European financial turmoil puts Austrian investors on standby

Newsroom 17/10/2011 | 12:28

Cautious but optimistic was the general state of mind of company representatives attending the third Austrian Business Forum organized by BR last week. Against the looming debt and banking crisis in Europe, Austrian investors have became even more guarded in handling their local business but remain confident that growth will follow.

Simona Bazavan

“We would have seen much stronger positive development in 2011 if no other external factors had hit,” said Edith Predorf, commercial attaché with the Austrian Embassy to Bucharest.
The opinion was shared by Nicola Szekely, country manager for Romania of the DIY retailer bauMax Romania, and Reinhard Zeitlberger, head of the Austrian corporate customer department at Raiffeisen Bank.

Szekely pointed out that unlike three years ago, the situation in Romania is now more sustainable. Should international events not take a turn for the worse, 2012 could be a much better year, he added. “We don’t think that there is any negative news coming from inside Romania. (…) The only thing that we need right now is some good sentiment. The Romanian consumer needs a couple of months without bad news,” he went on. Zeitlberger noted that Raiffeisen Bank expected the Romanian economy to grow by about 1.5-1.6 percent this year, down from the 3 percent hike predicted at the beginning of 2011. For 2012 the Austrian bank foresees similar growth of about 1.6 percent.

While some of the recent domestic economic climate can be blamed on external factors, it also goes to show the vulnerability of the local economy. “What we’re seeing now is how much Romania depends on foreign capital, and this shows that the basis of the Romanian economy is not as stable as it should be,” said Prof. Dr. Joerg Menzer, managing partner of Noerr Romania and also the event’s moderator.

Taking a more optimistic tone, Eva-Simone Perauer, managing director of Marketing – Austria, said that a recent survey conducted by her company found the general economic sentiment to be improving. Furthermore, out of the respondents, 80 percent said that had they known the outcome of the economic crisis that hit the Romania three years ago, they would still have chosen to invest here.

However, many company representatives present at the event voiced their concern that despite the improving general sentiment, optimism has yet to translate into action.
Looking at how Austrian companies have handled the past year in Romania, Markus Imgrund, senior project manager with Horváth & Partners, said that after focusing their attention on cost control, firms are now concentrating on marketing and sales and a more thorough customer analysis. “Companies are no longer trying to push their products into the markets and find customers for that, but rather focusing on what their present customers need and trying to segment their customers,” he said.

Taking the analysis a step further, Karim Kheirat, country manager of ICAP Romania, revealed that from a total of 936 local companies with more than a 30 percent Austrian shareholding, 57.6 percent have not changed their commercial risk class between 2010 and 2011, 22.7 percent have seen a risk increase while 19.6 percent of the firms have managed to decrease their risk class.

Taking an overview of Austrian FDI in Romania so far, Predorf stated that Austria is Romania’s second biggest source of foreign capital after the Netherlands with EUR 9.2 billion invested so far, which accounts for about 18 percent of the total stock. EUR 363 million was invested last year.

The main industries where Austrian companies are seeing growth are alternative energy, R&D, industrial modernization, tourism infrastructure and industry.
The third Austrian Business Forum was organized last week at Ramada Plaza  Bucharest. The event gathered around 60 company representatives and was sponsored by Raiffeisen Bank, Noerr Romania and Horváth & Partners. For more information about future BR events please go to www.business-review.ro/events.
 
simona.bazavan@business-review.ro

Edith Predorf ,Commercial attache with the Austrian Embassy to Bucharest
“Even though we’re not seeing many newcomers, there is a lot of reinvesting from existing players of Austrian background”

Karim Kheirat,Country manager of ICAP Romania
“Large local Austrian companies have a better rating than the smaller ones and are also better prepared to face the crisis”

Eva-Simone Perauer,Managing director of Marketing – Austria
“It is still fashionable to be pessimistic but there are good signs that the
economic situation will improve”

Nicola Szekely,Country manager of bauMax Romania
“So long as the European situation remains stable, 2011 should be a much better year for Romania”

Markus Imgrund,Senior project manager at Horváth & Partners
“Firms now also have a plan B – they’re preparing for growth but also have better risk management approaches”

Prof. Dr. Joerg K. Menzer,Managing partner of Noerr Romania
“We saw an influx of investments in the first semester but on the other hand we’re seeing existing players slowing down their activity”

Reinhard Zeitlberger,Head of the Austrian corporate customer division at Raiffeisen Bank
“Romania and the other CEE countries are expected to outgrow Western Europe by about 1.5 percent”

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