, such as The Read-er by Bernhard Schlink.
How many new titles do you intro -duce year on year?
The portfolio of Romanian and for-eign titles exceeds 30,000 active titles,of which approximately a quarter arenovelties. English books cover all cat-egories, just as Romanian titles, andsurpass 10,000 active titles. They rangefrom fiction to business titles.
Currently we have a market shareof approximately 5 percent for booksedited in Romania (working with 300publishing houses in the country) andprobably 20 percent market share forimport books.
What are your development plansfor Carturesti this year?
The total value of investments wewill make in 2009 will amount to overEUR 600,000. So far, we have final-ized the investment in the galleryopened in April within the RomanianCultural Institute in New York. Forc o ffee lovers, we will open with thisy e a r’s edition of Street delivery the un-d e rground coffee shop at Carturesti ona space of approximately 250 squaremeters that will host exhibitions andcultural events.
Next comes the Verona garden- ter-race in the book store’s yard onMagheru Blvd., an extremely interest-ing project that will complement withthe bookstore really well (in fact weworked with the same team of archi-tects- Mr. Serban Sturdza and his col-leagues). The Verona garden will beopened in June.
With this project, Verona 15, thathas developed in several stages, Car-turesti has managed to save from dem-olition one of the most beautiful hous-es in old Bucharest. This is the houseon 15 Pictor Verona St. where Car-turesti expanded last year. It was a veryd i fficult and ambitious activity that wemanaged to carry through with great fi-nancial effort. This has been the mostsubstantial investment Carturesti madeso far, exceeding EUR 5 million. Wecontracted a bank loan for this.
Another very interesting projectwe will end by August is the Frenchbookstore Carturesti will open withinthe French Institute in Bucharest at theinvitation of the French embassy andthe Institute’s management. Last butnot least, we intend to expand with twobookstores located in other cities.
What investment went into the on -line bookstore you opened recently?
So far the total investment has
amounted to EUR 70,000 but it doesnot stop here, we intend to developmany other functionalities, to continu-ally improve the offer of cultural prod-ucts (books, music and films) availableonline.
At this point we sell online around200,000 titles but we aim to reach600,000 in a year. The turnover for theonline segment in the first year of ac-tivity is estimated to reach EUR200,000.
How do you see the book marketin Romania and how varies is the of -f e r ?
Recent official statistics on the val-ue of the book market do not exist yet,but there are talks about a value ofEUR 60- 70 million. The offer is variedand over past years nearly all importantdomains and niches have been ex-plored, but of course there are unex-plored niches still. The impact of thecrisis is probably visible in all do-mains. A small drop in the purchasebasket could also be noticed at Car-turesti.
On the other hand, many publish-ing houses have started discount pro-motions and campaigns that havesparked public interest in last weeks.Once the situation stabilizes, the mar-ket will grow more, for instance be-cause we are shifting, as an economy,towards services, greater added value,which means greater need for special-ization and training.
In what way is the price of thebooks settled between book stores andpublishing houses?
In Romania, as in many Europeancountries, the price of the books is setby publishing houses, so the bookshould be sold at the same price every-where. The price is set according to thepaid copyright and translations, the cir-culation, the time in which the book isestimated to sell, the quality of the pa-p e r / c o v e r, the thickness of the bookand so on.
Bookstores benefit from discountfrom the price listed but this is negoti-ated according to the sale potentialthey have, how old they are on themarket, payment conditions.
On the Romanian market there areexceptions as some book stores prac-tice prices that exceed with 15 percentthe price recommended by publishinghouses, but in Carturesti we practiceonly the prices and discounts set bythese or by importers. We are neverthe-less faced with a misconception of theclients who believe that if our bookstores look better, then the price ofbooks would be higher. ■
