The Recycler Issue 317

FEATURE
Business booming in Bucharest?
Three decades since the revolution, and twelve years on from its
ascendancy to the European Union, the Romanian economy looks to be
moving towards the light, after years of being seen as the ‘sick man of
Europe.’ But with plenty of challenges, new and old, ready to rear their
head, are the times of turmoil truly over, and is Romania ready to
embrace the present, and the future?
Towards the end of 2017, The Guardian
reported that the Eastern European
nation’s economy was “booming,” owing
to a combination of EU accession,
government-led injection measures, and
“communist-era educational excellence.”
Its economic growth has been boosted
further in recent years by the arrival of
many major global players, including
mobile phone titan Siemens, personal
exercise technology company Fitbit, and
household appliance monolith Bosch, all
of whom have either set up new
operations or expanded pre-existing ones.
Car giants Ford recently announced plans
to hire 1,000 new workers for its plant in
Craiova, in the south of the country
(taking its total workforce to nearly
4,000) and has invested more than €1.2
billion ($1.35 billion) in its Romanian
operations since 2008.
In terms of pure numbers, the
Romanian economy grew 5.7 percent
year-on-year in the second quarter of
2017 – more than double the average EU
growth rate of 2.4 percent. This follows a
GDP rise of 3.9 percent and 4.8 percent
in 2015 and 2016 respectively, with the
International Monetary Fund forecasting
at the time that the economy would have
grown by 5.5 percent for the whole of
2017.
The tech sector is showing particularly
fast expansion, owing partly to the legacy
of excellent scientific, mathematic and
technical education left over from the
nation’s Communist past. Although, like
many former Communist states,
Romania has a chequered history, it is
now seeing one of the benefits of its
previous didactic regime.
The country’s strong language skills
have also contributed, helping to
establish Romania as a hub for IT
outsourcing. This flair for linguistics can
be partially explained by the language’s
Latin, rather than Slavic, roots, but also
by more societal factors, such as that
foreign programming on Romanian
television is subtitled, rather than
overdubbed, ingraining an exposure to
other tongues into the consciousness of
wider society.
Industry insiders predict the tech sector
will double its share of the GDP by 2025,
taking it to 12 percent - partially thanks
to some of the fastest broadband speeds in
the world, that in 2017 were behind only
four countries in the world (Singapore,
Hong Kong, South Korea, and Iceland).
Similarly, the services sector continues
to expand, as do exports and
manufacturing. Private consumption,
meanwhile, hit a nine-year high in 2016
and increased by 8 percent again in the
first half of 2017.
Whilst accession to the EU has
contributed to Romania’s increased
economic stability, so too have
Government measures: A 5 percent cut in
VAT, to 19 percent, since 2015, and a
doubling of the minimum wage have
both helped stimulate growth.
Wages still present an interesting
conundrum, however, as despite recent
growth, they still sit well below the EU
average, and in 2017 were the second
lowest in the whole bloc, with only
Bulgaria paying its employees less on
average. Whilst problematic for workers,
it has had the effect of turning Romania
into an attractive outsourcing option,
which has provided the national
economy with a ‘shot in the arm.’
“The establishment of the Single
European Market has allowed the free
movement of goods, capital, and labour,”
observed Victor Matache, General
Manager of Romanian distributor Toko,
who explained to The Recycler that “the
free movement of goods allowed large
European wholesalers to enter the
Romanian market directly,” but that on
the other side of the coin, “the
distribution business model for
Romanian capital companies is restricted,
due to the big European distributors.”
As well as the big worldwide names
like Bosch, Fitbit, and Ford, Romania’s
remanufacturing industry has also felt
the benefit of the economic upturn,
with both Turbon and Static Control
planting a flag for the aftermarket in
recent years.
Static Control partnered with three
separate resellers in the country in 2016,
with new alliances inked with Toko, Sky
Group, and Timi Import Export. Speaking
at the time, Static Control made clear its
delight with the move, which brought on
board “a combined total of more than 50
years’ knowledge and experience of the
imaging industry in Romania.”
“Static Control is committed in its
support of the Eastern European region
and the territories within it,” said
Regional Sales Manager Andrzej Jaswin.
“Sky Group, Toko and Timi Import Export
all bring a wealth of expertise from the
perspective of both the territory and the
industry itself, placing us in the best
possible position to deliver the timely and
efficient service this growing region
demands.”
Jaswin added he was “delighted to
make this development within the
Romanian market with these highly
respected resellers.”
Another aftermarket player making
huge waves in Romania is remanufacturer
TIN Factory, which has opened
two brand new shops in recent years, as
part of a shift in business strategy.
“It was our way to survive,” the
company’s CEO Milan Banjac told The
Recycler. “We stopped distributing,
stopped selling at small Chinese prices
and greater quantities, and started to sell
just to end users. It was a good decision.”
Toko’s Matache also extolled the
virtues of transforming a business in
response to the changes. “For Romanian
companies, it becomes more sustainable
to develop a business that adds value,” he
explained. “Because the volume and
value of our affiliate business have been
declining for years, we have begun to
develop a new business model. We
36 THE RECYCLER • ISSUE 317 • APRIL 2019