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Industrial Developments in Hungary

German Investments in Hungary

| Editor: Isabell Page

Investments by German companies in Eastern European countries such as Hungary are rising steadily. For example, the BMW Group expanded its production network in Debrecen.

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Companies that are already active in Hungary or are planning to establish themselves there should take additional investments in employee qualification into account in advance.
Companies that are already active in Hungary or are planning to establish themselves there should take additional investments in employee qualification into account in advance.
( Source: gemeinfrei / Pixabay )

After the fall of the Iron Curtain, Hungary rapidly expanded its relations with the West, both politically and economically. With the automobile industry as its driving force, Germany developed into the most important foreign trade partner and has remained so to this day. German SMEs even see Hungary as one of the top 3 most popular target countries for setting up business locations in Eastern Europe, behind the Czech Republic and Poland. 13 % of the companies surveyed are already represented in Hungary. The main argument for a commitment is above all the possible cost advantages. For example, wage costs in most sectors are 30 to 50 % lower than in Germany. Advantages can also be achieved in terms of procurement costs. If these motives are supplemented by experience gained by companies during their time there, Hungary scores particularly well in the area of public infrastructure and the learning curve of its employees. One quality in particular is very advantageous: thanks to the high linguistic affinity of Hungarian colleagues, cooperation often works very well. 1

Robert Ésik also reported on the good mood among German investors at the annual meeting of the Hungarian-German Chamber of Industry and Commerce (DUIHK). The President of the Hungarian Investment Promotion Agency (HIPA) is convinced that 17,000 new jobs have been created in the past three years thanks to the support of HIPA. HIPA is under the direct control of the Ministry of Foreign Trade and Foreign Policy and provides initial support for Hungarian business development. 2

In the first half of 2018, Germany invested 263 billion euros in total trade with Eastern Europe. With 68 billion euros, Poland ranks first out of a total of 29 countries. Hungary follows in fourth place with about half of this amount. According to the Tagesspiegel, the turnover generated by German companies in both countries has increased by around eight percent compared to the previous year. 3

The BMW Group, which announced the expansion of its production network in Debrecen in July 2018, is also investing in the Eastern European country of Hungary. With 1,000 employees, 15,000 vehicles are to be produced annually. 2 "The decision to build a new plant underscores the BMW Group's global growth prospects. After high investments in China, Mexico and the USA, we are now strengthening our European location and thus the global balance of our production between Asia, America and Europe," said Harald Krüger, Chairman of the Board of Management of BMW Group. 4

Long-Term Commitment in Hungary Pays Off

Companies that are already active in Hungary or are planning to establish themselves theres hould take additional investments in employee qualification into account in advance. In order to counter the shortage of skilled workers in the management segment in particular, further training in areas such as project management and problem-solving technology is necessary. In addition to on-site training programs, exchange programs and joint workshops with German locations are also available. Due to the high learning ability, which the surveyed companies attest to their Hungarian employees in the study, the chances of success of such measures are particularly high.

References

1) https://www.maschinenmarkt.vogel.de/ungarn-trotz-steigender-risiken-beliebter-standort-a-546915/

2) https://www.mdr.de/heute-im-osten/orban-steuerpolitik-100.html

3) https://www.tagesspiegel.de/wirtschaft/osteuropa-die-groessten-firmen-ungarns-stammen-aus-deutschland/23239694.html

4) https://www.press.bmwgroup.com/deutschland/article/detail/T0283624DE/bmw-group-erweitert-produktionsnetzwerk-in-europa

Original: Isabell Page / Translation: Alexander Stark

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