The Belgian region of Flanders has one of the world’s most open economies and businesses established there are naturally inclined to expand abroad. The Hungarian representation of Flanders Trade & Investment (FIT), set up by the Flemish government in 2005, serves as a gateway to the Hungarian market for Flemish exporters.
The FIT office in Budapest offers tailor-made solutions, complete with market research and a sector-specific partner data base to Flemish companies, says Szonja Bender, Trade and Investment Counselor at Flanders Investment & Trade. “This requires thorough investigation and an extensive partner network on our part, but I feel that we provide essential help to companies. If they try to initiate contact with a business in Hungary by writing to a general email address or calling a central phone number, the endeavor is generally doomed to fail,” she says. A second phase of the process is the so-called ‘prospection trip’, during which Flemish exporters visit Hungary to attend bilateral meetings with potential partners or buyers, organized by the FIT office. Every two years, a business delegation consisting of representatives of around 15 Flemish companies comes to Hungary in the framework of an official visit organized by FIT or VOKA, the alliance of Flemish Chambers of Commerce. “I must confess my task is made a lot easier by the fact that Flemish companies are generally export ready, well prepared and have extensive experience in the area of international sales. However, our knowledge of the local market and our ability to identify the most appropriate contact persons for their business needs is a great advantage for them,” Szonja Bender says in an interview. She worked as the head of the Brussels office of the Hungarian Chamber of Commerce and Industry and at the Hungarian Embassy in Belgium prior to joining FIT in Budapest.
Flemish presence in Hungary
Hungary’s trade with Flanders is on an upward trajectory, having increased by nearly 20% last year. Flanders, which provides 83% of overall Belgian exports, sold goods with a total value of EUR 2.2 billion to Hungary in 2018 while Hungarian imports to the region amounted to EUR 1.4 billion. Machinery and mechanical equipment, chemicals and pharmaceutical products as well as the automotive sector are the key areas of trade cooperation. The requests that the Budapest office receives reflect an increasing interest on the part of businesses active in agriculture and the food sector, including bio products, beer, chocolate and products for customers with special dietary needs, Szonja Bender notes.
Besides K&H Bank, which is the flagship Flemish investment in Hungary of the parent company KBC, most of the other investors from Flanders established their Hungarian subsidiaries in the early 2000s. Another exception to this is Samsonite, which started production in Szekszárd in 1990. In 2005, the factory shifted from softside to hardside products. In the last few years the company doubled its production capacities in Hungary and now the manufacturing site has a floor area of 40,000 square meters.
Furniture maker Sinia Bútorgyártó, fully owned by Belgium’s Recor Group, built a second plant at a cost of HUF 1.7 billion in the Bátonyterenye industrial park, northeast Hungary, in 2013. The company, which exports leather sofas and chairs to Western Europe, mainly the Benelux countries and France, initially operated a factory in an industrial park nearby Salgótarján, but had no room to expand.
Other Flemish companies with a manufacturing presence in Hungary include corrugated cardboard box producer Pacapime N.V., Soudal, which operates a distribution center in Budaörs on the outskirts of Budapest, and fried snacks producer Beltaste.
“In my experience, Flemish companies have a positive and open attitude toward Hungary. Exporters that already have experience on the local market generally see further potential in Hungary and ask for our assistance in broadening their partner base and securing new customers.
Improving economic indicators are prompting companies with no presence in Hungary or the region to shift their focus to this part of the continent and access these markets as soon as possible,” Szonja Bender notes. She adds that the recent rise in Hungarian wages is, on the one hand, a positive development as it boosts purchasing power, but on the other hand it diminishes the allure of the country as an investment destination with a cheap labor force.