business review issue 45, dec 14-20, 2009

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As the first full year of recession draws to a close, Business Review gets in the festive

mood with an overview of how the luxury segment has held up and some ideas for the

perfect stocking fillers that are bound to generate some Christmas cheer

As the first full year of recession draws to a close, Business Review gets in the festive

mood with an overview of how the luxury segment has held up and some ideas for the

perfect stocking fillers that are bound to generate some Christmas cheer

MONEYThe relentless march of expansion is

over for banks, who are now trying to

keep their customers loyal and launch

products suited to the era of austerity

See pages 10 - 11

SHOPPINGWhat do you buy the man or woman

who has everything? Business Review

presents some festive gift ideas to suit

Santas and Scrooges alike

See pages 14 - 15

LUXURYHigh-end buys were left high and dry

by the crisis. From top hotels and spas

to statement jewelry and fancy phones,

BR sees how posh products have fared

See pages 16 - 19

BR WISHES ALL ITS READERS A HAPPY HOLIDAY SEASON! NEXT ISSUE WILL BE OUT JANUARY 11, 2010

LIGHTS GO OUT ON 2009

LIGHTS GO OUT ON 2009

BUSINESS REVIEWROMANIA’S PREMIERE BUSINESS WEEKLY DECEMBER 14 - 20, 2009 / VOLUME 14, NUMBER 45

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BUSINESS REVIEW / December 14 - 20, 2009 3

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Str. Alecu Russo 13 - 19, et. 7, ap. 14, Bucharest - Romania E-mails: [email protected]; Phone: +4021 210-7734, Fax: +4021 210-7730 ISSN No. 1453 - 729XPrinted at: MASTER PRINT SUPER OFFSET

Founding EditorBILL AVERY

Editor-in-ChiefSIMONA FODOR

Deputy Editor-in-ChiefCORINA S~CEANU

Senior JournalistsDANA CIURARUANDA DRAGAN OTILIA HARAGA

Copy EditorDEBBIE STOWE

ContributorMICHAEL BARCLAY

ResearchSIMONA BAZAVAN

PhotographerLAURENTIU OBAE

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Sales & Events DirectorOANA MOLODOI Marketing Manager

ADINA MILEASales & Events

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THAT JUST HAPPENED!Just when you thought Basescu

was down, he fights back to win theelection by less than one percent –about 60,000 people. In last week’scolumn I said the election was tooclose to call, but no one anticipatedjust how badly Geoana would blun-der last week, to erase his big sixpoint lead. From the kid-punch videoto the ill-conceived visit to Timisoara,Geoana’s people seemed out of touchwith reality. Basescu’s message ofstanding firm against communismand business moguls paid off, withthe final straw being Geoana’s admis-sion that he had paid a visit to SorinOvidiu Vantu’s (SOV’s) house thenight before his big debate withBasescu, who nailed his rival to thewall. Why SOV decided to shutdown his flagship newspaper divi-sion the following week, includingBusiness Standard and Cotidianul, isanyone’s guess, but fleeing for politi-cal cover seems a reasonable expla-nation. Like the other businessmoguls Basescu rails against, the me-dia holdings were never about mak-

ing profits anyway, but political influ-ence and protection.

Here at Business Review we aregetting ready for a short holiday.We’ll be back in print on January 11,but please check our websitewww.business-review.ro for dailynews updates during the break. We’reoffering special online subscriptionoffers for 2010, and a wealth of extrainformation, including archives, onthe site. You can join the BR Club fordiscounts to our events, and also re-ceive complimentary discounts ontravel, restaurants and more. Readmore about our upcoming projectsincluding our annual Business Re-view Awards Gala, Tax, Law andLobby event, and many other net-working opportunities beginning ear-ly next year. How about a specialseminar on how to avoid getting yourcar towed by Sector One thugs?

I wish everyone a wonderful andpeaceful holiday season! Stay intouch and see you soon!

Bill [email protected]

LOOK BACK IN ANGER?2009 is over.

Most of the businesscommunity wouldprefer to forget aboutit. Was it really theworst year since therevolution? The econ-omy has shrunk re-

markably for the first time in years.Business has dropped by 20-90 per-cent since 2008. Investments arenearly at a standstill. Many expats aredirectly concerned; some have beensent home. Have we forgotten some-thing here? Big profits were cashed infor years. Romania became a refer-ence in many international firms forhigh ROIs and profits. Everybodyknew things would get back to nor-mal; the speculative element in busi-ness plans had become too important.As an expat, I was happy about thedynamism in the business. We allparticipated in this hype. It was ashow and now the show is over.

What comes next? Maybe we’ll think more about

sustainability and forget overnightriches. What makes economies likeGermany so strong is the sustainabil-ity which comes from the expertise ofSMEs developed over years. Maybe

we will also take it easier. Whyshould the economy be different fromour personal lives? There are ups anddowns. Be aware of it and develop apositive attitude to it.

Maybe it is also time for modestyand humility, words that have disap-peared from our vocabulary. Have wenot invested too much in our imageand ego, in material things, just to be“en vogue”? Have we not been in-fected by the disease of always want-ing more? Now we have time to thinkabout what is really important to us, ifwe’re happy in our jobs, if we’re do-ing something meaningful, not justworking for money. Some peoplehave lost their jobs and so these ques-tions present themselves even moreurgently. Try to look for honest an-swers and maybe you will experiencea shift in your perspective. Enoughreasons to look back gratefully on2009! Good luck to you all and havea good start in the new era.

Michael Schroeder is a mediaexpert. He has worked for the last

17 years in France, Germany, Ser-bia and Romania and was until re-

cently general manager of BurdaRomania

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Basescu (top) sticks it to his critics and confoundsthe exit polls with a knife-edge election victory,the results of which are being contested by thePSD. And a “beautiful night for democracy” evap-orates in the cold light of day for Mircea Geoana.

PHOTOS OF THE WEEK

BRIEFSONLY HALF ROMANIANFIRMS TO PAY CHRISTMASBONUSES THIS YEARé Only half of the companiesactive in Romania will pay theiremployees Christmas bonuses thisyear, compared to nearly all ofthem in previous years. Theaverage bonus has dropped fromRON 605 to under RON 230,according to a recent study byPaylogic. More than half of thebonuses will be offered in theform of tax-deductible mealvouchers, up on last year.

REALITATEA CATAVENCUTO AXE DAILY PAPERSBUSINESS STANDARD ANDCOTIDIANUL é The Realitatea Catavencugroup, owned by Romanianbusinessman Sorin Ovidiu Vantu,will stop printing the dailyBusiness Standard, with the lastissue of the publication set to hitthe newsstands on December 23.The newspaper’s employees havealready been told that the groupwill no longer print BusinessStandard as of January 1 nextyear. The firm’s management hasnot ruled out the possibility ofselling the title to an investor,should one come forward.General newspaper Cotidianulwill also be axed as part of thesame plan. Vantu has previouslysaid that the publishing groupwould focus on its TV, radio andonline businesses.

LENDERS COULD MAKELOWER LOAN PROVISIONS é Lenders could choose torefinance or set new maturities forexisting loans with lowerprovisions, if the National Bank ofRomania (BNR) approves aproposal from the RomanianBanking Association (ARB) relatedto the changing of ranking andprovisioning of credit regulations.At present, lenders cannot switcha refinanced or restaggered loanto a better risk category than theone it was in before restructuring.According to Nicolae Cinteza,manager of the BNR’s supervisiondivision, any changes inprovisioning regulations can bepassed only with IMF agreement.

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BUSINESS REVIEW / December 14 - 20, 20094

Tuca, Zbarcea & Asociatii hasopened a representative office inMadrid to meet the increasing needsof Iberian investors doing business inCentral and Eastern Europe, especial-ly in Romania. The move makes thecompany the first Romanian law firmpresent in Spain.

The local office in Madrid is oper-ating for the moment under the FusterGarcia-Berdoy brand, and the expan-sion of the team is planned. PabloGarcia-Berdoy, former Ambassadorof Spain to Romania, and JaimeFuster Rufilanchas, erstwhile manag-ing partner with Garrigues CEE, arepartners in the office.

“Spain has been one of the mostdynamic investors in Romania in re-cent years but there are many opportu-nities to come. Our recent experiencein the EU will, for sure, accelerate thisprocess,” said Garcia-Berdoy.

The representative office willserve as a local hub in helping Iberianinvestors do business in Romania, byacting as a point of contact for clientsactive internationally while also pro-

viding first-hand facts and informa-tion about key regulations and stan-dards in Romania.

“There was a clear client-driven-need to open in Madrid. Spain and theentire Iberian region are strategicmarkets for us and our decision is anatural extension of the firm’s alreadystrong presence in Romania. Investorswill benefit from a potent mix of glob-al outlook and local expertise and apowerful combination of the individ-ual and collective expertise of ourSpanish and Romanian teams,” saidFlorentin Tuca, managing partnerwith Tuca Zbarcea & Asociatii.

Tuca Zbarcea & Asociatii andFuster Garcia-Berdoy will provideservices in areas such as corporate andcommercial, mergers and acquisi-tions, energy, banking and finance, in-frastructure (PPP/PFI and conces-sions) and real estate.

Romanian president Traian Bases-cu has narrowly won the second roundof the presidential elections, with 50.33percent, defeating Social DemocraticParty (PSD) candidate Mircea Geoana.The difference was around 70,000votes in favor of Basescu, who willserve another five-year term as presi-dent. The outcome took Geoana by sur-prise, as the exit polls on Sunday hadpredicted him to take more than 51 per-cent of the ballots. The PSD candidatehad even delivered a victory speech be-fore the final results were announced.The party said it would challenge theresults in the Constitutional Court. On-ly after the court validates the resultswill they become final.

The PSD has alleged fraud, sayingit has presented evidence of this to theCentral Elections Office. Liviu Drag-nea, secretary general of the PSD, saidthe fraud included bribery and multiple

voting, as well as changes to the officialballot papers on their way to countyelection offices. The party said it waseven considering asking for the elec-tions to be annulled and re-run, shouldits evidence be accepted. Geoana him-self said the PSD had won the electionsand that the Democratic Liberal Party(PDL) fraud machine was responsiblefor the final result of the poll.

Meanwhile, the PSD’s main partnerin the second round, the National Liber-al Party (PNL), has already switchedsides, saying it would consider forminga government with Traian Basescu’sparty, the PDL, provided that the PNLcan name the prime minister of the newgovernment. The PNL’s candidate inthe presidential race, Crin Antonescu,came third in the first round of voting.He then threw his support behindGeoana for the second round.

The Democratic Alliance of Hun-

garians in Romania (UDMR) said itwas open to any governmental forma-tion. “A very important element for ushas changed. We supported Klaus Jo-hannis for prime minister, but he laterdeclined, which is an essential changeof context for us,” said the head of theUDMR, Marko Bela. He added that theparty would hold discussions with thehead of the PDL, Emil Boc.

Outside the country, the interna-tional press has warned of the politicalinstability and financial risks stem-ming from the Romanian poll. The Fi-nancial Times said Romania was inturmoil over the poll result, citing thepolitical uncertainty and the shock-waves reverberating throughBucharest’s financial markets, with a 3percent drop in equities and slight fallof the Romanian currency against theeuro. “The outcome leaves recession-hit Romania with a disputed winner aspresident and with only a caretakergovernment in office, just whenBucharest faces pressure from Euro-pean Union partners and the Interna-tional Monetary Fund for budget re-forms,” wrote the FT. The Wall StreetJournal also published a piece on theelections, asking whether the presidentwould have a strong enough parlia-mentary mandate to push through thetough reforms needed. The WSJ articlealso noted the financial risk incurredby any delay in forming the govern-ment.

Corina Saceanu

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Mircea Geoana (left) and his PSD party are hotly contesting Traian Basescu’s (right) election victory

Basescu edges presidential race, sparks political turmoil

Tuca, Zbarcea & Asociatii opens representative office in Madrid

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Pablo Garcia-Berdoy, former Ambassador ofSpain to Romania

BRIEFSIMF SAYS MISSION READYTO VISIT ROMANIAWHENEVER LOCALAUTHORITIES ARE READYé The International MonetaryFund (IMF) has yet to set a newdate for its latest mission toBucharest, but is ready to send itsrepresentatives whenever the localauthorities are ready, accordingto Tony Lybek, IMF representativein Romania. “Neither the IMF notthe European Commission has seta date for the next mission. Wewill be ready when you areready,” said Lybek. He addedthat Romania had delayed theimplementation of certain fiscalmeasures which agreed upon inAugust. However, the budgetdeficit situation for this year hasimproved, moving towards the7.3 percent of GDP target.Romania has signed a stand-byagreement with the IMF for EUR12.95 billion, out of a totalfinancing package of EUR 19.95billion from the EU, World Bankand EBRD.

NEXT DEBT CRISIS COULDBE IN EASTERN EUROPE,NEWSWEEK PREDICTSé The next debt crisis, after therecent one in Dubai, could comein the Eastern Europe economieswith a high level of debt,according to Newsweek.Magazine analyst Jerry Guowarned that the next victims of thedebt crisis could be the countriesat the “periphery of Europe.”Bulgaria, Hungary and the BalticCountries all have high levels ofindebtedness related to their GDP.

INTESA SANPAOLO BANK,MONEYGRAM JOIN UP é Intesa Sanpaolo Bank, asubsidiary of Intesa SanpaoloGroup, has signed a partnershipwith MoneyGram International toprovide money transfer servicesthroughout the lender’s 100-branch network nationwide. Theservice is available in both RONand foreign currencies (EUR andUSD). Pedro Saro Campos,regional manager at MoneyGramfor the Iberian region, Romaniaand Bulgaria, said that Romaniawas an important market formoney transfer services.

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Former IT entrepreneur TiberiuDuma, who sold his share packagein NetPoint telecom company in2007 and then went on to invest in awine retail business, is planning tohave a network of ten Patria Vinumwine shops in the capital by the endof next year.

“We would like to reach tenstores in Bucharest by the end of2010 and then start to franchise theconcept throughout the country.One of the ideas we could pitch toour collaborators is supporting vine-yard tourism, as most of our suppli-ers plan to open accommodationand wine-tasting units near theirwine cellars […],”Duma, one of theowners of the Patria Vinum busi-ness, told Business Review.

The firm currently runs twostores in Bucharest in which it hasinvested EUR 50,000, but with thestart-up costs, the investment

reached EUR 75,000. However, fu-ture stores should require only EUR15,000 each, which would bring thetotal planned investment in thechain’s next stores to around EUR120,000.

Patria Vinum sells variousbrands of wine in bulk. It came upwith this concept after seeing the

wines on sale in supermarkets ortraditional stores, which despite be-ing varied, were still of poor quality,said Duma. “The loyal consumer ofa certain brand of wine knows thereis a difference between a bottledwine and the natural wine theywould find somewhere in the coun-tryside. This is why we have chosensmall and medium producers, lessknown to the Bucharest market, butwho produce natural, qualitywines,” said the businessman.

So far, Patria Vinum’s sales havebeen below expectations, mainlybecause of the drop in consumers’purchasing power and a decrease inspending intentions. During the hol-idays, the average volume of a pur-chase is from 4 to 5 liters of wine,while for the rest of the year, the fig-ure falls to below 2 liters per trans-action.

Corina Saceanu

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Grape expectations: the firm is planning 10 shops

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Full speed ahead: the Dacia Duster

Wine entrepreneur wants to uncork 10 PatriaVinum stores and franchise the concept

Bunatarie, a bakery brand re-cently launched by Europa StarService, was built with Europeanfunds, but the owners have yet to re-ceive the bulk of the financingwhich was approved. The invest-ment in the factory, which producesbaked products under the Bunatariebrand, came to EUR 780,000 in to-tal, out of which 40 percent shouldbe covered by European funds.

“We have accessed the EUfunds, but we haven’t yet receivedthe non-refundable financial aid.What we have got so far is the downpayment, 10 percent of the value of

the project. We are now trying tosubmit the payment dossier, which isthe most difficult part in the processof receiving European funds,” Au-gustin Manescu, administrator ofEuropa Star Service, told BusinessReview. “There are various prob-lems and supplementary requests,not all through our own fault, but be-cause the departments within the in-stitution which is managing thesefunds are not working constructivelyto support the investor. This is why ithappens that a project approved by adepartment does not get approved bythe payments department.”

His own stake in the investmentwas comprised of both personalfunds and bank loans. So far,Bunatarie runs a production unit inAdunatii Copaceni, 20 kilometersfrom Bucharest. The company plansto further invest in five shops inGiurgiu, Bucharest and Ilfov. It ex-pects a EUR 500,000 turnover thisyear and EUR 1 million next year.Later on, the company wants to adda pastry production line, besides theexisting bakery one, but its future in-vestments will not be financed byEuropean funds.

Corina Saceanu

Bakery business rises with EU funds onpaper, but payments yet to materialize

Automobile Dacia has announcedthat it will launch its four-wheel drivemodel, the Duster, in the spring of nextyear. According to company informa-tion, the SUV will be produced underboth the Dacia and Renault brands.The new model will have a capacity of1.6 liters and 110 HP for gas and 1.5liters and 85 HP in the diesel version.The Duster is the sixth model fromDacia after the Sandero, Logan, LoganMCV and the utility vehicles LoganVAN and Logan Pick-Up.

Dana Ciuraru

Dacia to spring-clean auto marketwith Duster

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Augustin Manescu, administrator of Europa StarService

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Pharmaceutical producer TerapiaRanbaxy, which has recently welcomedback Dragos Damian as CEO after hisshort stint with producer Actavis, hascompleted an investment in a 1,600-sqmwarehouse in Cluj county.

“I am happy to go back to a compa-ny where, together with 700 specialists,I can contribute to the growth and devel-opment of an integrated pharmaceuticalmodel,” said Damian, who did not re-veal his reasons for leaving Actavis toreturn to his former employer.

Terapia Ranbaxy will focus on creat-

ing an industrial operational hub in Cluj-Napoca to serve the EU market. Thewarehouse has yet to receive the greenlight from the National Drug Agency,but the company expects it to be ap-proved by year-end and to start workingat full capacity in January next year.

Damian has previously worked asCEO for the local subsidiaries of Zenti-va, Actavis and Terapia Ranbaxy.

His term at the helm of Actavis wasamong his shortest tenures, at just underthree months.

Corina Saceanu

Terapia Ranbaxy rehires DragosDamian, invests in new warehouse

OTP Asset Management Romaniahas announced the successful closureof the OTP Green Energy public offer,after 650 investors, most of them Ro-manians, bought 43,583 fund shares,worth more than RON 8.7 million.Some 55.52 percent of the shares wereacquired by legal entities, thus ensur-ing OTP Green Energy fund guaran-teed capital. In the retail segment,OTP Bank Romania, as a distributorof the fund’s shares, conducted mostof the sales.

“At the launch of OTP Green En-ergy fund, a month ago, we counted onits innovative character, as well as onthe access it provides to one of the

most dynamic and active fields at Eu-ropean level, renewable energy. Now,at the closing moment, the large num-ber of subscriptions shows that wemade a good decision, as the investorshave understood the growth potentialof the companies from the renewable energy field,” said Catalin Iancu, pres-ident of OTP Asset Management Ro-mania. The fund, a premiere on the lo-cal market, is the first closed invest-ment fund with guaranteed capital inRomania specially designed for the re-newable energy segment. The sub-scription period ran from November 4to December 2.

Anda Dragan

OTP Green Energy public offer wrapped up

IT&C retailer Flamingo has filedfor insolvency after running up EUR17.5 million of debt to ING Bank. Thebank had notified Flamingo that itwould start seizing the retailer’s stockfrom its stores to recover some of thedebt. On Thursday, Flamingo shareswere suspended from trading on theBucharest Stock Exchange. However,the Bucharest Court approved the in-solvency request forwarded by thecompany, which entered into legal re-structuring last week, and the Transil-vania Insolvency House was appoint-ed judicial administrator. As a result,the forced execution started by INGhas been stopped.

According to Adrian Olteanu,president of Flamingo International,this is “a new stage for the company aspressure from creditors is lower, so wecan concentrate on making the activitymore efficient.” He added: “The com-pany is running its activities normally,

all the stores are operational and readyfor the peak season.”

Flamingo will try to reorganize itsbusiness and protect itself from credi-tors. The retailer hopes that the EUR 7million it should raise from the bondsissuance started on December 3 willhelp it pay off some of the debt andkeep the company running. Theamount would have been enoughshould the retailer have reached anagreement with ING Bank.

“Flamingo is at this point a compa-ny that is being restructured from theoperational point of view, with an op-timized cost structure, but which lacksthe necessary cash to get through a 50percent fall in the market. Through thelaunch of the process of legal reorgan-ization, we are trying to give the ef-forts made since 2008 a chance andbring the firm to where it should be,”officials told the Stock Exchange.

Otilia Haraga

Flamingo files for insolvency

Jury members met last week for thefirst round of the judging process for theBR Awards. The 2010 Business ReviewAwards are set to take place on March 4next year, marking the fifth edition ofthis event aimed at recognizing the busi-ness achievements of the previous year.

This year’s jury is made up ofSteven van Groningen, president andCEO of Raiffeisen Bank (also last year’sBusinessman of the Year); Oliver Olson,country manager of CEU BusinessSchool Romania; Peter Jansen, manag-ing partner of Cohn&Jansen; George Al-berts, president of KD Investments; IonFlorescu, GM of New Europe Capital;Matei Paun, managing partner of BACRomania; George Mucibabici, chairman

of Deloitte Romania; Alexandra Gatej,counselor with the Romanian presiden-cy; Eva-Simone Perauer, managing di-rector of Casa Austria; Sorana Savu,owner of Premium Communications;and Friedrich Niemann, GM of theAthenee Palace Hilton. van Groningenwill serve as jury president and cast thedecisive vote in the event of a tie.

This year, the jury has adapted thecategories to reflect new sectors of inter-est in the Romanian economy, withprizes such as the Clean Business Awardand Sustainable Business PracticesAward. Additional information to helpthe judging process will be gathered un-til the end of January. For more details,see www.business-review.ro.

BR Awards kicks off with first judging session

From left: Alexandra Gatej, Friedrich Niemann, Ion Florescu, Steven van Groningen and Bill Avery

debate the major events on the Romanian business scene this year

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From left: Eva-Simone Perauer, Peter Jansen, George Alberts, Sorana Savu and Oliver Olson reflecton the achievements of 2009

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EVENTS, BUSINESS AND POLITICAL AGENDADECEMBER 15é 12:00 – IBM Romania organizes a press lunch at the McMoni's restau-

rant. By invitation only.

DECEMBER 16é 11:00 – The National Association of Travel Agencies in Romania or-

ganizes a press conference at Hotel Ramada Nord. By invitation only.

DECEMBER 17é 9:00-15:00 – KPMG in Romania organizes the training course ‘Practi-

cal fiscal issues related to the VAT package implementation’ at the com-pany’s headquarters. By invitation only.

E N T R E P R E N E U R


é 2008 turnover: EUR 580,000é 2009 turnover: EUR 600,000é 2010 estimated turnover: over

EUR 600,000é Total estimated investment:

over EUR 1,000,000

Run Data Solutions

With his business increasing

significantly from year to year,

RAZVAN MUNTEAN, CEO of RUN

Data Solutions, intends to continue

the organic growth process through

major investments and to make his

firm a top-tier player in a crowded

field.

Anda Dragan

The business that Razvan Munteanis running today is the result of a long-standing passion for software, borntwenty years ago. He had enjoyed pro-gramming since gymnasium and highschool, and dedicated the first years ofhis studies to research. But what most at-tracted him was the idea of creating pro-grams for collective usage. He started byimplementing a salary program for asecondary school – a moment that wasto prove crucial for him. “I realized thenthat in the software industry there wasno place for ‘almost working’. The re-sponsibility was great because there wasa lot of money at stake. But the satisfac-tion of a successful project was worththe work,” says Muntean. “It is hard todescribe the feeling when you see thatyou have managed to contribute to theoptimization of a business as a whole.”

In 1998 he took on even greater re-sponsibility, building a program for aninternational survey conducted throughFIMAN, the International Foundationfor Management. That year of his careerafforded him a crash course in running abusiness. “I learned about the meaningof a business plan and how to track abudget, and I was only 21 years old,”says Muntean.

In 2000, he felt ready to set up hisown business. While looking for anapartment, he had dealt with some realestate agencies and had spotted a busi-ness niche which he decided to enter on.“I started the ‘RUN’ real estate project,in defiance of all those real estate marketplayers who were skeptical about myidea,” remembers the entrepreneur. By

2003 he had launched three versions ofthe application, each having the role oftraining users in both the informatizationprocess and using the business tools. “Ihad tapped into a large volume of realestate know-how at that time, with theresult being the building of a softwareapplication that many players still con-sider avant-garde today.” He adds: “Lastyear we re-launched the real estate por-tal Imopedia.ro, which summarizes allthe information harvested by real estateagencies.” According to Muntean, it hasnow become a top-ranking site for traf-fic, despite the fact that the portal’s rangeis mainly Bucharest and Constanta.

The real investments started in 2006,and took two directions: the develop-ment of a Content Management System(CMS) platform, which now supportsmost Romanian internet users, havingbeen implemented for the company’scustomers; and creating and strengthen-ing the online platform Imopedia.ro,which also has the entire technology be-

hind it. These two long-term goals havemeant costs of more than EUR 400,000.

Since 2005, Muntean has built busi-ness IT solutions for very large compa-nies such as Tiriac Holding and mediatrusts Ringier, Intact, MediaPro andHiparion. For Tiriac Holding he createdthe whole logistic and sales platform aswell as the integrated system of financialreporting. His company’s portfolio ofcustomers also includes over 500 real es-tate agencies. In terms of partnerships,RUN Data Solutions, through the Imo-pedia online platform, has become thestrategic partner for the TNI NationalReal Estate Fair.

One of the biggest challengesMuntean has faced has been to build very high-traffic websites, because many of them were at a technological standstill. Sites such as GSP.ro, Libertatea.ro, Capital.ro, Jurnalul.ro, Cancan.ro andCasaMea.ro now have over 1 millionunique viewers a day.

The businessman’s finest momentwas when he decided to stop program-ming and start building his team. “It wasa new family and world, with new re-sponsibilities and a new scale of values,”says Muntean. Being a perfectionist, hedoesn’t deny there have been decisionshe made that could have had other, moreefficient solutions. “Despite this, I lookmore towards the future and treat astandstill as a new challenge. If you arenot innovative and proactive, you shoulddo anything rather than remain in thisbusiness,” says Muntean.

According to him, companies likehis can be successful only if they fullyunderstand the customer’s business. “Itis amazing to discover and create newbusinesses, and also to see how a cus-tomer that perceived you initially as aprovider of software is now asking youto provide consultancy services,” saysMuntean.

Although the competition is very in-tense on the local software market, thereis still plenty of room for professionals.Besides, one of the main features of theIT industry is that it continuously drivestechnical advances, and every year newmarkets and opportunities open up. “Ifyou don’t keep up with the market, itmeans you reach your inability limit,”says Muntean. In short, it is very hard todifferentiate software products availableon the market while it is very easy tospread concepts around competitors.“Specialization is in the quality of serv-ices and each provider’s expertise. Wehave a client-oriented approach that ispart of our corporate culture. We haveseen time and again that this is the rea-son for our success,” says the entrepre-neur.

Looking to the future, Muntean saysthat the long-term success of the busi-ness is based on organic growth. “In thenear future we intend to consolidate ourleader’s position in the two industries weare targeting through our software and tocontinue to innovate, because this iswhat keeps us alive.” The company aimsto reach a turnover of EUR 600,000 in2010 and become a top-tier player in acrowded field. It also plans to investEUR 250,000 in technical equipment forthe media division of the real estate plat-form Imopedia.ro.

In it for the long run: Razvan Muntean’s passion for programming began in his school days

Running with an idea

E N T R E P R E N E U R


é 2008 turnover: USD 384,000

é 2009 estimated turnover: USD

450,000

é Number of employees: 6

é Initial investment: USD

100,000

é Total estimated investment:

USD 120,000

é Total training cost/per partici-

pant/per year: USD 4,000

Crestcom

Since GIULIANA BOICU became an

entrepreneur, by bringing the

franchise of the US-based training

company Crestcom onto the local

market, she has managed to build

turnover to approximately USD

450,000 this year. Next year’s

objective is to increase the team.

Dana Ciuraru

Giuliana Boicu first decided tobecome an entrepreneur in 2005,when she took the decision to repre-sent the US-based training companyCrestcom International in Romania,as a master franchise. This routeseemed to her the best way into thebusiness world.

“Along with my current busi-ness partners at People Investment-Crestcom – Gabriela Badina andAnne-Marie Iliescu – we thoughtabout different solutions for entre-preneurship at that time. It is wellknown that one of the shortest waysto success is a franchise business sowe turned our attention to this op-tion,” Boicu tells Business Review.She goes on: “We went to severalfairs in both Bucharest and abroadand decided on a franchise in thetraining field. After a week of train-ing in Denver, we decided to repre-sent Crestcom in Romania as a mas-ter franchise.”

It wasn’t an overnight decisionand her previous work experiencehad given her a good grounding inthe field.

The entrepreneur had built upsolid experience over more that nineyears working in different industriesfor well-known companies such as

DHL International Romania, Tele-mobil, Sensiblu and GSK-Eu-ropharm.

“After my last job with a multi-national company, in 2005, I knewthat I wanted to become my ownboss, to use the experience I hadgained and proven by results in themanagement field and to have aflexible work schedule. Therefore, Idecided it was time to start my ownbusiness,” says Boicu.

Now managing partner at PeopleInvestment-Crestcom, Boicu re-members that at the beginning ofher career as an entrepreneur, therewere some tough times, and troughsas well as peaks.

“There were many difficult mo-ments in the first year, such as thetranslation of material, logistics andlearning from experience and from

failures. And most of the experiencewe now have was gained the hardway,” says Boicu, looking back onher early days as a fledgling entre-preneur.

Nor did she get automatic sup-port from those around her. “Noteverybody was happy when the ini-tial investment was high and we hadto convince our families that it wasa good one.” According to her, theinitial outlay for the franchise wasabout USD 100,000.

People Investment-Crestcombrought onto the local market Bul-letProof Manager, a training coursewhich is based on the developmentof ten managerial skills, includingcommunication, customer service,developing and motivating employ-ees, managing priorities, negotia-tion, solving problems and strategic

thinking. According to Boicu, what differ-

entiates Crestcom’s training fromother available services in the samefield are the product, the way inwhich it is delivered and its efficien-cy.

“This is a program that com-pletely prepares a manager to deliv-er results as per role responsibility,”says Boicu. She adds that the prod-uct has been awarded in the UK andhas received positive feedback frommanagers and CEOs who havesigned up for it.

Even now after some years ofexperience, the business still has toface some hurdles, one of which issome local businesspeople’s skepti-cism. “One of the biggest chal-lenges is CEOs’ mentalities. Whilemultinational companies constantlyinvest in management team devel-opment, very few Romanian com-panies do. Many of our clients real-ize how this training can positivelyinfluence their people’s perform-ance,” says Boicu. Another big chal-lenge is that the training market is avery competitive one with a lot ofcompanies offering this kind ofservice.

People Investment-Crestcom’splans for the following years arebold. As master franchisee, Boicuannounces that the major plan is toenlarge the team.

“Beside Bucharest we are nowrepresented in Ploiesti, Brasov,Sibiu by Excellero and in theTimisoara region by Vladteh,” addsthe entrepreneur.

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Training Day: (from left to right) Anne-Marie Iliescu, Giuliana Boicu and Gabriela Badina at a recentseminar organized at the Howard Johnson hotel

Training her sights on the market

M O N E Y


With the first full year of crisis in

Romania nearing an end, local

lenders are looking back on a 2009

characterized by staff reductions,

branch closures and a credit crunch.

Rather than continue their relentless

march towards greater expansion,

banks have focused on keeping their

current customers loyal by launching

customized products and services in

tune with these straitened times.

Anda Dragan

Although the downturn started inSeptember last year, 2008 was a goodone for many lenders in Romania.

They posted significant resultsand continued to implement theirplans for development. It was 2009that proved to be the first full year ofcrisis both for the Romanian marketas a whole and for the local bankingindustry. In response, many playersput their previous plans on the backburner.

According to National Bank ofRomania (BNR) data, the total valueof banking assets was EUR 76.8 bil-lion in September 2009, 54 percent ofwhich were held by the top five bankson the market. The banking systemposted a solvability indicator of 13.7percent in the same period. Among

foreign investors in local banking,Greece, Austria, the Netherlands,Hungary, France, Italy, Portugal,Cyprus and Germany were the majorones.

Along with the other EU memberstates, they owned 93.6 percent of thetotal foreign equity.

Meanwhile, the BNR’s informa-tion indicates that the local bankingsystem posted a ROE (return on equi-ty) of 3.2 percent, a ROA (return onassets) of 0.28 percent and a RON680 million net profit in September.

LOWER SALARIES FOR FEWEREMPLOYEES

2009 has brought a cautious ap-proach, the freezing of loans, cost-

cutting measures and strategies to in-crease lenders’ efficiency. A reduc-tion in the number of branches na-tionwide, a slackening in aggressivedevelopment strategies and a halt onhiring new people were some of themost significant trends of the year.

Many banks have been more pru-dent in extending their local branchnetwork, which has become a sec-ondary priority.

Currently the lenders on the mar-ket fall into three categories: thosewhich have stopped expansion, thosewhich have opened a handful ofbranches this year and those whichintend to expand their local networkon the medium term.

According to BNR’s data, some

6,552 credit institution units wereoperational last December, while thenumber had decreased to 6, 464 in-September.

The number of employees work-ing for these institutions similarlydropped, from 71,622 in December2008 to 68,462 in September. But forsome lenders, the reduction of theworkforce was a marginal one, asthey moved mainly to curb potentialexcesses.

One of the major features of thebanking workforce this year was thelow staff migration, due to the high-er uncertainty and employees’ reluc-tance to change jobs. Staff turnoveracross the industry has dropped fromdouble digits – a few years ago – to asingle digit, not far above zero, in thelast year. Moreover, lenders were notas keen to hire new people this yearas they had been in the past.

Their recruitment plans weremore limited than in previous yearsand were specific, strictly related totangible needs. Bankers also felt thechange in their pockets. Remunera-tion was cut through lower bonusesand fewer financial benefits fromsome segments such as sales, retailand loans.

BANKS PIN HOPES ON NEWPRODUCTS AND SERVICES

The current downturn has givenfresh impetus to the race to get morecustomers. After many years of ag-gressive expansion nationwide,lenders are now trying to find waysboth to attract new customers and toretain their existing ones. Launchingnew products and services that ad-dress specific needs seems to be oneof the key planks in their strategies.

Banks identified available nichessuch as pensioners, members of theliberal professions, children,teenagers, students and tenants asso-ciations, viewing them as newsources of income generation thisyear. All this is clear evidence thatlenders’ investments in 2009 wentmainly into developing new productsand services, rather than opening

STOCKEXC

HANGE

Tipping point: Stung by the effects of the crisis, local banks are trying to balance the pursuit of profitswith a sensible approach to risk

Risk-aware lenders proceedwith caution

M O N E Y


new branches. Another distinct trendon the local banking market has beenlenders’ focus on customized prod-ucts and services, adapted to the cur-rent economic conditions. It is nolonger enough to offer a customizedproduct; it must be designed to re-flect the customer’s current needs.

Google Friend (a projectlaunched by Banca Transilvania inconjunction with Google, meant tosupport entrepreneurs in promotingtheir business through Google Ad-Words), consultancy services for cor-porate customers (OTP), grace peri-ods for some types of loans (Garan-tiBank) and alternative solutions tofacilitate loan repayments (RBS) areamong the examples. Furthermore,some lenders decided to relax somecredit conditions, in order to sign upnew borrowers.

“This move could also be drivenby the market conditions (the fall ininter-bank interest) or the fiercercompetition. Moreover, taking intoaccount customers’ low appetite forloans in the last year, it could simplybe a way to boost demand for bor-rowing and consumption,” says Dra-gos Cabat, managing partner of con-sultancy firm Financial View.

With lending stalling, banksneeded to find new ways to generateincome. Savings accounts with at-tractive interest rates were one routethat some opted for. But specializa-tion is the key in any industry, espe-cially in banking as the market ma-tures and Romanian customers be-come more sophisticated in their de-mands.

According to specialists, thebuzzword is loyalty. Once peoplechoose a bank, they hardly evermove to another one.

A customer would never changebanks for similar products and serv-ices. As a result, the easiest thing isfor banks to retain their existing cus-tomers, and the hardest is to attractnew ones.

INCREASING EFFICIENCYLast but not least, one of the top

priorities for lenders this year hasbeen to increase the efficiency oftheir activity, because it is more ex-pensive to retain some underper-forming activities than drop them.One such example is unused POSs,which have been relocated to otherretailers that exploit them better.

Despite the economic woes, thelocal market has even seen a coupleof new players arrive. The businesspress announced this year the emer-gence of two new banks – Banca

Feroviara and GE GarantiBank.They were authorized by the BNR inthe second half of 2009, with BancaFeroviara having been operationalsince November.

WHAT’S NEXT?According to Cabat, lending

should recover in the comingmonths. “However, it is importantthis recovery takes place graduallyand does not drive the same easy ac-cess to loans as in 2007 and 2008.”In his opinion, the fight for marketshare and the exposure to risk should

be considered in tandem. “Other-wise, in the future we could see a re-turn to the current problems of dis-tressed loans portfolios and provi-sions related to them,” warns themanaging partner.

He adds that in the current con-text lenders are under pressure tobuild up lending as soon as possible.“In these conditions, innovative solu-tions are needed in order to attractcustomers and to ‘reduce the risk’,”says Cabat. But according to him,some of these special solutions willgradually disappear after the crisis,

simply because there will be no needfor them.

Like many other consumers hitby the current crisis, Romanians areawaiting the favorable conditionsthat will persuade them borrowagain. “Therefore, it is possible thatthe customers who can afford to takeout a loan at the present – but wereafraid to do so in the current marketconditions – will decide to go ahead.Banks hope the lending recovery willhave a ‘snowball effect’ both for thedemand for banking products and forthe consumption,” concluded Cabat.


P R O P E R T Y

Anchor Grup, the developer of the InCity Residences compound,has sold 60 percent of homes in the project and started a promotion-al campaign aimed at increasingsales for the remainder of the flats.

The 502-apartment compound,which was finished at the beginningof this year, now includes an al-lowance for furniture in the salesprice of apartments.

The developer is partnering

Anchor splashes promotional offers to sellremaining 40 percent of InCity Residences

Ibrahim Paksoy, CEO of Anchor Grup

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Travel agency Happy Tour has leased 1,160 sqm of office space and 70 sqm of retail area in the Me-

tropolis Center office building, on Iancu de Hunedoara Boulevard, said BNP Paribas Real Estate,

which intermediated the lease. The office building comprises a ground floor and seven upper levels.

Metropolis Center hosts tenants such as Boehringer Ingelheim, EBRD and DLA Piper.

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Real progress: The retailer’s new outlet will be its 24th in Romania

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Ortansa Dumitru, managing partner of TowersGroup

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Mobexpert, BoConcept and Ko-mandor for this offer.

It is also offering VIP discountcards to Bucuresti Mall and PlazaRomania and preferential prices formembership of World Class andGett’s Hair Studio.

“Like all the real estate market,we didn’t have a very strong salesperformance this year, but buyershave remained interested in the fa-cilities that InCity offers,” saidIbrahim Paksoy, CEO of AnchorGrup. He added that the companyhad not changed the prices of itsapartment this year.

“We have focused more on of-fering accessible financing our-selves and additionally we offerbanking services from Credit Eu-rope Bank,” he said.

The most sought after homes inthe project have been two- andthree-room apartments. “Our aver-age price is EUR 1.650 per sqm, butit also depends on the type of apart-ment,” said Paksoy.

InCity Residences includes fourbuildings with 502 apartments, agym and covered pool area, run byWorld Class, and a beauty salon byGett’s Hair Studio.

Corina Saceanu

Towers Group plans to manage 250apartments in 2010

Towers Group, set up by real es-tate professional Ortansa Dumitru,plans to expand its portfolio ofclients to 250 apartments and 50land plots in 2010.

“There is enough housing inBucharest and in other larger citiesin Romania. Towers plans to helpbuilding owners maintain the valueof their property and even increasethe revenues generated by thoseproperties,” said Dumitru, manag-ing partner of Towers Group.

The company currently managesa portfolio of 30 apartments andplans to add a group of customerswhich will complete apartments inthe first half of 2010. Dumitru, whopreviously worked for CopperBeech and DTZ in Romania, set upthe firm two years ago.

Corina Saceanu

Real opens 24th unit in Ploiesti

My Dream Residence developer files forinsolvency to protect project

Retailer real,- Hypermarket hasopened its 24th store in Romania,near Ploiesti, following an invest-ment of EUR 23.8 million. The12,500-sqm unit outside the city hasbrought the firm’s total investmentin Romania to EUR 500 million, ac-cording to Michel Lamoot, manag-ing director of real,- HypermarketRomania. The new store employs

280 people. At the end of last year,the retailer was employing around7,500 people in Romania, 3,000more than in mid-2007.

real,- posted a EUR 638 millionturnover at the end of last year, a 92percent increase on the previousyear. The retailer opened six newstores last year and four this year.

Corina Saceanu

Developer Plus Development,which was working on the MyDream Residence project in thePipera area of Bucharest, has ap-plied for insolvency, after runningup EUR 20 million of debt. Thecompany said it had made the appli-cation to protect its real estate proj-ect against creditors. Plus Develop-

ment has completed the project butis currently involved in litigationwith the general contractor, whichhad previously called for the devel-oper to be made insolvent. The MyDream Residence project was ex-pected to cost EUR 30 million tocomplete.

Staff


P R O P E R T Y

REGIONAL NEWS

H&M GOES TO LET SHOPPINGCENTER IN ST PETERSBURG

velopment. The bonds are part of public-

and private-sector efforts to raisefunds for projects seeking to miti-gate the rise in greenhouse gasemissions or help people in devel-oping countries affected by climatechange.

The transaction was lead-man-aged by SEB. Among the investorswho purchased the bonds were insti-tutions in the US such as the Cali-fornia State Teachers’ RetirementSystem (CalSTRS), and in Sweden,the Swedish life insurance providerSEB Trygg Liv, and Swedish Na-tional Pension Funds, AP2 and AP3.The United Nations Joint Staff Pen-sion Fund (UNJSPF), which partici-pated in the inaugural World Bankgreen bond last year, also investedin the latest issuance.

This third transaction brings thetotal amount raised through WorldBank green bonds to the equivalentof almost USD 800 million.

KING STURGE REAL ESTATEECONOMY INDEX SHOWSIMPROVEMENT IN PROPERTYCLIMATE

The King Sturge Real EstateEconomy Index has found anotherincrease in almost every climatic in-dicator for November. Last month,the poll-based real estate climaterose by 2.0 percent, from 78.2 to79.8 index points.

The growth driver this time wasthe rental climate. Unlike the earn-ings prospects, which continue to beeyed with skepticism in the face ofthe threat of insolvencies and rentlosses, the investment climate ap-proached the threshold mark of 100points – reflecting a balanced senti-ment ratio – climbing from 90points in October to 91.4 in Novem-ber.

“There is little reason to expectthe economic crisis to end anytimesoon,” commented Sascha Hettrich,managing partner of King SturgeDeutschland.

“With this in mind, the poll re-turns for the office climate assume asurprisingly positive significance.After all, the looming threat of jobcuts made it reasonable to expectthe gravest problems in this seg-ment. For the time being, though,the office letting markets remainrelatively stable.” ■

WORLD BANK GREEN BONDISSUE RAISES USD 130MILLION FROMINSTITUTIONAL INVESTORS

The World Bank has raised USD130 million in its third green bondsissuance, which aims to supportprojects in client countries that meetspecific criteria for low-carbon de-

The H&M store will be on two levels

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Retailer H&M has leased 1,700sqm of space in Leto shopping cen-ter in Saint Petersburg, a develop-ment by Sistema-Hals and ApsysGroup.

The H&M fashion store will beon two floors in the shopping center.The marketing and leasing agent forLeto is Jones Lang LaSalle in part-nership with Apsys Rus.

Sistema-Hals and Apsys arebuilding shopping center Leto withapproximately 114,000 sqm andGLA of about 80,000 sqm. The out-door parking area is designed for3,200 vehicles. Grand opening is es-timated in the third quarter of 2010.

The key anchor retailers in theproject are Auchan on circa 11,600sqm, Media Markt on around 6,000sqm, and entertainment park Baby-lon on another 2,200 sqm. Other keybrands that have confirmed theirpresence are: Inditex Group withZara, Pull&Bear, Stradivarius andBershka; Monex Group with Moth-ercare, Next, Claire’s, The BodyShop, Justice and Starbucks; LPPGroup with Reserved, House andCropp Town; as well as New York-er, Ann Christine; Le Pain Quotidi-an, Motivi, Lady&Gentleman, Pro-mod and L’Etoile.

S H O P P I N G


Santa’s swag bag for all budgetsBusiness Review presents some festive gift ideas – from bargain to splurge – for

your Christmas shopping spree this year.

HTC TOUCH PRO

from EUR 299 to EUR

550 (Orange); from EUR

269 to EUR 499 (Voda-

fone) – price varies on

subscription package

Features: touch

screen, qwerty keyboard,

3.2 megapixels cam-

era, microSD slot, in-

tegrated GPS, mo-

bile internet features

GOLF SETS

*Masters, complete set – RON

1,409 from www.golfstore.ro

*Wilson Pro Staff half set

(man/woman) – RON 1,120 on

www.etenis.ro

*VI4 complete set – RON 1,051

from www.tenisshop.ro

SEGWAYUSD 6,290 to USD 6,990, without

VAT, depending on model, from Au-

toitalia

INTERNATIONAL STOCKS

*USD 3,315 for a B share in BERKSHIRE HATHWAY or USD 99,500 for an

A share, owned by Warren Buffet, trading on New York Stock Exchange (NYSE)

*USD 586 for a share in GOOGLE, trading on NYSE

*USD 188 for a share in APPLE, trading on NYSE

NIKON D3000 KIT

RON 1,999 on sale at www.f64.ro

Includes: package with bag,

stander, camera, photography

seminar

Features: 10.2 Mpx

resolution, 3 inch LCD

monitor, ISO up to 3,200,

preset programs, image stabi-

lizer

iPHONE 3GS

EUR 1 to EUR 449 with subscription

from Orange

Features: touchscreen, 8GB

internal memory, 2 megapixel camera,

WiFi, 3G, incorporated GPS,

e-mail; works only in Orange

network

KINDLE

USD 259 from www.amazon.com, de-

liverable to Romania; transport fees &

taxes not included in the price

Features: electronic paper display,

6 inch diagonal, no system require-

ments, no syncing needed, free wire-

less connectivity for downloading

books

SPLURGES

By Corina Saceanu

S H O P P I N G


BARGAINS

The product reviews do not include hidden advertising for any of the brands featured. The selection was madebased on pricing offers and the novelty of the product on the Romanian market, with reference to Business Review'sreadership.

GIFT VOUCHERS

*RON 250 - SPA GIFTCARD – White Christmas from Eden Spa

Includes: Chocolate & Orange Body Glow, well-being half body massage

*RON 300 to 500 – GIFT CARD FROM SARA BLU

CONCERT TICKETS *RON 50 to 130 – DAMIAN & BROTHERS on December 17*RON 90 to 400 - SMOKIE on December 20*RON 70 to 200 – HARLEM GOSPEL CHOIR on December 21COOKING CLASSES*RON 350 from SOCIETE GOURMETBOOKS*THE LAND OF GREEN PLUMS, by Herta Muller, GBP 5 from Amazon UK*DRACULA IS DEAD, by Sheilah Kast and Jim Rosapepe, USD 25.95, on

www.draculaisdead.com

SONY VAIO Z51

EUR 2,550 (RON 10,699)

Features: Intel Core Duo,

2.8 GHz, 6GB SDRAM, LAN and WAN

wireless, 13 inch screen, NVIDIA

GeForce graphic board,

Windows 7 operating system

BICYCLE

around EUR 350 – Ideal bicycle from Bike Expert, www.bikexpert.ro

from EUR 1,100 – Ferrari bicycle, Ferrari Store on Calea Victoriei

GIFT BASKETS*RON 250, LE GRAND PANIER

from Comtesse du Barry – Le Manoir(left)

Includes: Gascogne pate, pate withMedere sauce, champagne pate withpeanuts, Duck rillettes, biscuits withchocolate, dark chocolate with oranges,La Syrah Vin de Pays d’Oc dry red wine,South of France

*RON 406 - PANIER GOUTE RAF-FINE from Delicateria

Includes: chocolate pralines,Manchuria caviar, Duck foie gras, onionjam, goat cheese mix, champagneDrappier Carte Blanche

PERFUMES*Men: PLAY BY GIVENCHY (aftershave and eau de toilette, 100 ml), RON 278

at Sephora*Women: SENSUOUS BY ESTEE LAUDER, (body lotion and eau de toilette, 50

ml), RON 278 at Sephora

DVDs

*COLD WAVES by Alexandru

Solomon, RON 52.9 from

Carturesti (left)

*4 LUNI, 3 SAPTAMANI SI 2 ZILE

by Cristian Mungiu, RON 49.9 from Car-

turesti

*CALIFORNIA DREAMIN' by Crist-

ian Nemescu, RON 39.95 from Car-

turesti

L U X U R Y


The luxury industry has been feeling the strain this year, and does not

expect 2010 to be any brighter. Segments such as the hotel and car

industries, jewelry and watches have plummeted. These are counteracted by

a good performance and expected development of the spa market, with

some new entrances possible. Business Review takes a detailed look at the

luxury market this year and its prospect for future development.

Otilia Haraga

Before the start of the recession,Romania was a luxury market withgreat development potential, beingthe second market by size in EasternEurope. Oliver Petcu, managing di-rector of CPP Management Consult-ants Ltd, tells Business Review thevalue of the market in 2009 reachedEUR 325 million, and will remainconstant next year. This includes allthe segments of the luxury industry,except for hotels and perfumery.

“We are counting on a recoveryfor the luxury market from Septem-ber 2010, and the signal will be animprovement in sales. But we canonly talk of maturity for this marketwhen most top names are present inmonobrand stores,” says Petcu.

Fashion and accessories are gen-erally sold in the multi-brand sys-tem, which no longer meets theneeds and expectations of Romani-ans. Multibrand is a concept withnegative connotations, since therewere and still are many stores thatsell new collections mingled withold collections of the outlet type,explains Petcu.

Also, prices are generally 10-15percent higher than abroad and theoffer is limited. A third disadvan-

tage of multibrand stores is the fre-quent changes in brand portfolio.“For example this year Giorgio Ar-mani withdrew from the Mengottiportfolio and Burberry withdrewfrom the Victoria 46 portfolio,” hesays.

There have been some new en-trances this year. Paul & Shark andBelstaff entered through a mono-brand franchise. Frey Wille hasopened following direct investment.At the beginning of next year, HugoBoss will reopen in franchise mono-brand on Victoriei Avenue, but in adifferent location and with a differ-ent franchise partner.

However, monobrand franchisesVersace Jeans Couture and M Mis-soni, monobrand La Perla and Fer-ragamo quit the market. “Thesewithdrawals are partly due to thecrisis and partly due to the unfortu-nate choice of brand for the Roman-ian market,” says Petcu. “As far asluxury brands are concerned, malls

are a solution only if they have anarea or wing dedicated to luxury.Location is also important.”

The crisis bit deep into segmentssuch as the high-end car industry,which plummeted as much as 50percent. The jewelry and watchmarket posted sales that were 30percent lower in the first ninemonths of the year.

DIAMONDS, AN INVESTOR’SBEST FRIEND?

Micri Gold Bijuterii representa-tives expect diamonds to be the bestsold products in the jewelry seg-ment, since this is considered a safeinvestment even in periods of crisis.The evolution in the price of gold,which has increased by 30 percentsince the beginning of the year, andgrowth estimations for the price ofdiamonds, with the simultaneous in-crease in demand in China and In-dia, are factors for investors in thiscategory of products, they say.

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Watching their budgets: buyers of high-end jewelry and time pieces tend to prefer to shop for themabroad, due to the lower prices and better choice

No ker-ching asbling loses zing

L U X U R Y


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Healing hands: stressed out customers look to their local spa to ease away financial frustrations

Fashion, accessories and cos-metics sales have fallen 20 percentin the same period, but those are theonly segments where the decreasewill lessen during the festive sea-son, says Petcu.

Shopping abroad, which hasbeen popular until now, will contin-ue. “When it comes to watches andjewelry, Romanians will buy expen-sive items abroad, which will damp-en performances in this segment,”says the managing director. He ex-plains that many Romanians preferto acquire their jewelry and watcheselsewhere mainly because of thelower prices and greater choice. InRomania, most brands are present inmulti-brand stores and the selectionis quite limited,” says Petcu.

SPAS MASSAGE THE FIGURESUPWARDS

Among the least affected seg-ments is spa treatments, which con-tinue to have good developmentprospects. E’SPA, Shiseido andBuddha Spa are just a few of the bigbrands that are currently scouringthe market. “This is because intimes of crisis, people with money

feel the need to take more care ofthemselves. Experts have noticed atrend of self-pampering. And let usnot forget that the crisis is a contin-uous source of stress and spa servic-es offer relaxation,” says Petcu.

Although the spa market hasgrown between 2008 and 2009, Lil-iana Paraipan, general manager ofEden Spa, tells BR that Romania isstill behind other markets in the re-gion, in spite of all the resourcesthat the country enjoys and people’srelatively high appetite for spa treat-ments.

She says that often, clients de-cide to give up other luxury goodsfor spa services, since they has be-come a necessity in their life. “Asfar as the clients of Eden Spa areconcerned, there has been a de-crease at the corporate level but in-dividual clients have retained theirpurchase volume from before thecrisis.”

The market of luxury cosmeticshas also remained constant in 2009,compared to 2008. “As far as organ-ic cosmetics are concerned, L’Occi-tane continued its ascent this year,opening two new locations. Only

L U X U R Y


two months ago, French brand Cau-dalie also appeared on the market,”says Petcu.

Premium luxury telephonebrands such as Armani, Samsung,Prada and LG have held their ownfrom 2008 to 2009. “On the top lux-ury segment, we only have Vertu inRomania. Brands such as Dior andTag Heuer/Meridiist are missing. InRomania as well, consumers of lux-ury products such as handsets (Ver-tu) seldom upgrade,” says Petcu.

TOO MUCH ROOM AT THE INNThe hotel market was definitely

one of the two-three luxury sectorsthat have been worst hit by the cri-sis. “I can give a strictly estimativepercentage, but in total, there hasbeen a decrease of around 30 per-cent in revenues, some have suf-fered more and others less,” TinuSebesanu, CEO of Trend Hospitali-ty, tells BR.

Some developments have beenhalted. “There were projects thatwere in an incipient stage whichwere stopped entirely, and projectsthat were already advanced and hadconstruction authorization but didnot obtain financing, so they wereput on hold. Over the last three-fourmonths, they have re-entered themarket. Those who had financing

by September last year have contin-ued their projects and are complet-ing them. In two-four years we willstart to see the main impact of thecrisis, because no new projects havebeen launched in 2009,” says Sebe-sanu.

He adds that next year there willnot be any new large project “worthmentioning.” While there areschemes for small hotels, of 20-40rooms, no large project on the five-star market has been announced forthe future.

The market of high-end hotelshas been on the wane since the sum-mer of 2008. Bucharest has thegreatest number of rooms in thecountry – almost 80 percent of thecountry’s total capacity of luxuryhotels.

“While 2007 was the best yearin Romania for luxury hotels, fromthe summer of 2008, the marketstarted to decrease slowly. FromJanuary 2009, the effect was ratherbrutal and continued until October.In October the market started to sta-bilize,” he says.

There are two causes for this.First, in spring 2008, the recessionstruck Western markets. Over 70percent of guests of luxury hotels inBucharest were foreign businessclients. Therefore, since the crisisaffected large corporations in theWest, one of the first measures theytook was to cut travel expenses.

Another phenomenon also hitthe market. In 2008 there was an ex-plosion of low-budget airlines,which opened new destinations andcreated a lot of traffic, much to thedetriment of traditional airlines.This meant that business peoplecould come and go on the same day,

which did not happen before, saysSebesanu. Due to these two factorscombined, overnight stays de-creased dramatically year on year.

“In 2007, the overnight stay in-dicator in luxury hotels (whichmeans how many nights a clientspends on average a year) was 1.8.In 2008, it fell to 1.4. The situationbecame more severe in 2009, wherethe indicator fell to 1.25-1.3. So, notonly did traffic fall, but also the du-ration of stays,” says Sebesanu.

PROPERTY PROBLEMS PUT OFFTHE BIG OPERATORS

He believes that the market is farfrom saturated. As an example,Bucharest has only half the numberof branded hotels that Sophia does.However, luxury brands do notcome on the Romanian market be-cause there are no properties at ade-quate standards in which they canoperate.

“It’s not that they do not want tocome. Just think, there are chainssuch as Starwood, one of the largestin the world, which does not have asingle property in the entire country.They have been trying to come toRomania for years and haven’t beenable to do so,” he says. The reason isthat they cannot find properties upto their standards.

“Generally, developers and own-ers develop 90 percent of the prop-erty as they wish, without properconsultancy, and they build proper-ties that, when ready, cannot be op-erated by a brand because the spaceis not built to the standards that abrand finds acceptable,” he says.

For instance, one of the mainreasons why properties are not con-sidered by brands are safety criteria

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Bag a bargain: at the cheaper end of the luxury spectrum, experts are optimistic about accessories

CO

URTESY O

F EDEN

SPA

Outlook good: spa operators say that their individual customers have remained loyal

L U X U R Y


(both as far as customers and em-ployees are concerned), which arenot respected in Romania. “Nobrand will take responsibility forthis,” says Sebesanu.

When will the market of luxuryhotels recover? “This is the million-dollar-question. Nobody can say forsure,” he says. “Estimations are thatsometime after the second semester,the market will start to have a onedigit growth. I think we will reach anormal level – the level of 2008 –only three years from now,” he says.

The crisis has plunged operatorsin this industry into a price war.“Both the average room rate and theoccupancy rate have decreased.While occupancy could recoverquickly, it is hard to raise prices.They have fallen by up to 30 per-cent, which is significant – it willprobably take three years for themto reach the same level as before,”predicts Sebesanu.

THE BUBBLY GOES FLAT...Another luxury segment that has

declined, though not as drastically,is that of premium drinks. Con-sumers of these beverages havebeen severely affected by the crisisand have consequently reduced theiroutlay on this segment. Premiumdrinks are also suffering because thegift market has dropped significant-ly. “If premium means a shelf priceof at least EUR 25, then I estimatethis market is worth EUR 20 mil-lion,” Tudor Furir, general managerof Pernod Ricard in Romania, tellsBR.

The worst hit categories are pre-mium whisky and champagne,”says Furir. He estimates a fall of 25-30 percent in volume and 10-15 per-cent in value compared to last year.In the other countries in the region,the impact was less significant be-cause this category is significantlyless developed than in Romania,”says Furir.

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Cell phones not selling: few of the top luxury mobile brands have a presence in Romania

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Timeless: a shrinking gift market has also dented sales of high-end products

R E S T A U R A N T R E V I E W


SUSHI – THE FRAUD OF THE CENTURY?E

ighteen years ago, the lazy restau-rateurs of this town discovered piz-za. When they worked out that the

base was flour and water and the aver-age profit was around 800 percent, hun-dreds of grubby joints started making it.But in their greed they missed thebiggest money spinner ever – sushi. Thecontents are just a tiny lump of rice,splash of rice vinegar and small slice offish or vegetable. With prices here aver-aging EUR 1 a slice, you could make thesame dish at home for a few cents. Thatis what I call profit! I also call it a rip-off.

So now sushi is swamping the town.If you like it, go to Mega Image and buya bamboo rolling mat, rice vinegar,Japanese sticky rice and ‘nori’ (flatsheets of dry seaweed). You put the norion the mat, spread the rice evenly on topof the nori, roll the mat, un-roll it andyou have sushi. It’s simple and cheap.

You do not have to be Japanese toperform this task. Sushi Ko hired twoFilipino sushi rollers to seem Japanese.When my dishes arrived I questioned theauthenticity of the rice – which came

from the USA. Nor is there anythingJapanese about the rip-off ‘tempura’dishes. There was vegetable at RON 25and shrimp at RON 42.

The sushi choices were predictablewith salmon, avocado, prawns – then tomy horror I saw long, thin strips of so-called ‘crab sticks’. They contain nocrab whatsoever; instead they are madeby compressing all the waste from thefish factory. We avoided the sushi dishestogether with the ‘sashimi’ dishes. Sashi-mi is nothing more than sushi made byhand rather than with the rolling mat. Iconsider hand crushing and squeezingfood disgusting. Although the chef’shands are clean, there can still be sweaton them. The close contact of humanhands directly on my food is abhorrentto me. Chefs in every reputable kitchenin the world use surgical gloves to pre-pare food – except sushi chefs.

The offerings on the menu werepure tourist fare. We passed on a classic‘misu’ soup. It was probably the only au-thentic Japanese item on the menu, but itcame out of a packet. So we started with

‘tuna sticks’, breaded rolls deep fried,containing melted cheese and a tiny, al-most invisible slice of tuna. It was unad-venturous, uncreative and boring.

Away to a ‘beef teriyaki’. Althoughthe cubes of beef were very good, the ac-companying teriyaki sauce was almostflavorless. The House should make itfrom soy sauce, garlic, sugar, ginger andwater. I don’t know how many of thoseitems were missed out, but I can assure

you the water was present! Now to yetanother tourist staple: ‘beef yakitori’. InJapanese, ‘yakitori’ simply means youget your meat or fish skewered on a sticklike a kebab. There is no mystery aboutthis. The yakitori sauce can be made inseveral fashions, but most people agreeit should contain soy sauce, garlic, sugarand sake. It was OK rather than great.

Japanese cuisine (as made in Japannot Bucharest) is always evolving. Sushiwas a convenient, passing invention andis nothing special. The latest reincarna-tion in Japan is the ‘bento lunchbox’which we will doubtless be swampedwith when the dull-witted Bucharestrestaurateurs catch on 20 years aftereverybody else.

Sushi Ko is not cheap, but I cannotblame the House for this. Like all sushijoints they fool the public into thinkingthere is an Oriental mystique and specialskill surrounding sushi that justifies theprices. By now you will have realizedthis is not the case.

Michael [email protected]

Japan-easy does it: Sushi is not hard to make,despite what some would have you think

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S U S H I K O , 8 S T R A V R O P O L E O S ( L I P S C A N I )

E V E N T S


Fragments, a painting exhi-bition by artist TeodorMoraru, opened last weekat the Romanian CulturalInstitute. The exhibitioncomprises 11 works.Moraru has displayed muchof his work outside thecountry in cultural citiessuch as Paris, Berlin, Darm-stadt, Copenhagen, Tokyo,Prague, Vienna, Lisbon andBudapest. The exhibitionwill be open to the publicuntil January 17, 2010.

American actor BRAD PITT will produce a new film about the legend of Dracula, according to balka-

ntravellers.com. The project will be based on a script called Vlad written by actor Charlie Hunnam

and directed by music video director and photographer Anthony Mandler. It will focus on the youth

of the fifteenth-century Romanian ruler of Wallachia in Transylvania, Vlad Tepes (Vlad the Impaler),

who inspired Bram Stoker’s 1897 novel Dracula, according to the site. While Romania has declared

it no longer wishes to be associated with Dracula, the vampire remains one of the country’s most

prominent symbols and biggest tourist attractions. Pitt himself played a bloodsucker alongside Tom

Cruise in 1994 film Interview with the Vampire.Famous guitarist ERIC CLAPTON, whose hits include Tears in Heaven, Wonderful Tonight, Layla andOld Love, will play Bucharest on June 11 next summer at Arcul de Triumf stadium. Clapton, knownin the music world as ‘Slowhand’, will do a blues-rock show with an old collaborator of his and well-known name on the music scene, Stevie Winwood. The two played together for the first time in 40years in 2008, in three sold-out concerts in New York. In 1969, Clapton and Winwood founded thesuper-group Blind Faith, which released only one album. The concert will be part of a European tourthat will start on May 18 in England and end in Turkey on June 13. The European leg will be preced-ed by concerts in the United States and Canada.

Police, Adjective, a film by Ro-manian director CORNELIU PO-RUMBOIU, is on the list of 69 filmsup for nomination in the ForeignFilm category at the 2010 GoldenGlobes. Porumboiu will competeagainst established directors suchas Michael Haneke, winner of thePalmes d’Or this year, and PedroAlmodovar. Nominations for theGolden Globes will be announcedon December 15 and trophies willbe awarded on January 17, 2010.Police, Adjective tells the story ofCristi, a small-town policemanwho loses his faith in the power ofthe law. This film is also Roma-nia’s proposal for the 2010 Acade-my Awards.

Pop artist SEAL released last week hisnew album, Hits, which features hisbest-known songs plus two newtracks, I Am Your Man and ThankYou. In Romania, the album is beingdistributed by A&A Records/WarnerMusic Licensee. It includes 34 songs,including some of Seal’s best collabo-rations, with Jakatta and MyleneFarmer. The singer is currently work-ing on a new album with new materi-al that will be released in 2010. Sealrose to worldwide fame with his self-titled debut album in 1991. It featuredhits such as Crazy, which reached thetop ten in both the US and UK charts.

Romanian soprano Angela Gheo-rghiu has held a recital at the WhiteHouse, in the presence of US presidentBarack Obama and the first lady,Michelle Obama. Gheorghiu’s recitaltook place on the occasion of the 32ndKennedy Center Honors Gala, which

pays homage to artists who have con-tributed to American culture. Sheshowed up with a good friend, Americansoprano Grace Bumbry. The gala was al-so attended by actors Meryl Streep,Robert de Niro, Sharon Stone and BenStiller, director Martin Scorsese, singerBruce Springsteen, and pianist DaveBrubeck. Gheorghiu is one of the mostfamous contemporary opera singers,having sung in prestigious venues allover the world. Her voice is said by in-ternational critics to resemble a combi-nation of the voices of two famoussingers, Maria Callas and Renata Tebal-di. She debuted at the Royal OperaHouse in London in 1992 with a part inDon Giovanni. In 1994, she debuted inCovent Garden in Traviata, directed bySir Georg Solti. The show was aired liveon the BBC, which cleared its schedulefor the performance.

Otilia Haraga

Soprano Angela Gheorghiu performsat the White House

Gheorghiu performed before the US president

business review issue 45, dec 14-20, 2009

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