Old friends, new partners
In 1920, eighteen trainloads of guns and ammunition sent from Hungary helped the Polish army defeat the Bolshevik forces on its western front in Poland. Within four days, with the help of the generous Hungarians, the Soviet army was blown away, and Polish-Hungarian friendship was further cemented. But the close relationship between the two nations goes back even further, to the Hungarian independence battles of 1849, in which a substantial number of Poles fought side by side with their Hungarian brethren.
In 1956, when Nikita Khrushchev made the gesture of granting political concessions to the Poles, the people of Hungary took this as an opportunity to make their own bid for more freedom. They issued the Sixteen Points that ultimately brought Soviet tanks and bloodshed to the streets of Budapest, while the whole world stood by and watched.
Under communism, the relationship between the two countries was not always rosy, as when Martial Law was imposed here in December 1981. The Hungarian authorities used the situation in Poland to demonstrate to their own people how privileged their lives were. According to former director of the Hungarian Culture Institute in Warsaw, Janos Tischler, a report compiled for the Hungarian communist party's Central Committee read: "The public understood the need to impose Martial Law in Poland. Many people thought that the move was unavoidable; it was provoked by the forces of anti-socialism."
With over a decade of free market economy under their belts, Poland and Hungary have gained an indisputable reputation as the two most dynamic economic players in the region. Their success provides an illustration of how important are small start-up companies in a recovering economy. According to the Economy Ministry, this country has more than two million small- and medium-sized companies, which are responsible for approximately 50% of the country's GDP and employ more than 70% of its total workforce. The domestic SME sector has been expanding on an annual basis for the last nine years. Hungary meanwhile has some half a million small- and medium-sized businesses which, given its smaller population, is the same number per capita as it is here.
According to analysts, Hungary's economic growth is set to continue, supported by strong domestic economic activity. Investment in the public sector and private consumption, which benefited from strong increases in wages and salaries in the public sector followed by much of the same in the private sector, are the driving forces behind the current GDP growth of 3.8%.
The Hungarian economy hit the bottom of the cyclical trend in the first quarter of 2002, but foreign investment still showed a surprising increase of 8.6%. This high growth, however, can be attributed chiefly to investment in the public sector, while investment in the private sector, in particular in the manufacturing industry, is expanding more slowly.
Hungary's two flagship operations - Richter Gedeon and Egis - both generic brand pharmaceuticals companies, have already gained a foothold on the Polish market, with Richter Gedeon taking over drugs producer Polfa Grodzisk this August. Experts also confirm it is likely that oil giant PKN Orlen will be interested in purchasing a stake in its Hungarian state-owned counterpart MOL during the latter's privatisation, although it is possible that the Hungarian government might impose restrictions on competing firms.
As far as Hungarian SMEs in Poland are concerned, Janos Csösz, the director of the Hungarian Commercial Office in Warsaw, said that his staff is currently dealing with around 2,500 inquiries pertaining to this market, but that most Hungarian companies already on the Polish market are rather small and do not have much start-up capital.
"We are not a big exporting country," he said. "Hungary is focusing more on attracting foreign investment to our country."
Polish investors on the other hand perceive Hungary as a very attractive market. According to Hanna Kusiak, the commercial attaché in Budapest, the embassy receives on a daily basis about 40 questions or requests for help in setting up branch offices in Hungary.
"Those are usually small firms which most of all want to know how to present their offers to potential clients," she said. The bulk of what they sell, she explained, is furniture.
The influx of Polish companies into Hungary began on a large scale in the mid-1990s.
"Polish companies came here following the change in the political system," Kusiak said.
Companies were also forced to search for other markets following the Russian crisis in 1995, and that is when the embassy began handling large numbers of inquiries regarding investment opportunities. This shift towards the Central European markets was also caused by disillusionment with the Western markets and awareness of the potential that local markets hold, Kusiak said.
Considering the interest and the investment opportunities, there are surprisingly few Polish firms that are active on the Hungarian market; about 80 small- and medium-sized companies are present in Hungary at the moment.
Representatives in Budapest say that, based on statistics from the last few months, trade relations between Poland and Hungary are experiencing an upturn, and the increase in turnover points to the potential for further development in the trade between the two countries.
During the first half of 2002, the exchange of goods between Poland and Hungary was valued at €851.2 million, an increase of 14.9% compared to the same period of 2001. From our perspective, exports increased by 15.9%, and imports into Poland were up by 13.9%. Following the two countries' EU accession, it seems that we are not likely to lose our position as Hungary's ninth largest trade partner.
Bronisław Geremek, former minister of foreign affairs, dubbed the political changes in our region as the democratic re-birth in the East. It appears that Hungary and Poland are not only two of the political leaders of the region; they also set its economic pace. It is no small wonder that Poles have coined the phrase: "A Pole and a Hungarian are like two brothers."
In 1956, when Nikita Khrushchev made the gesture of granting political concessions to the Poles, the people of Hungary took this as an opportunity to make their own bid for more freedom. They issued the Sixteen Points that ultimately brought Soviet tanks and bloodshed to the streets of Budapest, while the whole world stood by and watched.
Under communism, the relationship between the two countries was not always rosy, as when Martial Law was imposed here in December 1981. The Hungarian authorities used the situation in Poland to demonstrate to their own people how privileged their lives were. According to former director of the Hungarian Culture Institute in Warsaw, Janos Tischler, a report compiled for the Hungarian communist party's Central Committee read: "The public understood the need to impose Martial Law in Poland. Many people thought that the move was unavoidable; it was provoked by the forces of anti-socialism."
With over a decade of free market economy under their belts, Poland and Hungary have gained an indisputable reputation as the two most dynamic economic players in the region. Their success provides an illustration of how important are small start-up companies in a recovering economy. According to the Economy Ministry, this country has more than two million small- and medium-sized companies, which are responsible for approximately 50% of the country's GDP and employ more than 70% of its total workforce. The domestic SME sector has been expanding on an annual basis for the last nine years. Hungary meanwhile has some half a million small- and medium-sized businesses which, given its smaller population, is the same number per capita as it is here.
According to analysts, Hungary's economic growth is set to continue, supported by strong domestic economic activity. Investment in the public sector and private consumption, which benefited from strong increases in wages and salaries in the public sector followed by much of the same in the private sector, are the driving forces behind the current GDP growth of 3.8%.
The Hungarian economy hit the bottom of the cyclical trend in the first quarter of 2002, but foreign investment still showed a surprising increase of 8.6%. This high growth, however, can be attributed chiefly to investment in the public sector, while investment in the private sector, in particular in the manufacturing industry, is expanding more slowly.
Hungary's two flagship operations - Richter Gedeon and Egis - both generic brand pharmaceuticals companies, have already gained a foothold on the Polish market, with Richter Gedeon taking over drugs producer Polfa Grodzisk this August. Experts also confirm it is likely that oil giant PKN Orlen will be interested in purchasing a stake in its Hungarian state-owned counterpart MOL during the latter's privatisation, although it is possible that the Hungarian government might impose restrictions on competing firms.
As far as Hungarian SMEs in Poland are concerned, Janos Csösz, the director of the Hungarian Commercial Office in Warsaw, said that his staff is currently dealing with around 2,500 inquiries pertaining to this market, but that most Hungarian companies already on the Polish market are rather small and do not have much start-up capital.
"We are not a big exporting country," he said. "Hungary is focusing more on attracting foreign investment to our country."
Polish investors on the other hand perceive Hungary as a very attractive market. According to Hanna Kusiak, the commercial attaché in Budapest, the embassy receives on a daily basis about 40 questions or requests for help in setting up branch offices in Hungary.
"Those are usually small firms which most of all want to know how to present their offers to potential clients," she said. The bulk of what they sell, she explained, is furniture.
The influx of Polish companies into Hungary began on a large scale in the mid-1990s.
"Polish companies came here following the change in the political system," Kusiak said.
Companies were also forced to search for other markets following the Russian crisis in 1995, and that is when the embassy began handling large numbers of inquiries regarding investment opportunities. This shift towards the Central European markets was also caused by disillusionment with the Western markets and awareness of the potential that local markets hold, Kusiak said.
Considering the interest and the investment opportunities, there are surprisingly few Polish firms that are active on the Hungarian market; about 80 small- and medium-sized companies are present in Hungary at the moment.
Representatives in Budapest say that, based on statistics from the last few months, trade relations between Poland and Hungary are experiencing an upturn, and the increase in turnover points to the potential for further development in the trade between the two countries.
During the first half of 2002, the exchange of goods between Poland and Hungary was valued at €851.2 million, an increase of 14.9% compared to the same period of 2001. From our perspective, exports increased by 15.9%, and imports into Poland were up by 13.9%. Following the two countries' EU accession, it seems that we are not likely to lose our position as Hungary's ninth largest trade partner.
Bronisław Geremek, former minister of foreign affairs, dubbed the political changes in our region as the democratic re-birth in the East. It appears that Hungary and Poland are not only two of the political leaders of the region; they also set its economic pace. It is no small wonder that Poles have coined the phrase: "A Pole and a Hungarian are like two brothers."
