Keeping Up Japanese Business Interest

Japan is the second most important investor country in Hungary from the Far East. The CEO of the Hungarian Investment Promotion Agency (HIPA), Róbert Ésik explains to Diplomacy&Trade how the organization is working to attract more Japanese investors and to accommodate those already established here helping the Hungarian economy.

“One of the first large foreign investors to place its trust in the Hungarian economy following the 1990 regime change was Suzuki. We value this trust and continue to strengthen our relationships with our Japanese friends, partners and investors,” the CEO points out.

Keeping up the interest
He highlights that Hungarian business promotion is constantly working on keeping up this interest, and “our ideal business environment helps this effort.” Hungary’s 9% corporate tax is the lowest in the European Union. The government has also reduced the tax burden on the gross salaries paid by employers from 28.5% in 2016 to 13% in 2022. According to the data of the Hungarian Central Statistical Office, Hungary’s real GDP growth rate in 2021 was 7.1%. The Hungarian skilled labor force is another huge asset that attracts FDI as it is available at a lower cost than in Western Europe.
“Thankfully, we have successfully managed the pandemic from an economic standpoint and today, Hungary is in a position to offer investors a stable and swiftly recovering economy. In addition to our successful vaccination strategy, our economic policy to financially support and incentivize companies, which are committed to increasing investments and maintaining their workforce, has contributed to our economic recovery,” he adds.

Profiting from Japanese business presence
Japanese companies in Hungary are especially active in the automotive sector with Alpine, Denso or Diamond Electric, for instance, introducing new technologies and increasing supply capacities, also in the past year. As to how much the Hungarian economy is profiting from the Japanese business presence here in general, Róbert Ésik points out that Japanese investment has led to some of the most advanced technologies reaching the Hungarian market and these have fast-tracked the automation of our manufacturing processes and boosted our industrial competitiveness.
“We recognize the excellent work ethic and admirable corporate culture which Japanese companies have imparted on the local business community. Recent Japan investments include Toray Group’s battery-separator film facility, GS Yuasa’s first overseas lithium-ion battery plant, Seiren’s first European synthetic leather car seat cover factory, or Nissin Food’s instant noodle plant expansion,” he says.

One-stop shop
One of HIPA’s main tasks is to attract more investors to Hungary. Regarding the means that the organization applies in case of Japanese businesses in order to accomplish this task, the CEO explains that from selecting a location, supplier development, financial support and policy advocacy, HIPA supports Japanese investors throughout the entire process. “We function as a one-stop shop that handles all investment-related matters. More importantly, we mediate between businesses and the government which speeds up decision making considerably. Closing a deal is just a start, we follow up the whole implementation phase. These relationships ensure that whenever a new project is on the agenda, we can work together immediately in a seamless manner. No wonder nearly 70% of investments stem from companies that already have their operation in Hungary as they are satisfied with the economic conditions here and are eager to expand.”
As for partner organizations in presenting business opportunities in Hungary and attracting Japanese investors to come here, HIPA works closely together with the Hungarian Embassy in Tokyo, which is crucial to forge bilateral relations with the Japanese business community. The Japanese External Trade Organization (JETRO) also plays an important role in improving our reputation, and HIPA also has a partnership with the Japan Institute for Overseas Investment (JOI) and some of the most important Japanese commercial banks.
Once Japanese investors get themselves established here, HIPA works to keep them operating in the country. “Apparently Japanese investors are here to stay. In fact, they are the seventh largest investor community in the country. The Hungarian government has so far signed strategic partnership agreements with six of them such as Suzuki, Bridgestone, Denso, Zoltek, Ibiden and Alpine. Such partnerships are a sign of long-term commitment since they are meant to incentivize investments of foreign companies in Hungary, increase employment, accomplish higher value-added production, integrate corporations into vocational training and tighten relations with domestic suppliers. Bridgestone alone launched three capacity expanding investments just in the past five years,” the CEO stresses.
He adds that HIPA is eager to maintain a close relationship with all existing Japanese investors to help them achieve their business goals. “Our experts are at their disposal at all times.”

From ‘Made in Hungary’ to ‘Invented in Hungary’
There are about 180 Japanese companies present here, providing jobs for more than 30,000 people. “The overall picture is promising since 2021 marked a record-breaking year in Hungary in terms of FDI volume. In total EUR 5.9 billion was invested in the country, and Asian investors accounted for 60% of the full volume. Japanese companies are well-known for bringing high-tech investments to Hungary. It is essential to keep the pattern to invest into more knowledge-intensive and less labor-intensive projects so that we can continue our journey from ‘Made in Hungary’ to ‘Invented in Hungary’. Some 64,000 people already work in Business Service Centers and this trend should go on. It would be also great to attract more decision-making centers of global corporations. All this could help Hungary move up the value chain, thus create more wealth than ever. Our Japanese friends have proved themselves to be reliable partners and have contributed to the development of the Hungarian economy. We look forward to continuing our close cooperation,” Róbert Ésik concludes.