A civilian engine of trade relations

The Hungary-Japan Economic Club (MJGK) was founded in 1971 to assist with information, events and contacts (companies and individuals) interested in economic co-operation between Hungary and Japan and to aid in the improvement of those relations. It is a non-profit and non-political organization that has been providing this forum for its members for 44 years now. Diplomacy & Trade presented the Club in its recent Japanese Focus.

The history of the Club’s predecessors closely
intertwined with that of Hungarian-Japanese diplomatic and economic relations that
date back a long time but were broken several times. “One interesting period
was between the two world wars when civilians managed these relations,” the
current President of the Hungary-Japan Economic Club, Sándor
Kiss tells Diplomacy and Trade.

As he explains, the collaboration of civilians was
necessary since neither of the two countries had money to maintain an embassy
in the other. During this period, the Japanese dealt with Hungarian issues from
Vienna while Hungarian affairs in Japan were handled by the Spanish Embassy in
Tokyo where their head of mission was the Don José Caro y Széchényi, a man of Hungarian
noble descent.

In Hungary,
it was the Hungarian Nippon Society that became the engine of bilateral economic
relations. It was established by former Hungarian prisoners of war who had been
held as prisoners from the army of the Austro-Hungarian Monarchy in prison
camps in southeastern Siberia following World
War I. The control of those camps was later taken over by the Japanese
expedition army whose leaders developed a mutual respect with the Hungarian
prisoners.

One of the main sponsors of the Hungarian Nippon Society was Baron
Takaharu Mitsui of the Mitsui concern. “Actually, the Mitsui Trust was our
first Japanese buyer after the war when they imported refined sugar in 1926.
The head of Mitsui zaibatsu, Mitsui Takakimi, the richest Japanese at that
time, visited Hungary in 1927,” Kiss notes.

Between the two world wars, commodities transported from
Hungary to Japan included
pharmaceutical products, the then world class Hungarian X-ray tubes, photo
paper, steel shapes, special leather and even caoutchouc plates of military grade,
while Hungary
mainly imported copper, rice, paper and silk, says Sándor Kiss who is a
researcher of this period.

The
re-launch

Although, the Hungarian Embassy in Tokyo was reopened in 1959 only, commercial
relations started to develop from 1954-55. In the first transactions, Hungary imported copper from Japan and bartered it with rice from Egypt and Burma, in 1954. After the 1956 revolution,
a major deal – machinery imports for the Hungarian lamp factory Tungsram –
helped re-launch bilateral trade and business relations. The first ever Japanese-Hungarian
joint venture, Polifoam Co., Ltd. was set up by Hungária Mûanyagfeldolgozó
Vállalat (later Pannonplast), Furukawa Electric Co., Ltd. and Itochu in 1984.

In
a new framework

After the political changes of 1989-90 in Hungary, civil
organizations were allowed to be set up, and the Hungary-Japan Economic Club
was also re-established in this new format. Until 1991, the Club operated
within the framework of the Hungarian Chamber of Commerce, and then, according
to new regulations, it was transformed into a social organization with legal
entity. Its spheres of activity – within Hungarian-Japanese economic relations
– include the monitoring of economic and investment trends and bilateral trade
developments; the discussion of problems arising (the latest concern being the
Hungarian government’s slight shift of policy away from Japan and towards
China); the carrying out of occasional tasks of advocacy, interest
representation and conciliation; the organization of events as well as the
collection and dissemination of information related to Hungarian-Japanese
investment relations.

Sándor Kiss, who has been involved in bilateral
relations for three decades since he was first appointed as Trade Secretary and
then commercial counselor at the Hungarian Embassy in Tokyo (see box), points
out that the Club maintains regular contact with the leaders and staff members
of the Nippon Keidanren (Japanese Business Federation), and helps support their
programs in Hungary. Every five years, the Club organizes the ‘National Grammar
School Japanese Competition’, a knowledge quiz about the Far Eastern country with
the first prize being a one-week trip to Japan.

Also, every year, the Club
invites the Japanese Ambassador to Hungary and the Hungarian Ambassador to
Japan to talk about bilateral relations from their own perspective. There are
Club events about six times a year. The Hungary-Japan Economic Club also supported
the publication of the Hungarian-Japanese Business Dictionary.

Sándor Kiss, who has been the President of MJGK since
2003, says the number of club members jumped from 20 to 40-45 around 1990 and remained
there for an intensive period of about five years that included the arrival of
Suzuki and other Japanese companies. (Currently, the ‘big guns’ of Japanese
investors in Hungary
are Suzuki and Denso.)

“As a result, until the turn of the millennium, Hungary
raked in the majority of Japanese investments in the post-Soviet bloc of East
Central Europe. Then, the neighboring countries caught up while the Hungarian
investment environment became less predictable,” the President adds. Now, the
Club has 18 members, one third of them Japanese companies present in Hungary
and the rest are Hungarian firms, including law firms who act as advisors to
Japanese companies, and there are also Hungarian suppliers to Japanese
companies.

Nowadays, he says, Hungarian exports to Japan include Hungarian
Mangalitsa pork, which is of excellent quality and taste, in the amount of some
USD 70 million a year, as well as alumina, aluminum products, pharmaceutical
base materials, gallium, and others like foie gras, Herend porcelain, Suzuki
cars, Archicad software, Rubik’s cube – a continuously changing portfolio of
300-400 commodities. Recently, Hungarian software and scientific instruments
have become popular in Japan.