From POWs to investors

The President of the Hungary-Japan Economic Club, Sándor Kiss, has been involved in bilateral relations for three decades. In the Japanese Focusof the a recent issue of Diplomacy & Trade, he talked about the past and present of these relations.

The Hungary-Japan Economic Club (MJGK) was founded in 1971 with the aim of assisting with information, events and contacts (companies and individuals) interested in economic co-operation between Hungary and Japan and 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 41 years now.

The history of the Club’s predecessors is 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 as 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.

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.

Although, the Hungarian Embassy in Tokyo was only reopened in 1959, 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, respectively 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.

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 reestablished in this new form. Until 1991, the Club operated within the framework of the Hungarian Chamber of Commerce, and then, according to the 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 appointed as Trade Secretary at the Hungarian Embassy in Tokyo in 1982, 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. The last one, in 2009, was won by a team from Szombathely, western Hungary.

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 has 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 19 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, Hungarian exports to Japan include Hungarian pork, which is of excellent quality and taste, in the amount of some USD 50 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. Currently, fused cast refractories and corundum are also selling well.