Finally, Загорка!
Occasionally, I’ve been an outspoken critic of Romania’s apparent lack of interest in participating in neighboring economies. Those synaptic flares generally boil down to the distasteful observation of Romania drinking in too much of the outerworld in comparison to seemingly non-existant projection of itself.
Some moments it seems Romania could have a long-term economic disadvantage when I read about Austrians buying the banks, Dutch buying the breweries, Czechs buying energy concerns, British buying the property, French buying the car manufacturers, Swiss buying the ice cream makers, Germans buying the insurance conglomerates, and so forth and so on.
Rather than build lasting commercial empires, I worry about a future where Romanians have already sold everything like an international rummage sale when the economic games have only just begun.
Will the macro point of view be one where Romania only exists to be drained of its’ wealth potential? It’s a vampiric scenario to think of so many Romanian companies having their profits siphoned outside the borders.
From there I get to ranting about how various foreigners are taking possession of historical treasures, the radical absorption of massive amounts American culture through the entertainment and food/beverage industries, the rapid influx of retail brands from Hungary, the loss of seaside tourism to other parts of the Black Sea, and more.
When I rarely, if ever, hear about Romanian-owned companies exporting Romanian brands to the outside world, those are the times when I wonder what is happening to Romanian culture? It is really disappearing before our very eyes?
I hope I am overlooking some obvious and substantial enclave of Romanians who take pride in ownership, build some great businesses, brave the economic wars of entering new markets, and bring some of those profits back home.
A new generation of Romanian business leaders who don’t salivate over the exit strategy of quickly selling out to the nearest stranger with sacks of cash and then blowing it all on some wildly lavish escapism.
A bumper crop of serious entrepreneurs yearning to construct stable empires to hold.
Romania needs such iconic figures who breed successful outreach strategies enabling the nation to compete in the European Union and internationally without simply becoming a wilted plop of resources to be leeched.
Hungary, Bulgaria, Serbia, and Ukraine all represent logical markets for exporting Romanian-made products and Romanian-performed services sold under Romanian brands of Romanian-owned companies. There’s a ready audience right across the border just ripe for the taking. Do it.
While I clearly do not subscribe to the completely xenophobic or isolationist philosophies of Romania’s more, er, colorful political figures, I am unequivocal in my observation of a huge imbalance between foreign ownership and Romanian ownership.
The long and painful history of the Romanian peoples should not end with indentured servitude. Ba nu.
To lighten the mood, I’m hypocritically quite overjoyed to report on my latest findings in international commerce happenings here in the central economic hub of Bucureşti, colloquially known as the hot buzzing zona Rahova.
After much longing and despondent searching since prior excursions to the wilds of Sofia, my intrepid scouring of the busy Sector 5 streets has revealed someone finally imported the unbelievably fantastic Zagorka lager of Bulgaria into Romania.
Time to get on the clue train, you hip kiddies. Be the first one on your block to be super marfa. Ask about it at your local store (just like I incessantly badgered mine). Amaze your friends with your new-found sophistication by tipping back a glass of deliciousness.
Noroc!
June 19th, 2007 at 6:23 pm
So, this sparks my ever growing interest in business opportunities within and beyond the borders of Romania. Write me an e-mail, so I can shoot some ideas back at you….I’m in touch with a local here that exports farm equipment to Romania & he’s made out very well. There are surley opportunities to explore.
June 19th, 2007 at 7:52 pm
While your remarks ironically read like some kind of sarcasm, I know that business and not parody is on your mind. I’ll drop you a line and remember to swing that newspaper article your way as well. Oh, and, while I’m thinking about it; thanks again for that Magic Hat!
June 19th, 2007 at 10:37 pm
Our true industrialists were killed or disowned in ‘47. Nowadays, the majority of rich people built their fortunes on “ţepe”(frauds) and continue to do so. We are seeing a small, but growing number of people who are actually BUSINESS-men and try to build up fortune again.
Expansion into the neighbouring countries may seem like a logical idea but one must bear in mind the hatred we have for one another. It’s a tricky business but we’re getting better at it, we have to. Especially now since there are no more clearly dominant powers like the Turks or the Russians some 100 odd years ago and new countries must rise up over the others. Heck I see no reason why Romania can’t do this, in the medium to near future though
June 19th, 2007 at 11:46 pm
I’m with ya on the post-communist fallout which drives the motivation of most of these mafia people to sell out. I think it’s very problematic for Romania’s future economic growth because of the scale on which it is happening.
I’m glad to hear you say there are signs of the kind of leaders needed in Romania. That’s precisely what the country needs in order to grow strong over the long term.
Yeah, I get the idea that many of the Old Guard (or their ne’er-do-well kids) still cling to hatreds of this group for that reason and that group for this reason. By and large, the 20-somethings and younger don’t have quite the same level of animosity which is a very encouraging sign that Romania can move past the historical victim mentality and simply make a new claim by demonstrating what the nation is fully capable of in a positive light.
Any guesses as to how long before a turnover happens in the business culture here? Except for internet mavericks, I suspect the overall merchantsphere (forgive me!) is a long ways off from taking down the For Sale Cheap sign. What say you?
June 20th, 2007 at 12:48 pm
1. You are still here? Really brave…
2. Foraging in Rahova is a tough job, I agree, but you are already a veteran (my first word was crone, but I’m muuuch older than you, so…). Well, berea bulgareasca e OK, but where is “magazinul cu brinza bulgareasca”? (Hint: In Rahova area, not Ferentaurus). If you can find that salient outlet of market economy and cooperation with our nearest neighbour, I will proclaim you a TRUE native, with diploma and congratulations and letter of appreciation etc…
3. About that entrepreneur thing, you are not quite right, but I must write like for some master’s degree to cover relevant aspects, but 35 degrees celsius outside … are for beer and ice cream not for international investment…
June 20th, 2007 at 2:00 pm
1. Can you believe I’m still stuck in this dump? If only my visa application had not been rejected by the Myanmar Embassy…
2. You, good sir, are oil-wrestling with alligators if you would dare to tease me about any such magazinul cu branza bulgareasca being possibly located in my vicinity! It’s a well-known fact among most people I’ve met in past year or two that I am completely bonkers over Bulgarian sheep cheese. Should I ever locate rumored establishment, the chances are quite high that I would never leave (not the country, city, or cartier, but I mean the cache).
3. Keeping your cards close to your chest, I see. It seems to me that maybe we should entertain possibly meeting-up later this month to corroborate theories over the aforementioned beer and ice cream.
June 20th, 2007 at 6:58 pm
Drop us a line when you have a chance :) We miss you :)
June 20th, 2007 at 11:24 pm
ha…On a recent trip to Watertown Mass. My wife & I made such a purchase you so dreamingly speak of……Kashkaval direct from Hungary..oh you said Bulgarian…my bad…still it is fantastic(as I sit here with paring knife in hand, mouth full) and only 10 times as expensive(8 bucks a lb).. everybody’s gotta make a buck….but Romanian Cascaval afumat is waaaaaayyy better!
June 21st, 2007 at 3:55 am
Caşcaval afumat is only good if you have sources in Romania. Buying that in stores anywhere, Romania or North America you do nothing but cheat yourself out of some excellent cheese. Unfortunately the stuff found in NA is really expensive and low-quality.
Ever tried brânză de burduf, mr Ron? :D
June 21st, 2007 at 4:55 am
Why yes I have tried stomach cheese..usually a little too salty(kind of like over aged pecorino romano), but definitely workable into some recipes.
We have puchased authentic, quite good quality cascaval here as of late.Maybe it seems better due to our time and distance from the real deal. But it does suffice…
And yes, I agree the best cheese I’ve ever tasted was purchased on the side of a mountain road, just north of Courte de Arges. A golden clopot shaped 3 lb beauty I only paid 8 dollars for…too bad with the new strict regulations of EU compliance, such things of greatness are now “illegal”
Nonetheless, my wifes family still purchases all natural milk from the same family down the street now for 20 something years or so. And for the first time in my life I was able to look the cow in the face from whom I’ve pilfered it’s offsprings nourishment!
June 21st, 2007 at 9:03 am
The market of my neighbour must be greener then mine. JUNE 2007 ZKF Swiss Bank Ceo is fired after discovery he was supporting a Russian millionaire to buy the Swiss Multinational Sultzer.
(May the last of the humble readers ask for more posts and comments on Mergers and Acquisitions in Romania ?)
June 21st, 2007 at 10:09 am
1. such a nice cozy warm place place Myanmar! see below
http://www.alertnet.org/thenews/newsdesk/DHA161681.htm
A good place to meet myanmarians(?) myanmarezes(?) what ever.
2. “Dear lady”.
3. the earliest RO investment in the country of aforementioned cheese I know
http://www.policolor.ro/en/index.php?location=company5 . This was an early bird, to invest internationally you need capital. Even with tunuri- based economy from Ro, in 15 years or so, it’s quite hard to collect such an amount. In the last few years, yes - I’ve seen Romstal near Chisinau last week. Others: Flamingo, the furniture guys Mobexpert I think somewhere in Balkans, and of course Rompetrol in France, Jolidon in Italy. A failure, but nice try- Cuprom with that Serbian mining company.
June 21st, 2007 at 3:05 pm
Romerican, don’t get over-excited about this. Free market economy and modern governance is not about who owns the things, but about where the taxes go (to which government, that is). If the shit hits the fan, and bussiness owners undermine national interests, nationalisation, requisitioning and legal harassment are still possible solutions (e.g. a situation where we are at war and foreign company owners refuse to join the war economy effort). Otherwise, it doesn’t really matter that Dacia is owned by Renault. What matters is that it employs people, exports production, makes a profit, and that profit is taxed by our government. And it’s still called Dacia. Concerns about direct ownership of the economy are primitive, 18th-19th century ideas. They belong in the ages of mercantilism, not in modern capitalism.
Of course, some things should have never been sold out, like Petrom. Or at least they should have sold the company */without/* it’s oil reserves, which happen to be Romania’s strategic oil reserves and should have remain unexploited except in case of dire emergency. But otherwise, foreign ownership is no problem as long as it gets taxed. To give you only a few examples: Opel, the german car maker, is in fact owned by GM, since the aftermath of WW2. Chrysler is/was owned by the German Mercedes. The majour share-holders of the biggest steelworks conglomerates in Europe include Indians, Americans and whatnot.
Direct ownersip only really matters when you want to coerce them into an “all for the front, all for the final victory” policy.
What does matter a lot though, is the commercial balance. We shouldn’t be importing so much over our exports. However, this balance is so far eased by direct foreign investment (which counts as money in) and the huge flux of unregistered, untaxed money sent home by Romanians working abroad.
In the end it’s not that bad, but caution is necessary. On the other hand, Romania has a tradition of not going for canned cucumbers as an economical basis. Aside from agriculture which has always been the backbone of our survival ability, majour production sectors in various periods was as follows:
1930s to 1945: railroad stock (cars and engines), oil and related products, light armament and munitions, military aircraft;
1947 to 1960: crisis confusion and reconstruction :P
1960 to 1989: automobiles, oil and related chemical products, steel, alluminum, ships and, guess what? light armament, artillery, tanks, helicopters, munitions, etc…
See a pattern here? Regardless of the level of government stupidity and corruption, Romania has traditonally went for developping strategic sectors that ensured its polytical position and military capabilities. We still do that, albeit quite inconsistently and ineffectively. If the plan was to offer fast developpement and prosperity for the masses, we could have invested heavily in light industry (food, services and textiles) like the Bulgarians, Italians and others. But that wouldn’t cover other, higher polytical requirements.
June 22nd, 2007 at 1:33 pm
Tudor - industry structure changes in time. Fabrics, other industries with VERY small value added (in lohn especially) are now a thing of the past for Ro (moved to Vietnam). -Idem glass industry (expensive gas, equipment/working place) -
Now, it’s time for mounting@assembly (improved Value added, but not spectacular) - see all cars&related industry, solectron or nokia, aviation, …
A lot of call centers teleport from India to ro- very funny, romanian economy developing using skills in foreign languages (small value added, too…). That applies to IT too- see bill gates visit in february(? ) this year.
To develop, really, we need ROADS ROADS ROADS - & other groundwork (sidewalks borders excluded)
Agree with Tudor about direct ownership- it’s for small companies. When a company grows, become public, listed, main shareholders can control with a smaller stake…
Romerican- this is the beginning of that master’s degree. Want more?
June 22nd, 2007 at 3:40 pm
[…] writes about the prospects of Romania’s economic relations with its neighbors: “Hungary, Bulgaria, Serbia, and Ukraine all represent logical markets for exporting […]
June 23rd, 2007 at 1:09 am
Tudor & mutz - Thanks. When I have a free moment this weekend, I’ll reply (probably by deleting this comment, but we’ll see).
June 23rd, 2007 at 5:19 pm
Mutz, when I said light industry, I didn’t mean Lohn. There are lots of countries that live on light industry (from food, through textiles to tourism) and make quite a handsome profit. This is especially importatn, since jobs in high tech industries (although very well paid and with a large profit margin) are not exactly accessible to the average idiot.
On the other hand, light industry does not help with foreign policy, military independence, and the ability to control other nation’s supply of essential products and comodities (which is what power and influence are really about). If you can’t pull the plug on majour issues on the economies of the countries you want to be able to controll/count on, you’re going nowhere. Profit margins don’t really count there. It doesn’t matter how small the profit margin is all year long, if it allows you to starve a country of energy in 5 minutes and coerce it into doing “the right thing”.
In my opinion, there are 2 objectives in the long run. One is ecnonomical and military independence from our archthreat, Russia. Second is the reasertion of the pre WW2 position of relative superiority and influence over Bulgaria, Serbia and nowadays Moldova. Unfortunately, you still need Banking, communications, energy and heavy industry to do that, even if they’re not the latest and best in terms of economical profits.
June 23rd, 2007 at 9:15 pm
out of town@ internet -less until next Friday. I’ll be back! gone packing…
June 26th, 2007 at 2:43 pm
v-twin - In most of the local stores around me, here in Rahova, the most common cascaval afumat is packaged/branded by Hochland. And it’s repulsive. A poor substitute. Frankly, I don’t even think they smoke the cheese at all, but rather my theory is that they spray the outer edges with imitation smoke.
In some stores, it’s the only afumat you can find. I’ve stopped buying it after giving in once or twice because it’s really that worthless. When you open the wrapper, you can smell some smokiness, but there is zero taste. Just bland pressed cheese. Blech!
Ron & Maria - I’m on a 99% good-luck trackrecord for branza de barduf. I just love it to death. The one that comes in the wood wrapping tends to be a little more pungent than the stomach wrapped ones, but I like them both. I agree it’s salty, but I don’t find it “too salty” personally… it’s just part of the yumtasticalness.
Your tale of Curtea de Arges makes me very jealous indeed. It sounds like you found one helluva hunk of Grade A cheese there. Beautiful.
mutz - 1. Glad to see my comparison was not wasted on you.
2/3 - I think you make a very valid point with respect to “it ain’t easy” gathering the money to invest internationally during the first 15 years of post-89. I can readily see that. Nonetheless, I find myself in an all too comfortable position of armchair quarterback (as we way) able to critique the greedy foibles of those Romanians who found themselves lucky pilferers of state assets.
What I am trying to say is, most of the people didn’t even try. They nabbed their share of the nation’s coffers and sold out as quick as possible. Had they been interested –in any way– in actions other than enriching themselves via exit, then I think they would have been able to procure the financial backing to expand outward into the region. Not everyone pays out of savings, but many make banking credit arrangements in order to execute strategy.
Tudor - Thanks for the reality check. You gave me cause to revisit some of my thinking on the topic and ‘come your way’ a bit. But not entirely. I think it does matter who owns things… or, to be more exact, I think it matters if Romanians own virtually nothing.
War was an interesting example you brought up. Surely, there are probably some cases of foreign owner undermining a government, but I think there are *far more* cases showing that foreign ownership of a company during war time means very very little indeed. In fact, there are many examples which even show foreign owners to be more accommodating than locals. I’ll have to politely disagree with you on that one point. War situations are not one of the few situations likely to reveal weaknesses of foreign ownership. Quite the contrary, as far as I see history.
Be that as it may, we can probably safely move on to the bigger question without necessarily debating endlessly the impact of pre-wartime foreign investment during conflict outbreak.
I agree with you 100% with respect to Romania’s oil reserves. Once again we see the PSD mafia absconding with the resources of the country for their own personal benefit. You have to give credit to the Austrians, though. To me it’s eerily similar to the far distant past, where the Austrian bourgeois control Romania as a vassal servant with some simple bribes to key politicians who betray again and again.
Of course, I’m not opposed to business deals or reserves contracts or foreign purchases. And I’m certainly not opposed to Austrian economic exchange. But this one deal was pretty rotten, on the surface.
Now, on to your big point, which was that you suggest the owners of the company do not matter as long as the entity is taxed. It’s an interesting point but one with which I vehemently disagree with… given the imbalance of ownership in this country.
See, in a microscopic view, the ownership of any one company doesn’t matter. They employ people, create goods or provide services, participate at some cursory level in taxation schemes, and generally play a role in the economy.
However, I’m not sure how you can deny there is a difference in terms of where the profits go. Foreign owners often export wealth out of the host nation via licensing deals, fixing subcontractors, outsourcing services, or otherwise funneling profits back out under the guise of costs thus pitted against taxable incomes. Happens all the time around the globe.
I think this truism becomes important when you look at what I characterize as an imbalance of Romanian ownership. When you drag it out to scale, then the situation becomes damaging if not dangerous. This ship is listing badly and I wouldn’t like to see Romania dragged down into a scenario where most of its’ people subsist for generations just to enrich a foreign economic empire.
My examples would be much of South America, nearly all of Africa, chunks of Asia, pieces of the Near/Middle East, and -yes- portions of the former Soviet sphere. I’m even happy to avoid discussing how foreign owners in those countries often go to great lengths to suppress the native peoples.
Hopefully, it may not come to all that. It’s certainly not a foregone conclusion, but in order to avoid it, some people have got to step up to the plate. Both on the political front and the boots on the ground in the private sector, the upcoming generations have the opportunity to correct the large PSD-facilitated imbalance that threatens the longterm health of the Romanian peoples.
To help right the boat, I’d like to see more Romanian brands owned by Romanians to be promulgated outward into the nearby regional markets in order to assert and/or bolster greater economic independence of Romania.
mutz - I agree with you 100% that Romania does need about 5-10 years of serious infrastructure retooling. The national government can work with the EU to help build a series of autostradas which will have an important impact, but in my way of thinking it is best to leave local highways and roads to the respective judeti and cities (in a “keep local things local” perspective).
But I’ll go you one further and suggest that equally important would be for the Romanian government to build (not license to a foreign owned monopoly) an IT infrastructure that brings broadband to all Romanians (or, at least, 95+%) for a monthly cost of $0 to $5. This will have a tremendous impact on Romania’s long-term prospects by providing infrastructure necessary which enables Romanians to leverage their unique assets (low-cost, high-education) at a unique time in the history of world development. Other nations, such as Estonia, have proven it can be done cost-effectively and the economic benefits are readily apparent to anyone with half a wit who analyzes the reports.
Tudor - I enjoy reading your point of view, but again I wonder about some of what I’m seeing. I’m curious if achieving military independence from Russia means surrendering so new dependence much to the Americans. It sounds good now, but I worry it could possibly be problematic in the future. I suppose the main question would be, has work begun on a strategy to make Romania actually independent once the goal of pushing Russia back has been accomplished?
As for me, I’m do not have any strong desires to see Romania dominate it’s neighbors, per se, with “relative superiority” as seemed to be the case for 10-15 years during Romania’s brief heyday a century ago. Rather, the distinction of what I — as a non-Romanian outsider — find to be important, is that Romanians exercise their power to stop the current mafia hemorrhaging that undermines the nations ability to prevent itself from being categorically inferior. You see, I’d be okay if RO was roughly equal with it’s peers, so long as it’s not lesser than. But I can understand how you might feel differently… ;]
June 27th, 2007 at 5:17 am
As I just left Romania, I was confronted with what gifts to bring back for family and friends. However, I realized that most of what Romania has to offer (at least in forms of gifts) would not interest most of them. The picture books and postcard packages, detailing landscapes and buildings seemed to be the only way to go. This is just the problem. Romania seems to have no identity. Although there was once, perhaps, a chance for the country to have blossomed into something worthwhile on the European and perhaps global stage, at every turn the wrong decision has been made. Fascism, Nazism, Communism and now Robber Barron Capitalismo. I’m glad I’m not there, frankly, because even when you are trying to help, at some point you have got to let the people make their own mistakes, even if it is a habit.