Romania is still below the radar of many international business giants. Out of the world’s top twenty companies in terms of market capitalisation, only eight have invested, directly or indirectly on the Romanian market. Also, their investments are not huge, amounting to just tens of millions or even only millions of dollars.
This conclusion comes after an analysis of the famous names at the top of the world’s 500 biggest companies, released every year by British daily the Financial Times, compiled based on the companies’ stock prices on the markets on which they are listed.
Out of the top twenty companies, only General Electric, Citigroup, AIG, Vodafone, IBM, Procter & Gamble, Shell and Coca-Cola have deemed Romania as a market worth investing in.
However, IBM has only invested $1.5 million in Romania so far, whereas General Electric has invested a little over 15 million dollars (GE’s investments in Hungary amount to several hundred million dollars).
Citibank, the world’s largest bank, has maintained a low profile in the Romanian banking system so far, only participating in large transactions and loan agreements.
Furthermore, out of the world’s top twenty companies, only three have invested several hundred million dollars in Romania: Shell (more than $230 million), Vodafone (whose stake in Mobifon is valued at $200-230 million) and Coca-Cola (with investments in excess of 300 million dollars).
“Theoretically, Romania should be an attractive market for such large companies, since the number of inhabitants puts it in second place among the Central and Eastern European countries. However, purchasing power, one of the main indicators considered by the big companies, is still very low (half the purchasing power in Poland), whereas the Romanian business environment has been permanently marred by uncertainties ever since 1990,” says Daniel Ionescu, the general manager for Romania of one of Europe’s largest consultancy firms – Larive.
As the top of the twenty biggest companies is clearly dominated by American companies (holding 15 such places), their absence from the Romanian market may also be due to geographical reasons. Moreover, groups with sales worth hundreds of billions of dollars only make large-scale investments in countries that can either bring them a sizeable market or help them cut costs. The difference between General Electric investments in Hungary and in Romania also lies in the fact that the Americans (like all the big investors) were granted long tax exemptions in Hungary in the mid-nineties.
“A large company drafts a global survey and chooses those countries that are attractive in terms of infrastructure, law and the professional training of the workforce. Moreover, it also looks at the competition in its line of work. So why aren’t there more large groups in Romania and why haven’t bigger investments been made? I think every company has its reasons,” says Dan Ionescu, General Electric’s general manager for Southeast Europe.
laurentiu.ispir@zf.ro