Information on international business: Hungarian market opportunities, meeting ISO 9000 standards, and packing tips.
This Month
Market Intelligence
Hungary is reeducating its people, encouraging a free-market mentality. In the past three years, U.S. investors have sunk $1.8 billion into the country. Is Hungary the new gateway to Europe? (page 2)
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Company Profile
Lori Sweningson of Job Boss was fluent in quality lingo but had never heard of ISO before a customer mentioned it in passing. Now her commitment to achieving ISO certification may transform her company. (page 3)
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On the Road
The well-packed briefcase (page 5)
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The Global Perspective
"I am not enough Master of the Course of our Commerce to give an Opinion on this particular Question, and it does not behove me to do it; yet I have seen so much Embarrassment and so little Advantage in all the Restraining and Compulsive Systems, that I feel myself strongly inclin'd to believe, that a State, which leaves all her Ports open to all the World upon equal Terms, will, by that means, have foreign Commodities cheaper, sell its own Productions dearer, and be on the whole the most prosperous.'
-- Benjamin Franklin, in a letter to Robert R. Livingston, July 22, 1783
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"You wake up over the Mideast, over North Africa. As you eat breakfast you look out the window as you're going past and there's the Mediterranean area, and Greece, and Rome. . . . And you finally come up across the coast of California and look for those friendly things: Los Angeles, and Phoenix, and on across El Paso and there's Houston, there's home. . . . And you identify with that, you know -- it's an attachment. . . . And the next thing you recognize in yourself is, you're identifying with North Africa. You look forward to that, you anticipate it. And there it is. That whole process begins to shift what it is you identify with. When you go around it in an hour and a half you begin to recognize that your identity is with the whole thing.'
-- Rusty Schweickart, Apollo 9 astronaut, quoted in Peter Senge's The Fifth Discipline (Currency/Doubleday, 1990)
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"The prudent traveler in the former Soviet Union carries soap and toilet paper because hotels may not have any. A light bulb is a good idea. And about two pounds of rubles. The government eased my burden when it issued 5,000-ruble notes (worth $40 in July [1992] but only $12 in December [1992]).'
-- Mike Edwards, "A Broken Empire,' National Geographic, March 1993
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"The Chinese expression 'Shang chang ru zhan chang' translates literally as, 'The marketplace is a battlefield.' That is how the Asian people view the importance of success in the business world. The success of a nation's economy influences the survival and well- being of a nation as surely as does the course of a battle. Asians understand the true nature of business competition. They see it and call it as it is: 'Shang chang ru zhan chang.' '
-- Chin-ning Chu, The Asian Mind Game (Rawson Associates, 1991)
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"The best thing about our victory [in the cold war] is we did it with Levi 501's. Seventy-two years of Communist propaganda got drowned out by a three-ounce Walkman. A totalitarian system has been brought down because nobody wants to wear Bulgarian shoes.'
-- P. J. O'Rourke, "The Berlin Ball,' Rolling Stone, January 11, 1990
EXPLORING HUNGARIAN OPPORTUNITIES
By Albert Warson
New England machinery is pure Americana, fairly reeking of small-town industriousness, inspired tinkering, and Yankee trading shrewdness. It was created in a garage in 1974 by three enterprising packaging engineers -- one of them a Hungarian immigrant sentenced to death, in absentia, in his homeland because of his exploits during the 1956 uprising.
But instead of being hanged when he first returned to Hungary, in 1988, Geza Bankuty was welcomed. He was the prodigal son, returning to put to use some of those American entrepreneurial virtues he'd learned so well. So profitably, too. Virtues that Hungary -- then a pseudo-Communist society heading down a free-market road -- craved.
Bankuty is president of $8-million New England Machinery, in Bradenton, Fla. The 50-person enterprise designs and manufactures packaging equipment.
New England Machinery opened in Hungary in 1989 with a sales office in Budapest and 12 employees in a rented plant in Szeged. Within a year that branch had replaced the company's manufacturing operation in Sweden and absorbed the Paris office.
Opening Hungarian Branches
"We're profitable in Hungary,' says David Burton, New England Machinery's vice-president of finance, "because we started from ground zero instead of acquiring an inefficient enterprise' from the State Property Agency (SPA), which is selling off state-owned assets.
New England Machinery trained Hungarian staff in the United States and added equipment, operating capital, and marketing. Sales, profits, and export markets throughout Europe keep improving.
Resources: Doing Business in Hungary (Price Waterhouse, 212-819-5000; free) is becoming dated but remains useful for general information. For on-the-scene assistance, call Peter Fath, American Chamber of Commerce in Budapest (36-1-142-8752). Brian Toohey is desk officer for Hungary at the U.S. Department of Commerce, 202-482-4915.
The Acquisition Route
Through international trade shows, a state-owned Hungarian sheet-glass factory's technicians came to know managers at Guardian Industries, in Northville, Mich., a manufacturer of flat-glass products. The Hungarian company's glass was inferior, and its appeal as an exportable product was waning, so the Hungarians invited Guardian to transform their energy-inefficient and labor-intensive operation into a sophisticated float-glass facility. "It was a strategic fit for us,' says Ralph J. Gerson, executive vice-president of Guardian. "We needed additional product for our European markets.'
A joint venture was signed in 1988. "At the time Hungarian law precluded foreigners from having more than 49% equity interest, but negotiations allowed us to maintain management control. We raised our equity interest to 100% after the law was changed to allow full ownership, in 1991.' Guardian rebuilt the plant and reduced the work force to 250 and retrained it. The factory reopened as Hunguard Float Glass in 1991; some 80% of its production is today exported to distributors throughout Europe.
