1. potential and performance
Hi-tech in Hungary:
potential and performance
Előadás helyszíne:
Időpont és időtartam: nov :30-11:30, 25 perc
Diák száma: 22 (cím és befejező diákkal együtt)
Alkalom: Shenzhen Hi-Tech Fair, kínai-magyar-izraeli zártkörű szeminárium a CHTF 2011-es európai rendezvényéről
Géza Vass, Director General
Department of Bilateral Economic Relations
Ministry for National Economy, Hungary
China Hi-Tech Fair, Shenzhen, Nov 2010 1

2. 500 million consumers within easy reach
Hungary
Member of EU since 2004
Hungary offers countless advantages to foreign businesses; chief among them its strategic location in the heart of Europe. This provides an ideal base for investors eyeing more distant markets or planning further expansion within Central Europe and the European Union. As Hungary is now fully integrated into the EU, investors here find themselves in a single market of nearly 500 million consumers. This is an enormous advantage to those firms seeking new markets and new horizons.
Over the past fifteen years, Hungary has integrated successfully into the global economy. From 1996 to 2009, our share in global exports has doubled. Hungary has also demonstrated strong economic growth in the past decade. A number of economic sectors, such as transportation equipment and vehicle manufacturing, electronics, IT, pharmaceuticals production, biotechnology, renewable energy and financial and business services, have performed outstandingly.
Hungary has an open, export-oriented economy. The global slowdown has had a major negative impact on economic growth, particularly in export-oriented sectors such as the automotive industry and consumer electronics. Growth in exports, manufacturing and GDP are all dependent on European demand. As a consequence of the sharp slowdown in the country’s destination markets, Hungarian GDP contracted in 2009 but we are expecting a growth of 1% this year.
Land: 93,030 km²
Population: 10 million
GDP/capita, at PPP:
EUR 14,900/ USD 18,840 (2009)
(wiiw, EIU)

3. ICT-related R&D drives more than a quarter of total R&D
The strength of the ICT sector with good e-skills: strategic assets for Hungary
Hungary’s ICT sector represents one fifth of its exports, the third highest in the EU
The percentage of people employed with ICT user skills exceeds the EU average
Major software developers: IBM, HP, Siemens, CISCO, SAP, Oracle, Microsoft and TATA
Several IT companies, such as BT, EDS-HP and Getronics operate technology service centres in Hungary
ICT-related R&D drives more than a quarter of total R&D
Hungary has grown into one of the major players in hardware production in Central and Eastern Europe. In 2009, the sector accounted for 13% of manufacturing output, 19.1% of total manufacturing exports and 6.5% of industrial employment. (Source: Hungarian Central Statistical Office)
According to EITO, the Hungarian software market has been one of the most affected by the economic crisis since First, this is due to a lower receptiveness of the public sector, despite the central procurement system. Second, the SMEs – considered as the most promising part of the market – have been strongly affected by increasingly difficult access to financial resources and has put software investments on hold.
IT services
In terms of business solutions, Hungary is regarded by most software suppliers as an almost saturated market. This is not entirely true, but this perception is mainly based on the fact that most of the medium sized and large companies in the country already have at least the basic modules of ERP systems in place and already have chosen their preferred suppliers. At the same time, the potential for all additional functionalities (such as CRM [Customer Relationship Management], SCM [Supply Chain Management], etc.), business intelligence tools or integration platforms is still high and expected to increase remarkably during the next five years.
IT Outsourcing
According to EITO, as Hungary proved to be one of those Eastern European countries which are most open to outsourcing, there is a high share of this segment within the IT services market. In line with the market maturity, the bulk of the outsourcing demand comes from the infrastructure side of customers’ IT, starting from the transformation of hardware maintenance contracts into infrastructure outsourcing deals governed by quite strict SLAs (Service Level Agreements).
The overall progress countries are making towards becoming information societies is also measured by the International Telecommunication Union (ITU). Every year a so-called ICT Development Index (IDI) is composed, made up of 11 indicators covering ICT access, use and skills. According to the latest report of 2010, Hungary ranks top in the region.
Source: Europe’s Digital Competitiveness Report - i2020 – ICT Country Profiles, August 2009 3

4. Biotechnology & Pharmaceuticals
Hungary’s biotechnology sector on par with some Western European countries (Europabio, 2009)
The 5th largest drug producer in Europe
Hungary ranks top in clinical research
(Buck Consultants)
„Biotech in the new EU member States.: An Emerging Sector” Europabio and Venture Valuation, 2009.
The study analyzed life sciences data such as the number of biotech companies, number of drug candidates in the pipeline, size of companies, workforce, intellectual property from 14 countries. Hungary was ranked first both in the quantitative as well as the qualitative factors.
One of the largest and most developed drug markets in the Eastern European region, with estimated sales of US$3.5bn in 2009.
EU accession in 2004 leading to the alignment of Hungary’s primary pharmaceuticals legislation with EU standards.
The best track record in the region for FDI in the pharmaceutical sector.
At US$310 per capita in 2009, Hungary’s per capita spending on drugs is above average for the region. (Source: BMI, February 2010
Buck Consultants benchmarked Germany, UK, Czech Republic, Poland, Romania and Hungary in 2009, and found that based on labour costs, patent population, labor availibility, available infrastructure, regulatory framework, business climate and accessibility, Hungary ranked top in Clinical Research.
Clinical trial costs in Hungary are 22% lower than in the US, 31% lower than in the UK and 80% lower than in Germany. (Source: Biotech 2010 Life Sciences: Adapting for Success, Burrill & Company 2010 – page 122) 4

5. Four life sciences clusters
János Szentágothai Centre of Excellence: molecular biology and info-bionics
27 pharma companies engaged in R&D
Large international companies are clustered around universities
Enhance the cooperation between academia and business
Each granted by EUR 6.3 million by the National Research and Technology Office
Long-term programs in basic and applied research
Budapest
Debrecen
Genomnanotech Centre of Excellence
Teva-Biogal R&D
Szeged
Biopolis
Neurobiological Knowledge Centre
Bay Zoltán Foundation for Applied Research
Biological Research Centre
Pécs
Hungarian succes stories in the past few year include:
Klonilla: the first clone-mouse in Central Europe
Cyclodextrine: the industrial material
BGP-15: prevention of metabolic adverse effects of anti-psychotic drugs
The revolutionary P-gp PREDIVEZTM Kit
DermaVir: a novel nanomedicine for HIV/AIDS
Jedi knife: the intelligent surgical cutting device
Development of the pharmaceutical Industry in order to Increase Hungary’s economic competitiveness
Running programs supporting R&D in pharmaceutics
Encouraging R&D expenditure by modifying tax regulations
Helping SMEs’ access to funds
Introduction of the Young Innovative Company status in Hungary
Supporting research facilities
Raising the level of education of natural sciences
Medipolisz Regional Knowledge Centre: pharma research

6. World’s 2nd largest powertrain plant in Hungary by Audi!
Automotive
Original manufacturers: Suzuki, Audi
Suzuki: 181,000 pcs (2009)
Audi Motor: 32,600+ TT coupés and roadsters, A3 cabriolet
Engine manufacturing:
Audi Hungary: 1.38 million engines(2009)
GM Opel: 400 thousand engines (2008)
Automotive electronics prod. + R&D: Bosch, ThyssenKrupp, Knorr Bremse, etc.
TIER 1s: 14 of the world’s top 20 are present in Hungary
1. The automotive industry is one of the economic sectors that have benefited the most from the heavy foreign direct investment inflows.
2. One quarter of the total FDI in manufacturing industry was invested in the automotive sector.
3. The small and medium-sized local automotive companies have become stable and strategic partners of local based and Western-European car manufacturers.
4. Owing to the quick introduction of modern corporate management and quality assurance systems, productivity in the sector reaches the Western-European average.
5. The world-class training and education of engineers in 5 major university towns make sure that this quality is maintained and even improved.
6. Numerous multinationals have set up R&D centres in Hungary, examples include: Audi, Bosch, Knorr-Bremse, Magna-Steyr, ThyssenKrupp, Arvin Meritor, Denso, Continental, Visteon, WET, Draxlmaier, Edag and Temic Telefunken, ZF etc.
20% of total industrial production and exports
World’s 2nd largest powertrain plant in Hungary by Audi! 6 6

7. Largest electronics producer and exporter in the CEE
Major global manufacturers: Samsung, GE, Philips, Sanyo, Sony and Jabil, Flextronics
Booming sectors: IT manufacturing, telecommunications, consumer electronics
„Hungary provides an ideal environment for electronic manufacturing services as the country has good industrial infrastructure and a strong industrial culture.” Hannu Hanatala, Managing Director, Elcoteq
In the 1990s Hungary emerged as a major global production location in the electronics industry. Hungary produces 34% of the regional output in the CEE. Between 2000 and 2008 production grew further: its rate reached 80% while that of export 60%.
Electronics is one of the leading-edge sectors of the country: it represents 25% of manufacturing and of export (2008).
In the past few years, foreign investors have shown a particularly keen interest in four areas: information technology, communications, consumer electronics and automotive electronics. Several of the major global original manufacturers are present in the country such as GE, Philips, Siemens, IBM, HP, Ericsson, Nokia, Sony, Samsung. However, Hungary has been a popular location for CEM companies as well, including global tier one suppliers such as Flextronics, Sanmina-SCI Jabil Circuit and Elcoteq.

8. 38 multinational company R&D units
Bosch Power Tool
Audi
Magna Steyr
General Electric
Philips
AFT
Michelin
Flextronics
ZF Hungária
Samsung
W.E.T.
Electrolux
Samsung
Nokia
Draixlmaier
Philips
Samsung
Ericsson
Continental Temic
IBM
Sysdata
General Electric
Nokia
Cisco
SAP
TATA Consulting
Sanofi-Aventis
Denso
Visteon
Philips
Zeuna Starker
GM-Opel
General Electric
Flextronics
Knorr-Bremse
Zenon
Continental Teves
Valeo Auto-Electric
Elcoteq
Source: ITDH

9. Lenovo’s business created 500 jobs
ZTE
Employs 45 people in Budapest in sales and technical support
Major partners: Invitel, T-com, Vodafone
In 2010 won tender of Telenor for network development
New plans: EUR million investment, 120 jobs in repair and manufacturing centres
Repair Centre opens in January 2011 with 60 employees
Second phase: manufacturing centre
Lenovo
Since 2009 Flextronics produces PCs, servers and workstations for Lenovo in Sárvár, Hungary
Lenovo’s business created 500 jobs
Assembling, testing and final control are performed in Flextronics’ factory

10. Huawei Employs 120+ in Budapest in sales and technical support
Major partners: Vodafone, T-Com, Invitel, Telenor, GTS Datanet, Antenna Hungaria
Europe Supply Center: plans up to 2012
ESC - Europe Supply Center
Activity in Hungary
2009
2010
2011
2012
Yearly Revenue (Bn $)
0.3
0.6
1.2 3
Countries served from ESC 20 35 45
Manufacturing plant at EMS partners (1000 m2) 15
100
150
Job creation (direct and indirect)
500
1000
2000
3000
Érvek Magyarország mellett:
központi elhelyezkedés,
kiváló logisztikai infrastruktúra,
munkaerő termelékenysége,
a két kormányzat közötti jó kapcsolat.

11. Business and Technology Center in CEE: Talentis-在中东欧地区的商务技术中心
Talentis Business Park sqm office-park: Business area, offices, laboratories, headquaters for trade companies / 10万平方米的Talentis商务、办公园区 设有商务区，办公室，实验室，贸易公司总部等
Business and Technology Center in CEE: Talentis-在中东欧地区的商务技术中心
Close cooperation with 14 municipal governments/在TALENTIS地区的14个地区政府有密切的合作
Built-to-suit solutions/寻找适合的解决方案
All-inclusive enterprise services (from company establishment to HR management)/ 全面的企业服务（从公司建立到人力资源管理)

12. Hungarian Government provides incentives for large investment projects
1.) Direct Cash Subsidy
• Option 1: Cash subsidy based on the decision of the Hungarian Government
• Option 2: EU co-financed cash grant, schemes to be announced early 2011
2.) Development tax allowance
3.) Job creation subsidy
4.) Tender supporting job creation
5.) Training subsidy
6.) Benefits by regional Labour Centres

13. Your Contacts Chongqing Beijing Shanghai Budapest
Hungarian Consulate General
JW Marriott Hotel
No. 77, Qingnian Street, Yuzhong District
Chongqing
Mr. Béla BÁTHORI
Consul General
Tel: (86)
Beijing
Hungarian Embassy
Commercial Office
San Li Tun, Dong Zhi Men Wai No. 10.
Beijing
Mr. Csaba WOLF
Commercial Counsellor
Tel.: (86)
Fax: (86)
Ms. Márta BALOGH
Second Secretary
Tel.: (86)
Mobile: (86)
Shanghai
Hungarian Consulate General
Hai Tong Securities Building 689
Guang Dong Road 28th Floor #2811
Ms. Katalin POLONYI
Commercial Counsellor
Tel: (86) ext. 826
Fax:(86) ext. 822
Budapest
ITD Hungary
Andrássy út 12.
H-1061 Budapest
Mr. Péter BUZÁS
Senior Consultant
Tel.: (36)
Fax: (36)
Ms. Anikó KIRÁLY
Consultant
Tel.: (36)
Opening soon in 2011: Shenzhen
Hungarian Commercial Office

14. Thank you for your kind attention!
Géza Vass, Director General
Department of Bilateral Economic Relations
H-1055 Budapest, Margit krt. 85.
Phone: (36 1) , fax: (36 1)
Internet: 14