Romanian entrepreneurs poised for regional expansion

It is worth taking steps to expand Romanian business into regional states and even into Europe, if the risks involved are carefully considered. This was the conclusion of the seminar -“Economy’s biggest players. What chance does Romanian capital stand in the EU?”- organised by ZIARUL FINANCIAR in partnership with Banca Comerciala Romana, Petrom and Nestor Nestor Diculescu Kingston Petersen (NNDKP) law firm. The seminar brought together Romanian market leaders, according to data available in Romania’s Business Yearbook, published by ZF.
“Many Romanian businesses have reached a certain level of sophistication, which now allows them to enter the European Union market. Romanian capital has the opportunity to hatch. The challenge, however, will be the extraordinary levels of competition in the EU,” says Manuela Nestor, managing partner of NNDKP, the leader of the business law market.
She believes there are many opportunities for Romanian-held companies in neighbouring regional countries, as a first step towards European expansion. “Serbia, Macedonia, Albania and the former Yugoslavian states are now providing all the opportunities that existed in Romania in ’93-’96. These countries are only beginning to privatise, almost their entire industry is up for sale,” Manuela Nestor explained.
Beyond the trend of expansion into neighbouring countries, Romanian companies are also facing increasingly fiercer competition from foreign rivals on the domestic market. “The Romanian market remains an extremely attractive environment for foreign investments, which will seek to take advantage of the good risk/benefit ratio,” says Nicolae Danila, chief executive of BCR, the largest bank on the market.
Danila believes that the domestic consumption market has not been sufficiently penetrated yet and offers a significant growth potential, which could be capitalised on through European funds and investments, either local or foreign. The average hourly wage in Romania stands at 2.3 euros, compared with 21.2 euros in EU25 (i.e. before the enlargement in 2007), Danila added.
Werner Schinhan, deputy chief executive of Petrom says, “there are still many businesses to sell and develop in Romania. In Austria, the country of OMV (Petrom’s owner) the stock exchange was both the growth driver for the business and for the economy, a recipe that could work for Romania, too,” he believes.
“Language skills and education are among the strong features in Romanian businesses,” says Schinhan, which could aid Romanian-held companies to expand. “To succeed in Romania, however, you also need a degree of luck,” Petrom’s official specified.
Some of the most successful companies in Romania started out with 200 square metre stores, often located somewhere outside Bucharest, and are now market leaders in their respective fields.
“In 1993 I started with a single 200 square metre shop in Piatra Neamt. Now Altex has 120 stores covering a total of over 80,000 square metres,” says Dan Ostahie, general manager of Altex, the leading domestic electronics and home appliances retailer.
Another company that started its business life in a similar fashion was Arabesque, the leading distributor of construction materials and similar products on the domestic market. Launched in 1994, Arabesque posted 144,000-euro turnover in its first year and last year reported a turnover of 288 million euros, according to general manager Virgil Cezar Rapotan. He believes, in the case of Arabesque, expansion “came naturally” and Romanian companies, which carefully analyse the risk of foreign expansion, have every reason to ultimately take the step of expanding abroad.