In Romania, the standard combination includes three or four products on average – a bank account, a loan, a mandatory insurance policy and an account in the mandatory private pensions system. There is no joint calculation method for companies in the fi nancial system that can reveal Romanians’ preferences in terms of fi nancial products.
However, a standard combination for Romanian clients is not very difficult to put together. ”The most common fi nancial products include banking loans and auto liability insurance, especially since it’s mandatory,” says Cornelia Coman, general manager of ING Asigurari de Viata (ING Life Insurance). On the other hand, there are the over 4.35 million participants to the mandatory private pensions system, making private pensions one of the most prevalent fi nancial products among the employed.
The same can be said about the current account – decidedly the banks’ best-selling product, ”to which a card and an overdraft, and/or a consumer loan can be attached. But the most common combination is current account – card – overdraft,” says Rozaura Stanescu, delegate executive manager of the strategy and marketing department within BRD-Groupe Société Générale.
There are over 100,000 investors on the Bucharest Stock Exchange. Many of them are ”voucher holders” and ended up on the Stock Exchange after the mass privatisation process carried out in the late 90s, when the privatisation vouchers were turned into shares in listed companies.
Therefore, the number of Romanians who headed for the Stock Exchange seeking a source of profit or income for the retirement years is relatively low. The main factors keeping Romanians away from the Stock Exchange are the low income and the lack of a financial education and discipline. ”One can start an investment on the Stock Exchange even with an average income of 500 euros per month. About 10% of this sum can go to the Stock Exchange. It is not a lot, but it’s a start. One should keep in mind, though, that an investor should not think that if they start out poor today and invest on the Stock Exchange, tomorrow they’ll be rich,” says Nicolae Pascu, chairman of brokerage company STK Financial.
”The Stock Exchange is open for anyone. Technically, there are no income barriers, but one basically needs around 500 euros in monthly income to invest on the stock exchange,” says Razvan Pasol, president of brokerage company Intercapital Invest. Perhaps even more important than the income are the savings of the future investors. More specifically, the money that investors can dispense with for at least a year or two, for which they have no plans, and, more importantly, the money they can afford to lose. This has been confirmed by the financial crisis, which led to shares falling by over 50% in certain periods. ”It matters less how much you make per month, what counts more is how much you can save. I would say 40 to 50% of the money left after all expenses are paid should go to the Stock Exchange. If the available cash amounts to less than 100,000 euros, it is rather difficult to make a stock exchange investment,” says Rares Nilas, president of BT Securities.
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The events that marketing calls ”cross promotion” or even advertising are increasingly reliant on the element of surprise, and organisers have imagined connections that are not necessarily obvious or conventional. If the cars on display at the mall or the theatre plays in coffee shops are no longer something out of the ordinary, trying a luxury coach for an hour while watching a theatre play or configuring your car among racks of Dior clothes is not as conventional, at least not in Romania. To companies, the idea generates a number of advantages, from consolidation of their image to lucrative aspects. Surprise can also make consumers forget about the crisis budget and leave with the keys of a car instead of a dress or buy a blouse or a piece of furniture during the intermission of a theatre play.
When the AutoItalia representatives launched the Infiniti brand (the Nissan luxury division) on the Romanian market they avoided the classic option, a party in their own showroom. Instead, they chose to display the cars in front of one of the biggest multibrand luxury store, Victoria 46 and open a configuration space inside the store for one month. As a result, the luxury fashion fans could configure one of the Infiniti models from the dashboard installed on the top floor of the store while checking out the new Christian Dior or Yves Saint Laurent collections. ”Victoria 46 is a trend-setter in terms of clothing, it targets connoisseurs first of all. It was a natural choice as a partner for Infiniti, because the two brands have lots in common,” explains Mircea Eremia, general manager of Infiniti Romania. On the other hand, the malls, one of the places automotive importers like to use to advertise, are no longer settling for simply displaying the models and have started to organise events for car fans.
For one day, the car park of Plaza Romania was converted into a rally track, with pilot Titi Aur offering a drifting demonstration just like in the ”The Fast and Furious”.
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Somewhere in a hidden corner of the Alexa shopping centre in Berlin is a place where visitors would be ill-advised to go, despite potentially being attracted by the tunnels and rooms that shoppers may not even be aware of. It is a place where the stench is almost unbearable, and the amount of rubbish is measured in tonnes: a facility that sorts and collects waste material produced by the shopping centre.
”This is one of the biggest mistakes being made in Romania – people talk about waste material and rubbish, but not about prospective resources. Another mistake is that in Romania sorting and collecting waste materials costs us money, whereas in Germany we get money for this,” says Ingo Nissen, country manager of Portuguese developer Sonae Sierra, which entered the Romanian market by buying River Plaza in Ramnicu Valcea. The manager, who supervised the development of the Alexa shopping centre in Berlin, talks about the recycling rate of waste material produced daily by a mall as a means of cutting operating costs, both in terms of the prospective sums received for collecting the waste, and in terms of cutting cleaning costs. ”For River Plaza we have set a 25.9% recycling target, but we have already exceeded it, we are at 29%. In Alexa, the rate is 60%; it is not easy to motivate people in Romania, but this is a good rate.”
Recycling targets are just one of the methods used for cutting operating costs of shopping centres, amid an around 20% rent decline, according to real estate consultants. ”Tenants do not perceive the rent they pay as a sum consisting of service charges plus the actual rent, they see it as a whole” explains Georgiana Andrei, senior retail broker with consulting firm Colliers International. According to a company study, service charges paid in Romanian shopping centres are among the highest in the region – close or even higher than in the UK – at 11 euros per square metre.
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The performance of the private pension market in Romania turned out to be remarkable under the very difficult conditions in the economy and on financial markets, says Crinu Andanut, chairman of the Association of Privately Managed Pensions in Romania (APAPR). The managers of the Pillar II (mandatory private pension) funds achieved an average yield of 7% in the first half, slightly higher than the voluntary pension funds (Pillar III) yield of 6.94%. These results were achieved at a minimal risk for participants, considering more than half of the investment portfolios of the managers comprise government securities, the safest and most prudent investment instruments, at the moment.
Mandatory private pension funds’ investments in government securities accounted for 55% of the total investments six months into the year, while corporate investments got 26.6% of the managers’ investments. ”We behave like a group when investing, which is why investment portfolios are so much alike. Too much alike for my taste,” Andanut says. As far as he and the other managers on the market are concerned, both the courage or and the options to create ”bold” portfolios are lacking now, otherwise investments in stocks would account for a significant percentage of the total, approximately 20 or 30% or more. According to Dorin Boboc, investment manager of Allianz-}iriac, we should not expect big changes over the next three to five years. The hierarchy and weight of investment instruments will remain very similar to what we are seeing now. He adds that until then, one of the new elements to generate diversity is that funds now have the option of investing in foreign government securities, which, in most cases, provide better yields than the Romanian securities. An encouraging, though not that visible, sign is the shift of funds towards new growth drivers compared with the end of last year: from government securities and bank accounts, they are now more open to investments in bonds issued by companies and shares. This openness was accompanied by a cautious strategy, focused on getting very good yields at minimum risk.
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Romania’s economy is functional and on the rise; next year we will start spending the money from the EU, especially for infrastructure investments, so that we will not have to deal with the depreciation of the economic growth. It is not us saying it now, President Basescu did it last autumn. It was October 21, a little while after the speculations on the forex market that had caused the RON to depreciate suddenly and one month before the parliamentary elections. Coincidentally, on the same day, Premier Tariceanu stated that Romania would post a 4 to 6% economic growth in 2009.
Back then, as well as now, the way businesspeople and authorities treat the economic information, the events happening before their eyes – in the US, in Europe and here at home, is the first step in the battle against the crisis. Those who look for the information and take advantage of it always stand to gain; those who ignore it either cannot shield themselves from the crisis, or (in the case of the government) only manage to prolong the dangerous illusion that the crisis will eventually pass on its own – unless it has already done so.
”Honestly, I didn’t imagine the situation in America would have such powerful effects in Europe, too, and especially in Romania,” admits Florentin Banu, the man who developed the Joe wafers brand and the Artima supermarkets. ”As proof that I did not anticipate it, I am now reeling from the heavy blow in terms of not only my real estate investments, but also of the plastic business.” Banu controls Banuconstruct, which develops apartment blocks in Timisoara and the plastic and mould factory Interpart Production.
”Unfortunately for me, I did not anticipate the crisis. When trouble started on the American real estate market I thought there might be repercussions on the Romanian real estate market, too, but nothing more,” Cosmin Alexandru, founder of branding consultancy Brandivia and cofounder of Erudio, in his turn admits.
Another man who paid attention to the real estate market was Marius Stancescu, chairman of business services firm Riff Holding, to whom, however, the obvious price bubble fuelled by the boom of cheap loans reminded of the Japanese crisis in the eighties, so that he started to ”stubbornly” look for information on similar situations in other parts of the world – South America, South-East Asia, where the overheating of the economies in the nineties caused the well-known crises of the time. ”I found lots of similar events to what was happening in the US and obviously to what was going to happen on the old continent,” he says, confessing he had tried to warn as may Romanian entrepreneurs as he could about what was going to happen, but to no avail, precisely because things looked so good in our country, that the possibility of a crisis seemed out of the question.
Among those who anticipated the crisis would be imported in Romania, as well, was Marius Sfintescu, manager of private equity fund 3TS Capital. ”I anticipated we would see the expansion of the US crisis to the entire world, including Romania. I used the specialised media as a source of information.” Which is why Sfintescu was one of the few business people who agreed to answer BUSINESS Magazin’s question about what his opinion on the policy of the foreign governments in dealing with the crisis; whether he felt that the relaxation of the monetary policy was too slow in Germany or France, considering the deflationary climate and whether it was important from now on for the developed states to concern themselves with the reduction of the monetary mass in good time in order to avoid a stagflation friendly environment in 2011.
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But those looking for haute couture escapes have started to take refuge in the last bastion yet unconquered by the crisis – hotels decorated by the famous fashion designers. Built and decorated in the good days, when fashion designers used to put their name on anything, from spirits to mineral water and mobile phones, hotels decorated by designers such as Versace, Bvlgari and Lacroix are fully-booked all year.
“I tried on countless occasions to book a room at the Hôtel du Petit Moulin (decorated by Christian Lacroix i.e.), but because I never schedule my trips very long in advance, it was almost impossible to achieve.
The hotel has a small number of rooms, around 8, of course there is great demand, and it is impossible to make a booking one week in advance,” says R=zvan Ciobanu, a fashion designer who also declares himself a lover of interior design, up to date with everything that happens in the field. According to the designer, when he finally managed to go to the Hôtel du Petit Moulin, it was a special experience. “I spent one night in this Parisian hotel which looks wonderful, with its 18th century design. And my room was just as I had imagined it: black curtains, a hallway with buildings from the last century painted on the walls, the bathroom had wooden flooring, a rare feature today, and the bathroom furniture was also 18th-century inspired.
” The story of fashion designers who put their names to luxury hotels started back in 1994, when Versace brought its opulent style to the hotel world, by launching the Palazzo Versace brand.
But the market became truly animated ten years later, after the Bvlgari group sealed a partnership with Ritz-Carlton (held by the Marriott group), to launch Bvlgari Hotels&Resorts.
The first creation of the one billion-dollar partnership between Armani, and EMAAR Hotels and Resorts will probably materialise towards the end of this year. The hotel will be part of the Burj Dubai complex, and will include 175 rooms and apartments, five restaurants and a spa, covering 40,000 square metres in overall area.
There ís nowhere like home, and the economic growth of the last few years made todayís Romania different from the Romania of the nineties: sufficient premises for a Romanian who left the country to want to come back. Still, the gap between reality and expectations of those who returned after a few years in London or on the Wall Street is still wide.
”If I did not leave the country on business trips once every few months, I think I would go crazy. This is my chance, being able to travel a lot,” Andreia Stavarache, 36, says frankly. She left for the United States through a programme of internship with audit and consultancy firm PricewaterhouseCoopers (PwC) at the beginning of 2000.
Stavarache had applied for an internship with PwC in Bucharest and had been turned down for being insufficiently experienced. “Those at Stamford, Connecticut, accepted me as a trainee for six months,” she recalls. What had started as a half-year internship was later extended by one year and, in mid 2001, the company hired her as a tax associate.
“When I returned, what I disliked most was the squalor and the “Romanian issues”: people, regardless of whether they have any money or not, complain. Romanians whine instead of looking for solutions. We want the idea to come up, to implement it and get results right away and always envy others for their success. We donít know how to apologize, nor say thank you,” Stavarache says.
The first and most abrupt difference for those that had management or senior positions at the offices abroad of major multinationals is how people work in Romania.
“In the States, they had some standards I donít see in Romania. Respect and attitude towards the client always came first,” Andreia Stavarache says. Any email from a client that the company received had to be answered within two or three hours at most; that was the organisationís policy with only one exception to it, which stipulated that the answer might be given in 24 hours if it needed thorough research. Even so, one still had to confirm the receipt of the message within three hours.
She believes that the idea of Romanians working harder than others is untrue. “They work at a crazy pace abroad. In Romania, there is no results-oriented management and employees follow the lead of the managers.”
However, the future of spas looks brighter, and has to do with the hotel operators who realised that a select hotel without a spa simply does not work very well anymore. ”In 2005 I was trapped on the financial market and seeking a place to escape to for a bit of relaxation,” says the owner of Eden Spa, Liliana Paraipan, who had tried the spa centres outside Romania and realised this market needed to be opened in Romania, as well.
In August 2005, Liliana Paraipan, at the time deputy general manager at the Romanian Commodity Exchange, decided to open her own spa, the first such centre in Romania, – after training in spa management and marketing in the US. In 2005, three months after the launch of the spa business, Paraipan left her position at the Commodity Exchange and started to work on educating the market: ”It was not easy for me to sell the spa therapy concept, because relaxation was directly associated with spending time in beauty parlours and body contouring.
The first signs of capitalism greet you right at the old gate of the former factory on 7, Iuliu Maniu Boulevard. On one side, tens of posters hastily thrown together and randomly stuck on the walls announcing the existence of all sorts of firms, from apparel to electronics shops, laundries, fitness studios, print shops and more. On the other, a new building, still under construction, sticks out like a sore thumb among the old buildings on the premises. A large billboard next to it advertises that this is where a new shop of one of the few clothing makers still operating in APACA, the biggest and best-known ready to wear factory in the communist years, will be built.
Since 1992, the year APACA was privatised, all the production facilities have been sold one by one and turned into different businesses. The ten ready to wear factories on the site were therefore much easier to divide among the hundreds of new shareholders, the former employees of APACA. The MEBO-type privatisation was the start of a real entrepreneurial aptitude test for the new shareholders. Until privatisation, the orders came from the state and were forwarded to divisions, but since 1992 each new owner has been on his own. It was very difficult because few of the APACA employees had had any contact with the foreign customers of the factory before, because neither the money nor the negotiations would reach the production facility.
That was also the case of Alexandru Ciucu Sr., who at the time took over section 5 that he was running, which made men’s clothes. The business was built together with his son, Alexandru Ciucu Jr. “At first we only worked under contract – exclusively to order, with materials supplied by customers, for Hugo Boss, Stefanel, Steilmann, YSL, H&M, but in time our friends started to ask for a suit and this is how we realised the potential of the domestic market,” Ciucu Jr, recalls.
Over time, other businesses came to the site, which had no connection to the APACA of yore. The site does not have a manager, however, so that there is no clear record of the companies operating on the nine hectares, and those who are curious to know have only posters, direction arrows and less often company logos to guide them to discover them: TipArt Vision print shop, Tara Fashion, Nordic Gym and so on.
Normally, the real estate market became interested, but APACA is hard to get. Real estate market specialists say the situation of the former apparel complex is quite complicated and attempts to gain exclusive rights to APACA have failed.