Wednesday 12 December 2018

Firms can discover gift-wrapped opportunities by looking east

Ladislav Müller
Ladislav Müller

Ladislav Muller

If you want an alternative to Irish Christmas, jump on a plane and you can be sipping mulled wine at the Christmas markets in Budapest, Zagreb or Prague. Stay over on Christmas Eve and you forget about roasted turkey and get a carp with potato salad instead.

And there will be no wait for presents - they will be delivered after dinner on December 24.

A different kind of Christmas and festive season would be a practical introduction to 2017, a year where some of us will have to think about alternatives following the Brexit vote.

Hedging against sterling is a necessary short-term response for most companies and although there are still opportunities in the UK market, many companies will need to look at new opportunities and diversifying both geographically and vertically.

In its autumn economic forecast, the European Commission is predicting only a feeble GDP growth in the euro area for 2017 which should pick up only slightly in 2018 - and that only thanks to the EU's investment plan for Europe and co-funding from structural funds.

The average EU growth figure is actually misleading. Some countries will grow much faster than that. Romania, with a population of 22 million, buoyant IT, BPO and industrial sectors and massive agriculture potential, is expected to grow by 5.2pc this year and nearly 4pc in 2017. Investments into the Hungarian and Slovak economy will increase by nearly 5pc next year. All the other economies in central Europe will exceed the EU GDP growth average by at least 1pc.

Some businesses may take inspiration from Ireland's largest companies. In recent years, Ryanair has built additional bases in Bratislava, Bucharest and Prague and plans to become the largest carrier in Central and Eastern Europe by 2018.

Last year, CRH completed the acquisition of Lafarge-Holcim assets in the same region and became the number one heavyside building materials company in Central Europe.

Irish agri-services group Origin Enterprises announced the acquisition of Redoxim and Comfert, two leading agronomy services groups in Romania. There are plenty of opportunities in the sector. Between 2014 and 2020, nearly €9.5bn will be invested there in farm competitiveness, environment protection and rural development.

In the Czech Republic, a number of Irish companies including Kingspan, Smurfit Kappa, Mergon International, ICON, Grafton Recruitment, CPL Jobs and PM Group have established operations.

In Hungary, architectural practice O'Donnell+Tuomey designed the redevelopment of Budapest's Central European University and CRH opened its new business service centre in the capital providing administration for operations in Austria, Hungary and Slovakia.

While Irish firms are getting busy in these markets, multinational investors are certainly not lagging behind. Daimler is spending €1bn on a second plant in Hungary, Japanese electronics firm Siix is doing the same. Pirelli poured €200m into their operation in Romania and Airbus Helicopters are there too.

Another billion euros was invested by Jaguar Land Rover into its new manufacturing facility in Slovakia and GE Aviation is building a €350m factory in the Czech Republic to produce turboprop engines.

Consumer demand is fuelling retail and tourism industries and government projects co-funded from EU coffers underpin local construction and agriculture.

For those who wish to explore alternatives, two hours away there is a booming region with like-minded people and businesses looking for new ideas and suppliers.

So there is an alternative window of opportunity open on to colourful and busy markets in continental Europe.

Ladislav Müller is Enterprise Ireland director for the Czech Republic, Hungary, Romania, Slovakia and Bulgaria.

Sunday Indo Business

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