Hungary has sent marketing expert Tamás Varga to conquer the Urals

13.12.2011 — Analysis

The Hungarians see Russia as a strategic partner that can supply them with the oil and gas so essential to them. For Russians, the Republic of Hungary is a supplier of wine and agricultural products, as well as a holiday destination. This economic synergy benefits both countries. And now new vistas for cooperation between the Urals and Hungary can be explored, thanks to the new consul for foreign economic affairs who is now stationed at the Consulate General of Hungary in Ekaterinburg. Mr. Varga divulged the business plans of his fellow Hungarians in an exclusive interview with RusBusinessNews.

- Mr. Varga, how did you end up in the Urals? Had you previously worked in Russia?

- I have both studied and worked in Russia. I graduated in 2006 from Plekhanov Russian Economic University with a degree in marketing, and I then began working for the German company HeidelbergCement. Specifically, I oversaw the company's new projects in Russia, including in Bashkortostan. But with the onset of the financial crisis and the economic downturn, I returned to Hungary where I established my own marketing company.

In early 2011, I learned of the competition for the position of trade representative in the Urals. I think I'm a good fit here, because with my experience I can help make it easier for Hungarian companies to thrive in the Urals market.

- You've been working in the Urals for a little over four months now. Have you been able to get a through grasp of the nuts and bolts of the Urals economy during this brief period?

- The past four months have been sort of a start-up for me. I have managed to visit Kamensk-Uralsky, Nizhny Tagil, Chelyabinsk, Khanty-Mansiysk, and Omsk. And wherever I go, I try to meet with representatives of the chambers of commerce and the ministries that handle economic issues. My job is to test the waters and discover the potential opportunities here for Hungarian businesses and their goods and services. Only then can I provide my compatriots with useful investment advice. In addition to offering support to our businessmen in the Urals and promoting Hungarian goods and services, my work to attract investment in Hungary from the Urals is equally important.

- Mr. Varga, does it bother you that the Hungarian trade mission was without a director for almost a year? Did relations between the Urals and Hungary deteriorate during that time?

- My predecessor, Gabor Reppa, could be seen as a Hungarian pioneer in the Urals. He opened the trade mission long before there was a Hungarian Consulate General in Ekaterinburg. When he left, the Hungarian consul in Ekaterinburg, Csaba Bajtai, took over the responsibility for promoting those economic ties. But the truth is that the primary job of the Consulate General is to resolve with visa issues and to assist Hungarian citizens. Thus, my current task is to continue these efforts in economic diplomacy with the different regions in the Urals, expanding our sphere of industrial cooperation.

Despite the recent economic crisis, Ural-Hungarian cooperation has increased, and the statistics bear this out. Between January and June of 2011, Hungarian imports to the Sverdlovsk region rose 53% in comparison with the same period last year. We expect to see an increase in the year-end totals as well.

Traditionally Hungary supplies the Urals with engineering products, mechanical equipment, pumps, computer equipment, and bearings. Hungary imports organic and inorganic chemical goods, mineral fuels, and food products and the raw materials for food products, as well as light industrial goods and ceramic products. Looking at the wide variety of products I just listed, it's safe to say that our investors are interested in many industries in the Urals, not just agriculture and medicine, but also construction, energy, and IT technology. And this is far from an exhaustive list.

- You mentioned IT technology - that's really something new...

- There are many internationally recognized IT companies in Hungary, such as IBM. We also have our own software-development firms that are very competitive in the global market. They create products that are attractive to the average Russian consumer as well as to major corporations. Currently there are no negotiations underway with the Urals in this area. But if we look at a field that overlaps with IT technology, such as telecommunications, we can see some progress. This fall representatives from a major Hungarian company, TMTO, visited Ekaterinburg. TMTO used to supply Hungary with antennas and other auxiliary equipment. The company found some potential partners in the Urals with whom they're negotiating.

- Are there any Hungarian companies with a well-established history in the Urals? For example, before the financial crisis the IGN company was looking at a wide variety of potential projects here, from building a mini-hydroelectric plant in the Central Urals to an office complex in Ekaterinburg...

- As you said, those plans were created before the economic crisis. But of course those projects haven't been completely abandoned, just put on hold until economic conditions are more favorable.

Two of the best-known Hungarian firms represented in the Urals are the pharmaceutical company Gedeon Richter and the Hungarian bank OTP. They both have representative offices here.

Besides these, there are many companies that have found a less expensive way to promote their products and services, by using a dealer or representative who travels around Russia. This costs less than opening an office or a representative office, but still gives them the opportunity to research the needs of the local market. Arrangements like that are more likely to work for sales of food or alcohol.
Also, Hungarian businessmen can use existing Russian state programs to promote their technology. One example is the federal Clean Water project, which attracted many Hungarian companies. I believe Hungarian expertise in laying polymer pipe is often relied on in Ekaterinburg. It's a simple idea - the old rusty pipe is used a framework through which the polymer pipe is blown in. The cost savings are obvious. It's much cheaper to lay that kind of pipe once than to dig up and patch the old one dozens of times. In addition, this technique improves the quality of the water by removing rust sediment.

- Polymer pipes and IT technology can be called the cooperation of the future, but what about good old agriculture?

- We only offer our services in areas where we are well-experienced. In agriculture, Hungary can offer its expertise in everything from crop and livestock production to the processing of the resulting products - from the seeds to the finished dumplings, so to speak.

There's an upcoming project in the Sverdlovsk region to construct a meat-processing line and to modernize their old facility. The Korax company represents the Hungarian side of this venture. Another of that company's projects is to establish a slaughtering and meat-processing business in Tatarstan.

We have high hopes for our work to develop an agribusiness sector in the Chelyabinsk region, where the climate and weather are very similar to Hungary. A farm holding is currently in the development stage in the South Urals, and that's something in which we have both experience and the needed technology. I'm planning to bring a farming delegation to the Chelyabinsk region.

- And if we move from the South to the North Urals, what does Hungary find interesting in that region?

- First of all, both areas have Finno-Ugric roots. It's no accident that Ugra State University has a Hungarian office in Khanty-Mansiysk, and there's a similar center in Ekaterinburg. We intend to supply Ugra State University with Hungarian equipment for their practical training exercises. That way, their students will be able to familiarize themselves with new technology, and Hungarian companies will be able to hire experts who have been carefully trained on their equipment. There are Hungarian companies that are ready to provide Ugra with energy-saving technology. I represented their interests in particular during my recent visit to Khanty-Mansiysk.

- For some time now Hungary has been as active as the Czech Republic in promoting itself as a tourist destination. Are Hungarian spas currently popular with tourists from the Urals?

- The Consulate General of Hungary in Ekaterinburg issued one-third more visas in 2010, and this year we expect to process approximately 12,000 visa documents, which includes not only visas to Hungary, but to Austria, Denmark, Latvia, Slovakia, Slovenia, and Finland (our diplomats have bilateral agreements with those governments to issue visas on their behalf). We expect a similar increase this year. I can say that Hungarian spas are popular with Russian tourists. Statistics such as the number of nights that Russians spent in Hungarian hotels rose by a third. And that's no surprise, because when a tourist arrives in Hungary, he finds himself surrounded by opportunities to enjoy our thermal baths. We Hungarians have been "taking the waters" for over 2,000 years.

In addition, we want to acquaint residents of the Urals with Hungarian private clinics. I've observed that Russians prefer to have their cosmetic and dental surgery done abroad. Hungary has many private clinics that attract even Hollywood celebrities.

- Hungarian pharmaceuticals are also quite renowned... Are any Hungarian companies planning to become part of the Urals pharmaceutical cluster?

- It's possible that some Hungarian companies might link up with the Urals pharmaceutical cluster.

Overall, medical cooperation looks very promising. Hungary underwent its own period of perestroika, just as Russia did, and many businesses were created during that time that were based on old companies from the 1980s. There was one well-known company, MEDICOR, that manufactured X-ray equipment. It shut down long ago, but the professionals who worked there have established their own businesses in various medical industries, and those companies are returning to the Russian market with their products.

- Are there plans to promote Hungarian food products in the Urals?

- Of course. For the most part, alcoholic products go through Moscow, but I have already met with a number of companies that are interested in arranging direct shipment to the Urals. Next year I plan to organize tastings of Hungarian wines and the famous, traditional Pálinka fruit brandy in various locations throughout the Urals, as well as in Ekaterinburg, and it will be possible to sample other Hungarian products as well during these events. This summer, Surgut, which is a sister city of the Hungarian town of Zalaegerszeg, will host the Hungarian Pálinka Festival. It's been suggested that a workshop in Hungarian cooking be arranged in the Urals, which would give tips on preparing authentic Hungarian dishes, using Hungarian products, naturally. I believe that these types of events are the most effective way to discover whether demand exists for our goods, and I have no doubt that it does.

One Hungarian businessman has another interesting project. He owns a chain of high-end shops in Europe that sell Hungarian goods, and he intends to open a sales outlet in the Urals. He will visit Chelyabinsk and Ekaterinburg in the near future, in order to examine potential sites for the store.

I think that this list of projects will keep expanding. And I'll be working as hard as I can on them. My schedule for the first half of 2012 is booked almost to the minute.

The interview was prepared by Valentina Mazharova