ADVANTAGE AUSTRIA is the Austrian Federal Economic Chamber's external trade agency in charge of trade development and Austria's largest provider of foreign trade services. The new head of the organization’s office in the Hungarian capital, Philipp Schramel tells Diplomacy&Trade about the tasks performed – and services provided – by the Budapest office.
“We have three pillars of what we do here as a service for Austrian companies and for the local market. The first pillar is information. Basically, we compile relevant information on the Hungarian market and make it available to Austrian companies – it can be market information, business intelligence data or new laws and regulations. The second pillar is a service component. We help Austrian companies to find the right business partners, ranging from investors to clients or corporation partners, for example, for joint production or outsourcing. Finally, the third pillar is our events. We organize a wide range of formats from classical networking events here for Austrian subsidiaries to targeted B2B events for Austrian companies interested in the Hungarian market,” the Commercial Counsellor explains.
As for specific services, he adds that “we also provide credit and background checks if needed, as well as initial legal advice. As we are not lawyers, our services are not legal binding advice. If needed, we can connect clients to lawyers specialized in the field where the company needs it. We also support Austrian companies. Although Hungarian is a beautiful language and there are many Austrians with Hungarian origin speaking this language, sometimes Austrian companies need help in translating, which is another service that we provide.”
Green tech and Zalazone
Austria is the second largest trading partner of – and third largest investor in – Hungary. Also, for Austria, Hungary is the fifth biggest export partner. “Even in times of economic and political challenges, Austrian exports to Hungary increased by 40% in the first half of this year compared to the same period in 2021,” Philipp Schramel notes. In terms of further improvement of bilateral economic relations, he mentions that “Austria has a lot to offer in the green tech area, for example. Waste management and green buildings are fields where Austria is a world leader and drives innovation in this field.” The automotive sector is an important area of business in Hungary and Austria has already multiple suppliers to the big car manufacturers here. The new developments in this area are e-mobility and autonomous driving for which ZalaZone in SW Hungary is the biggest testing center in Europe. There, the main commercial partner is Austria’s AVL List that is testing cars worldwide and helps commercialize testing for this Hungarian venue.
The Commercial Counsellor highlights four main areas in various sectors where ADVANTAGE AUSTRIA organizes events. “In food and beverages, we invite Hungarian partners to come to Austria to the exhibition ‘Marketplace Food’. This November, there was a big machinery forum in Austria where we had Hungarian companies traveling there to meet potential cooperation partners of Austria. Another area is the green building sector and we organize a big conference on mobility of the future in Vienna.”
In pandemic times, ADVANTAGE AUSTRIA organized multiple webinars to inform Austrian companies on the newest developments in the Hungarian market. “Since the easing of the COVID-19 restrictions, we once again participate in the major trade fairs in Budapest – for example at the Hungexpo site. At the HVG job fair, we were present with seven Austrian companies that recruit for the local subsidiaries. Then, we have the automotive fair where we are always present, the Construma construction fair where we always have group stands for ADVANTAGE AUSTRIA, the Educatio study fair, etc.,” he says.
The agency also looks into some smaller but sector-targeted events where they can promote Austrian know-how. “For example, I'm thinking about a road show next year for green technologies from Austria. And we have events for the Austrian-Hungarian business community here together with the Austrian-Hungarian Business Council and the Embassy where we provide information about the business climate here. We also try to bring together the community with social gatherings like at the traditional annual puntsch event coming up in December with mulled wine from Austria – a nice get-together for the end of the year,” he adds.
Challenges for Austrian firms
Philipp Schramel arrived to Hungary this summer “in addition to the daily business, I focused on meeting as many companies as I can – I am still in the process because we have over 1,400 subsidiaries here. Hungary is an important market for Austrian companies. They want to be here and they want to service the Hungarian market with their products and also as a reliable employer for their Hungarian workforce. In these challenging times, in addition to the rising energy prices, companies need to take care of their employees’ needs, raise wages so that people can somehow cover the rising costs of living. With rising costs for energy, raw material and the inflation, this is one of the major challenges they face. One of pain point companies face is to find skilled labor.
We have companies that could recruit, for example, 30 truck drivers tomorrow and they are not able to find enough of them. Another major challenge is plannability and the uncertainty of the business climate: everybody – from suppliers to clients – is waiting for the ‘what will be next?’ For example, some big construction projects are on hold because of the uncertain supply and future prices of construction material. In some sectors, insecurity persists about the legal framework changes with crisis laws or new taxes that are introduced – sometimes overnight – in Hungary. Our job is to try to reduce this uncertainty and inform Austrian companies on new developments and provide clarification, together with our partners in the Hungarian Ministries.”
He stresses that “from the Hungarian side, the ministries are important partners for us. We work closely with the Ministry of Economy, Ministry of Innovation and the Ministry of Finance, just to name a few. They are very helpful when it comes to clarifying what Austrian companies need to pay as taxes or if there is a change in regulation. We have also very close contact with the chambers of commerce here, regional ones and the national ones. We discuss investment issues with the national agency HIPA as we get quite a few investment requests from Austrian companies: what the legal framework is or what kind of grants they can get. And we have lawyers and tax advisors that help as well.”
ADVANTAGE AUSTRIA has a network of over a hundred centers in more than 70 countries. Philipp Schramel believes one of the main assets of this organization is its worldwide network as Austrian companies are strongly export-oriented and are not limiting their activities to a single market. “For example, if a company from Austria is planning to export to Central Europe, they will look at the Hungarian, the Czech, the Slovak market and so on. We have offices in all these countries and can offer a comprehensive overview of the market opportunities and possible challenges. Based on this information, the company can then decide which market they want to focus on or if they want to tackle all the markets simultaneously. This applies to the export of goods and services, investments or outsourcing decisions. We organize joint events as well with offices from other countries. We bring together corporation partners and buyers from the various markets either in Austria or to trade fairs in the regions to meet Austrian companies. The idea is to offer platforms for cooperation in the region, and especially with the neighboring markets. This is one of the mayor assets we have in the region and works very well.”
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